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Stocks may be undervalued fundamentally, but mainly because the 30-Year bond rate is below 3.00%. If the Dow Industrial Average closes above 12,500 today technical momentum takes over. All daily charts are overbought and the weekly charts are either overbought, or will be soon. To review; The Dow Industrial Average has been influenced by my annual and quarterly pivots at 12,312 and 12,478 and has tested the down trend connecting the highs of May and July 2011 at the 12,500 area. The other major averages have stayed below their quarterly risky levels at; 1305.4 SPX, 2777 NASDAQ, 2422 NDX, 5448 Dow Transports, 829.03 Russell 2000, and 390.17 SOX. Monthly value levels lag at; 11,210 Dow Industrials, 1152.8 SPX, 2432 NASDAQ, 2185 NDX, 4443 Dow Transports, 646.71 Russell 2000, and 310.48 SOX. The yield on the 10-Year has tested my semiannual pivot at 1.903. Gold tested both of my semiannual pivots at $1635.8 and $1659.4. Crude oil failed at the low end of my zone of annual and semiannual risky levels at $103.58 and $104.84. The euro versus the dollar hit a 52-week low at 1.2666 on Wednesday with my quarterly value level at 1.2499, my monthly pivot at 1.2780 and semiannual pivot at 1.2980.

10-Year Note – (1.925) Daily and annual value levels are 2.034 and 2.502 with my semiannual pivot at 1.903, and weekly, quarterly, monthly and semiannual risky levels at 1.885, 1.687, 1.409 and 1.385.
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Courtesy of Thomson / Reuters

Comex Gold – ($1650.6) Annual and weekly value levels are $1575.8, $1388.4 and $1517.4 with semiannual pivots at $1635.8 and $1659.5, and daily, monthly and quarterly risky levels at $1689.6, $1706.7 and $1740.9.
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Courtesy of Thomson / Reuters

Nymex Crude Oil – ($98.96) My semiannual and monthly value levels are $79.83 and $75.53 with monthly and weekly pivots at $99.87 and $98.89, and daily, semiannual and annual risky levels at $103.91, $104.84, and $103.58 and $117.00.
(Click to enlarge)

Courtesy of Thomson / Reuters

The Euro – (1.2827) Daily, quarterly and weekly value levels are 1.2704, 1.2499 and 1.2467 with monthly and semiannual pivots at 1.2780 and 1.2980, and annual and semiannual risky levels at 1.4239 and 1.4405.
(Click to enlarge)

Courtesy of Thomson / Reuters

Daily Dow: (12,471) Weekly, monthly and semiannual value levels are 11,920, 11,210, 8,425 and 8,336 with annual and quarterly pivots at 12,312 and 12,478, and daily and annual risky levels at 12,635 and 14,032..
(Click to enlarge)

Courtesy of Thomson / Reuters

S&P 500 – (1295.5) Weekly, monthly and semiannual value levels are 1218.8, 1152.8, 841.7 and 829.9 with daily, quarterly and annual risky levels at 1313.4, 1305.4, 1363.2 and 1562.9.

NASDAQ – (2725) Weekly, monthly and semiannual value levels are 2525, 2432, 2012 and 1952 with my annual pivot at 2698, and daily, quarterly and annual risky levels at 2768, 2777 and 3232.

NASDAQ 100 – (2382) Annual, weekly, monthly and semiannual value levels are 2300, 2209, 2185, 1851 and 1743 with daily, quarterly and annual risky levels at 2436, 2422 and 2603.

Dow Transports – (5209) Weekly, monthly and semiannual value levels are 4888, 4443, 4407 and 3778 with daily, quarterly and annual risky levels at 5242, 5448, 5861 and 6111.

Russell 2000 – (770.49) Weekly, monthly and semiannual value levels are 716.79, 646.71, 572.90 and 510.81 with daily, quarterly and annual risky levels at 776.42, 829.03, 836.15 and 969.09.

The SOX– (391.75) Weekly, monthly, annual and semiannual value levels are 342.16, 310.48, 269.80, 277.90 and 194.47 with a quarterly pivot at 390.17, and daily and annual risky levels at 397.10 and 520.61.

Equity Fundamentals – Stocks remain fundamentally cheap.

  • 72.4 of all stocks are undervalued / 27.6 of all stocks are overvalued. On October 4th - 93.5% of all stocks were undervalued. Keep in mind that with the 30-Year bond yield below 3.00% and with about 70% of stocks undervalued this market tends to top out.
  • All sixteen sectors are undervalued, twelve by double-digit percentages (10.0% to 17.0%). Back in March 2009 the sectors were undervalued by 33% to 45%.
Source: Key For The Bulls Is A Dow Close Above 12,500 Today