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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com . ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEnginecovers over 5,000 stocks every day.

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November 17 , 2009 Carry trade shifts into parabolic gear

The Dollar carry trade shifts into parabolic gear. Treasury yields decline, commodityprices rise. Stocks are approaching maximum resistance levels to say its still a BearMarket Rally.

President Obama and Fed Chief Bernanke mum on dollar support shuns Chinawarning.

The President and Fed Chief both talk a strong dollar policy, but do not back that with action. Infact Bernanke says interest rates will stay low for an extended period, on recovery concerns.

Bernanke says that he expects moderate growth in 2010, yet no talk of an exit strategy on thepolicy of flooding the World with dollars. Then he says that unemployment and job creation willbe an issue in 2010.

How do we get moderate growth without job creation with a weak housing market andtightening credit conditions? I guess by creating parabolic bubbles of dollar-denominatedassets via the dollar carry trade.

We have been on this trip before. Remember June 2003 through June 2004 with the 1%federal funds rate. That created the parabolic bubbles in Home Prices and Equities that poppedin 2007.

Monetary policy helps Wall Street make trading profits leaving Main Street high and dry withfailing C&D and CRE loans, and waves of bank failures that will last at least through 2012.

The Dollar Index remains above up trend support at 74.48 with oversold MOJO. Note that theEuro stayed below the psychological 1.50 level on Monday. Charts courtesy of Thomson / Reuters

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The yield on the 10-Year US Treasury is approaching weekly resistance at 3.32 with the 200-day simple moving average at 3.283. Wall Street borrows at zero percent and has been buying10-Year notes since June when the yield was four percent.

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Comex Gold reaches a new all time high of $1143 above my quarterly resistance, now a pivotat $1135.1, which is a sign that the parabolic phase has begun. We are back below the pivotthis morning.

Comex Copper held its 200-week simple moving average at $294.50 and reached a new 52-week high of 312.75. Monthly resistance is a parabolic 348.

Nymex Crude Oil held above its 200-week simple moving average at $75.50 with the October21 st high at 82 and my quarterly resistance at $83.16.

The Dow Industrial Average traded to 10,434 on Monday testing the Ascending Wedgeresistance on the weekly chart. The down trend that goes back to October 2007 is 10,655.

If this trend breaks the carry trade would have successfully ended the multi-year bear market

replacing the environment with a random and wide trading range market.Quarterly supports are 7,962 and 6,546 with semiannual resistances at 11, 407 and 11,508.

Other key levels are 1118 on the S&P 500, which is on the down trend that goes back toOctober 2007.

For the NASDAQ its the 200-week simple moving average at 2212.

For Transports its a return to my zone of annual resistances at 4037 and 4199.

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For the Russell 2000 the double-top remains at 624 / 625.

The SOX is similar with a double-top and my semiannual resistance at 337.

Send me your comments and questions to Rsuttmeier@Gmail.com . For more information onour products and services visit www.ValuEngine.com

Thats todays Four in Four. Have a great day.

Richard SuttmeierChief Market Strategistwww.ValuEngine.com (800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the websitewww.ValuEngine.com . I have daily, weekly, monthly, and quarterly newsletters available that track a variety ofequity and other data parameters as well as my most up-to-date analysis of world markets. My newest productsinclude a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go towww.ValuEngine.com and review some of the sample issues of my research.

I Hold No Positions in the Stocks I Cover.