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December 17 , 2009 The FOMC Status Quo Not Good Enough for Stocks

The Fed maintains Status Quo as expected. Architects warn that commercial real estate willcontinue to weaken. The FDIC gives banks a break on new FASB rules. The daily charts forGold, Crude Oil, dollar index and the Euro. The weekly chart for the Dow

Fed Statement is Status Quo as expected

The FOMC suggests that economic activity is picking up as the deterioration of the labor marketabates. The Fed says that the housing sector shows some signs of improvement, and householdspending is expanding. But the Fed admits that this is in the context of a weak labor market, modestincome growth, lower housing wealth and tight credit.

This muted upbeat commentary is more than offset by the fact that businesses are still cutting back onfixed investments and are reluctant to add to payrolls. The Fed says that financial market conditionshave become more supportive of economic growth.

The Fed also says that economic activity is likely to remain weak for a time, and they predict thatinflation will remain subdued. Thus the Fed re-iterated that the zero to .25% federal funds rate will beneeded for an extended period. I guess economic activity is improving but it at the same time is weak.HMMM!

Quantitative easing will sunset at the end of the first quarter of 2010 as expected and several of theFederal Reserve Credit Facilities will expire on February 1, 2010.

The American Institute of Architects billings index declined to 42.8 in November from 46.1, which isthe worse reading in three months. A reading of 50 means steady commercial real estate activity. Thisindex is said to be a leading indicator in terms of demand for commercial buildings, and thuscommercial real estate activities will be a drag on the economy, and that uncertainties are leading toproject cancellations.

Commercial Loans declined $163.5 billion since the end of 2007, down 11.4%. This loan category isdeteriorating at an accelerating pace down $89.1 billion in the third quarter to $1.276 trillion. This was asequential decline of 6.5% and 15.1% year over year versus 8.4% in the second quarter year over year.

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The FDIC to give Banks a break in implementing new Accounting Standards

Those FASB rules that began on December 15 will be allowed to slide until mid-2011. This means that

banks can phase in the mark to market rules where toxic assets in off balance sheet trusts must returnto bank balance sheets. This process will require many banks to raise fresh regulatory capital.

The daily charts for Gold, Crude Oil, the Dollar Index and the Euro

Gold is oversold with the 50-day simple moving average at $1111 and the 21-day at 1159 around thatquarterly pivot at $1135. Charts courtesy of Thomson / Reuters

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Crude oil has rising MOJO after holding my annual pivot at $68.81, as my weekly resistance at $72.13becomes a pivot. The 200-day is $66.03 with the 21-day at $74.67.

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The Dollar Index is overbought with the 50-day simple moving average at 75.77 with my quarterlyresistance now in sight at $78.64.

The euro is extremely oversold and is below todays pivot at 1.444. The 200-day simple movingaverage is 1.417 with weekly resistance at 1.475. The dollar bottomed on Thanksgiving.

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The Weekly Chart for the Dow shows an overbought condition since mid-August. The five-weekmodified moving average is support at 10,277 with the down trend resistance at 10,520. The bulls triedto press the upside following the Fed Statement on Wednesday, but the Breakout did not follow.

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

Thats todays Four in Four. Have a great day.

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

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com . Ihave daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters aswell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as theValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sampleissues of my research.

I Hold No Positions in the Stocks I Cover.