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A successful Santa Claus rally would have all equity averages above their 200-day simple moving averages at; 11,936 Dow Industrials, 1259.6 S&P 500, 2662 NASDAQ, 2288 NASDAQ 100 (NDX), 4977 Dow Transports, 763.99 Russell 2000, and 392.08 SOX. Only the Dow Industrials & Dow Transports are providing this leadership. Stocks are cheap when 75% or more of all stocks are undervalued and today’s reading is 73.6%. The yield on the 10-Year US Treasury is below its 50-day SMA at 2.046, but my weekly risky level at 1.826 has been tested. Gold traded as high as $1643.7 on Wednesday versus my semiannual pivot at 1644.8, but the close was just below the 200-day SMA at $1618.1. Crude oil popped back above its 50-day and 200-day SMAs at $95.16 and $95.77, and with a larger than expected inventories drawdown there could be a bullish crossover where the 50-day rises above the 200-day. This would signal a stronger than expected economy, which will help Santa guide his reindeer Saturday night. The euro remains oversold on its daily chart and a higher euro will make Rudolf’s nose brighter.

10-Year Note – (1.974) Semiannual, quarterly and annual value levels are 2.414, 2.669 and 2.690 with the 50-day simple moving average at 2.046, weekly and daily risky levels at 1.826 and 1.790, and semiannual and monthly risky levels at 1.672 and 1.602.

(Click charts to expand)

Courtesy of Thomson / Reuters

Comex Gold – ($1618.0) Daily, semiannual and annual value levels are $1507.9, $1469.9 and $1,356.5 with the 200-day at $1618.1, my semiannual pivot at $1644.8, and quarterly, weekly and monthly risky levels at $1738.4, $1773.6 and $1873.8, and the September 6th all-time high at $1923.7. The year’s low was $1535.0 set on September 26.

Courtesy of Thomson / Reuters

Nymex Crude Oil – ($98.86) The October 4th year-to-date low is $74.95 with daily and monthly value levels at $93.55 and $86.20, the 200-day simple moving average at $95.77, the 50-day at $95.16, quarterly, monthly and annual pivots at $100.34, $99.91 and $101.92, and weekly, semiannual risky levels at $105.58, $103.93 and $107.90. The high and low for oil happened on the same days as the Dow with the high at $114.83 per barrel on May 2nd.

Courtesy of Thomson / Reuters

The Euro – (1.3043) Daily and quarterly value levels are 1.2722 and 1.2598 with a weekly pivot at 1.3054, the 50-day simple moving average at 1.3551, and monthly and semiannual risky levels at 1.3953, 1.4752 and 1.4872.

Courtesy of Thomson / Reuters

Daily Dow: (12,108) The 200-day simple moving average is 11,936 with the 50-day at 11,847. Weekly, daily, annual, and semiannual value levels are 11,934, 11,732, 11,491, 9,635 and 8,468 with a weekly pivot at 12,043, and quarterly and annual risky levels at 12,507 and 13,890. The October 4th low was 10,404.49 with the May 2nd high at 12,876.00.

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Courtesy of Thomson / Reuters

S&P 500 – (1243.7) The October 4th YTD low is 1074.77 with a daily value level at 1198.9, annual and monthly pivots at 1210.7 and 1211.8, a weekly pivot at 1231.8, semiannual value levels at 981.3 and 855.7, and quarterly and annual risky levels at 1303.7 and 1562.9. The YTD high is 1370.58.

NASDAQ – (2578) The October 4th YTD low is 2298.89 with a daily value level at 2489, weekly and monthly pivots at 2585 and 2588, and annual value level at 2335, semiannual value levels at 2199 and 2049, and quarterly risky level at 2807, and the YTD high at 2887.75. My annual risky level is 3243.

NASDAQ 100 (NDX) – (2249) The YTD low is 2034.92 with a daily value level at 2182, a monthly pivot at 2282, semiannual value levels at 1951 and 1861, a weekly pivot at 2245, a quarterly risky level at 2440, the YTD high at 2437.42, and my annual risky level at 2590.

Dow Transports – (4985) The October 4th YTD low is 3950.66 with daily, monthly and semiannual value levels at 4810, 4752, 4335 and 3868, a weekly pivot at 4962, and annual, weekly and quarterly risky levels at 5179 and 5359, and the YTD high / all time high at 5627.85 set on July 7th.

Russell 2000 – (740.45) The October 4th YTD low is 601.71 with daily and monthly value levels at 704.66 and 695.30, semiannual value levels at 577.47 and 530.04, a weekly risky level at 745.86, and annual and quarterly risky levels at 784.16 and 802.96, and the YTD high / all time high at 868.57 set on May 2nd.

The SOX– (354.45) The October 4th YTD low is 322.24 with daily and monthly value levels at 332.38, an annual value levels at 270.98, a weekly risky level at 372.49, and quarterly risky level at 417.63, and the YTD high at 450.79.

Equity Fundamentals – Stocks remain fundamentally cheap.

  • 73.6% of all stocks are undervalued / 26.4% of all stocks are overvalued. On October 4th 93.5% of all stocks were undervalued.
  • Seven sectors are undervalued and nine sectors are overvalued in a range from 15.6% undervalued to 11.2% overvalued. Back in March 2009 the sectors were undervalued by 33% to 45%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Mixed Market Signals Are Confusing Santa Claus