Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Stocks are back under a ValuEngine Valuation Warning

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
The yield on the 30-Year bond is still at 4.66 providing that drag on equity valuations. ValuEngine will soon be generating key monthly benchmark revisions, which will affect the dynamics for better or worse. The Dow Industrial Average reached a new high for the move at 12,080.54, but the other major averages did not. The S&P 500 tested this week’s risky level at 1308.5, just as it did on Tuesday. The NASDAQ, Dow Transports and the Russell 2000 remain below the highs of mid-January.
  • The Dow Industrial Average should test my monthly value level at 11,759 this month as weekly risky levels form above 12,000. In March we will likely have a monthly risky level around 12,600. If we have a weekly close below 11,759, the risk is to my annual value level at 11,491.
  • The S&P 500 tested this week’s risky level at 1308.5 and a monthly risky level is projected at about 1365.0 in March. The downside is to my quarterly value level at 1262.5.
  • The NASDAQ is shy of this week’s risky level at 2769 with a quarterly risky level at 2853. This month’s value level is 2611.
  • Dow Transports tested 5143 on Tuesday between weekly and annual pivots at 5179. My monthly and quarterly value levels are 4962 and 4671 with the January 18th high at 5256.80. Dow Transports is below its 50-day simple moving average at 5083.
  • The Russell 2000 has been shy of this week’s risky level at 809.88 with the January 14th high at 807.89. We have an annual pivot at 784.16 and quarterly value level at 765.50.
  • I hope this explains why I can’t be overly bullish or bearish in the current market environment.
We are close to another ValuEngine Valuation Warning - 16 of 16 sectors overvalued and only 34.91% of all stocks undervalued, which renews the ValuEngine Valuation Warning. On December 19th we had a ValuEngine Valuation Warning with 33.33% of all stocks undervalued, below the important 35% threshold, and all 16 sectors were overvalued.
The US Treasury 10-Year Yield – (3.541)The trading range set in December remains in place between 3.568 and 3.247. Today’s risky level is 3.453.
Comex gold – ($1354.6) Daily, quarterly, weekly and semiannual value levels are $1341.1, $1331.3, $1319.7 and $1300.6 with my pivot at $1356.5, which was tested at Thursday’s high. Monthly, quarterly and semiannual risky levels are $1412.4, $1441.7 and $1452.6. A weekly close above my annual pivot at $1356.5 favors higher gold prices next week.
Nymex crude oil – ($90.61) My semiannual value level is $87.52 with weekly and monthly pivots at $89.91 and $91.83 and annual risky levels at $99.91 and $101.92. Weekly and monthly pivots at $89.91 and $91.83 have prevented a break-out above $92.00 per barrel.
The euro – (1.3630) Weekly and quarterly value levels are 1.3265 and 1.3227 with a daily pivot at 1.3760 and monthly risky level at 1.4225. The weak euro versus the dollar on Thursday was offset by perceived positive comments from Fed Chief Ben Bernanke.
That’s today’s Four in Four. Have a great day.
Richard Suttmeier
Chief Market Strategist, (800) 381-5576
Send your comments and questions to For more information on our products and services visit
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website I have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. You can go HERE to review sample issues and find out more about my research.
“I Hold No Positions in the Stocks I Cover.”