9/12/2012

Yields Near Lows, Gold Near Highs, Symbolic of Risk Aversion

The yield on the 10-Year Treasury is just above 3.061 tested on May 25th and June 24th. Gold continues to consolidate off last Monday’s all time high at $1266.5. Crude is above my annual pivot at $77.05 on the site if Tropical Storm Alex. The euro rebounded to my quarterly resistance at 1.2450 a week ago. The Dow is below its daily moving averages. On Thursday, July 1st I will have new monthly, quarterly and semiannual levels from my proprietary analytics, so stay tuned for new risk / reward parameters for the second half of 2010. The FDIC closed three banks on Bank Failure Friday.

US Treasury Yields – The daily chart for the 10-Year shows the longer-term trading range between the 200-day simple moving average at 3.537 and 3.061. Today’s resistance is 3.037, and annual resistances are the floor at 2.999 and 2.813. The low end of the yield range was last tested on May 25th and June 24th.

click to enlarge

Chart Courtesy of Thomson / Reuters

Comex Gold – The daily chart shows MOJO turning up again with last Monday’s all time high of $1266.5 in sight. This test was a failed test of my monthly resistance at $1265.9. The 21-day and 50-day simple moving averages provide key supports at $1232.6 and $1204.8.

Courtesy of Thomson / Reuters

Nymex Crude Oil – The daily chart still shows overbought MOJO with oil back above its 50-day and 200-day simple moving averages and annual pivot at $76.75, $77.11 and $77.05. The 21-day is support at $75.17. Today’s resistance is $85.93.

Courtesy of Thomson / Reuters

The Euro – The daily chart shows rising but flattening MOJO as strength reached my quarterly resistance at 1.2450 a week ago today. The 21-day simple moving average is support at 1.2214. Today’s pivot is 1.2343.

Courtesy of Thomson / Reuters

Daily Dow:Weekly support is 9,483 with today’s pivot at 10,211. The Dow is below the 21-day, 50-day and 200-day simple moving averages at 10,196, 10,517 and 10,356, and my annual pivot at 10,379. MOJO is declining eliminating on the daily chart. My call remains that the April 26th high at 11,258 ended the bear market rally since March 2009, and starts the second leg of the multi-year bear market.

Courtesy of Thomson / Reuters

Bank Failure Friday – There were three bank failures last Friday, and all were private banks that were extremely overexposed to C&D and CRE lending. Their real estate loan pipelines were 89.7% to 98.4% funded. The FDIC Deposit Insurance Fund (DIF) ended the first quarter of 2010 in arrears by $20.7 billion after closing 41 community banks and costing the Deposit Insurance Fund $6.5 billion. The FDIC closed 45 community banks in the second quarter draining the $11.1 billion from the DIF. For the first half of 2010 bank failures cost the FDIC $17.6 billion versus the total year member bank assessments of $15.33 billion. I estimate that the cumulative loss on June 30th is $31.8 billion. If you factor in the 2010 pre-paid DIF fees the balance is in arrears by $20.3 billion with a half year of bank failures that need to be covered.

  • Only 25 banks failed in 2008, as the FDIC was slow closing community and regional banks.

  • There were 140 bank failures in 2009 with a peak of 50 in the third quarter.

  • In the first quarter of 2010 there were 41 failures, and now 45 for the second quarter for a half year total of 86.

  • At this pace bank closures in 2010 will be within my 150 to 200 estimate range for 2010.

  • Since the end of 2007, the FDIC has closed 251 banks on the way to my predicted 500 to 800 by the end of 2012 into 2013.

Disclosure: No positions

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