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New Highs Again, but not for Dow Transports

|Includes: CSCO, DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
Tuesday’s closes were above all of this week’s pivots at 12,142 Dow Industrial Average, 1316.2 S&P 500, 2770 NASDAQ, 5077 Dow Transports, and 800.13 Russell 2000. The Dow Transport Average remains below its 50-day simple moving average at 5094. The Dow Industrials are up 5.7% year to date with Dow Transports down 0.4%. As the yield on the 30-Year bond rises and as stocks rally the ValuEngine Valuation Warning is heightened.
  • The Dow Industrial Average (12,233) – My monthly value level is 11,759 with week’s pivot at 12,142, Tuesday’s high at 12,238.79 and annual risky level at 13,890.
  • The S&P 500 (1324.6) – My quarterly value level is 1262.5 with this week’s pivot at 1316.2, and Tuesday’s high at 1324.87 and annual risky level at 1562.9.
  • The NASDAQ (2797) – M monthly value level is 2611 with a weekly pivot at 2770 and quarterly risky level at 2853.
  • Dow Transports (5085) My monthly value level is 4962 with a weekly pivot at 5077, the 50-day simple moving average at 5094 and my annual pivot at 5179. Transports lag its January 18th high at 5256.80.
  • The Russell 2000 (813.69) My annual and quarterly value levels are 784.16 and 765.50 with a weekly pivot at 800.13 and Tuesday’s high at 813.69 and annual risky level at 978.58.
 
We are trading under a ValuEngine Valuation Warning - 16 of 16 sectors overvalued and only 32.21% of all stocks undervalued, below the 35% threshold by this measure. This also means that 67.79% of all stocks are overvalued. Why does Wall Street think stocks are cheap?
 
 
The US Treasury 10-Year Yield – (3.731)My annual value level is 3.791 with a weekly risky level at 3.525. The rise in yield has become overdone on its daily chart.
 
Comex gold – ($1364.7) My quarterly, weekly and annual pivots are $1331.3, $1342.8 and $1356.5 with monthly, quarterly and semiannual risky levels are $1412.4, $1441.7 and $1452.6. Gold bottomed at $1307.7 on January 28th but is below its 50-day simple moving average at $1375.0.
 
Nymex crude oil – ($87.15) Has set a trading range between the January 28th low at $85.11 and its January 31st high at $92.84. My semiannual pivot is $87.52 has become a magnet with weekly and monthly pivots at $91.62 and $91.83. The 200-day simple moving average is $80.75.
 
The euro – (1.3630) My quarterly value level is 1.3227 with a weekly pivot at 1.3511 and monthly risky level at 1.4225. The euro may have peaked at 1.3860 on February 2nd.
 
My Stock of the Day and Stock of the Week – Cisco Systems (NASDAQ:CSCO) ($21.99)
 
Cisco reports quarterly results after the close today and is expected to report EPS of 35 cents per share. CEO John Chambers will likely join the chorus of CEOs who are now upbeat on the Global economic outlook. ValuEngine rates Cisco a BUY with fair value at $22.84 and one-year price target at $23.50. My monthly value level is $19.24 with a weekly pivot at $21.94 and annual risky level at $23.81. Cisco is a member of the ValuTrader model portfolio entering at $19.18 on November 23rd. On February 3rd we booked a gain of 10.4% on a second position that was in the model portfolio since November 16th. BUY and TRADE Strategies have been successful in Cisco Systems:
  • On February 8, 2010 Cisco came into the model portfolio at $23.70 and left at $26.32 on March 9, 2010 for a gain of 11.1%.
  • On May 21, 2010 Cisco came in $22.60 and exited at $24.50 on July 28th for a gain of 8.4%.
  • On August 12th Cisco came in at $21.42 and exited at $22.12 on September 14th for 3.3%.
  • On November 11th the entry was $20.30 with an exit on January 4th for a gain of 1.2%.
  • So the model portfolio made a total of 34.4% on a stock that traded lower in 2010.
 
Chart Courtesy of Thomson / Reuters
 
That’s today’s Four in Four. Have a great day.
 
Richard Suttmeier
Chief Market Strategist
ValuEngine.com, (800) 381-5576
 
Send your comments and questions to Rsuttmeier@Gmail.com. For more information on our products and services visit www.ValuEngine.com
 
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. 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.”