New Highs Again, but not for Dow Transports

Feb. 09, 2011 5:27 AM ETTLT, GLD, DUG, DIA, CSCO
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Banks, Homebuilders, chartest

Contributor Since 2006

I am the Founder & CEO at Global Market Consultants, Ltd. I consider myself as a Financial Engineer with an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. In 1972 I began my career in the financial services industry trading U.S. Treasury securities in the primary dealer community. I became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gave me the insights to be an expert on monetary policy, which I feature in my newsletters, and market commentary. I formed Global Market Consultants Ltd at the end of 1988 and expanded on my analysis to include proprietary analytics. While operating Global Market Consultants I was the U.S. Treasury Strategist at Smith Barney 1991 through 1995, was Chief Financial Strategist at William R. Hough in St. Petersburg, Florida 1997 through 1999, and was Chief Market Strategist at Joseph Stevens 1999 into 2008. I began covering U.S. equities in 1997 and began to use ValuEngine as my stock screening tool in 2002 before joining them as Chief Market Strategist between September 2008 and November 2014. I was the Chief Market Strategist at Niagara International Capital Limited between December 2009 and December 2014. In 2005 through 2007 I wrote columns on RealMoney.com and authored TheStreet.com Technology Report. My unique coverage called for the housing bubble to pop in 2005 and for regional banks to collapse in 2006 and early-2007. This is when my proprietary analytics became known as value levels at which to buy on weakness and risky levels at which to sell on strength. I became an Expert Contributor for TheStreet.com in April 2012 and currently write one or two stories a day covering subjects such as: The housing market, community and regional banks, momentum stocks, earnings profiles both before companies report quarterly results and provide scorecards after reporting results. Many of my stories we include moving averages, momentum readings, analysts’ earnings estimates, and value levels and risky levels. Over the years I made frequent appearances on financial TV beginning in 1993 on CNBC covering the U.S. Treasury auctions and as a substitute for John Murphy on his segment called ‘Tech Talk’. I also occasionally appeared on CNN and Bloomberg. On almost every holiday I appeared for an hour covering stocks on a call-in / email-the-expert ‘Talking Stocks’ show on CNNfn. In 2002 I had my own show on Yahoo Finance TV called, ‘Traders’ Club with Richard Suttmeier’. When Fox Business began in late-2007 I was a frequent guest on ‘Money for Breakfast’. I also made appearances on Reuters TV, Yahoo Finance Breakout and BNN in Toronto. In recent years I shifted my focus to making presentations to various investor groups such as: MBA students at the University of Florida and South Florida, The American Association of Individual Investors, Wells Fargo Advisors, The Executive Form at the National Arts Club in NYC, Investors Roundtable of Wilmington NC, The Market Technicians Association, The Information Management Network when they cover Florida Banks in Ft Lauderdale, and the University of Tampa Investment Club. I was president of the Society for the Investigation of Recurring Events in NYC from 2000 into 2009. My background began on Long Island, New York. I graduated from Bay Shore High School in 1962, and was a member of the Honor Society, Golf Team, Math Team and Band. I graduated from Georgia Tech in Atlanta with a Bachelor of Industrial Engineering Degree in 1966, and was a member of Chi Phi Fraternity, the freshmen Golf Team, and was the captain of the Bowling team. I won the South East Regional Bowling Tournament in 1964 and won the National Intercollegiate Bowling Championship in the Doubles Event that same year. I graduated from Brooklyn Poly in 1970 with a Master of Science in Operations Research, Systems Analysis. My first job out of Georgia Tech was with Grumman Aerospace on Long Island 1966 through 1970 with project assignments on the Lunar Module and F-14 Tomcat Fighter Jet contract proposal. I was with Bank of New York in 1971, as the Senior Systems Analyst for computer applications for the Bank’s International Division. When I shifted my to Wall Street In 1972 I became a U.S. Government securities trader at Briggs Schaedle, a primary dealer where my father was Vice Chairman and my brother was Sales Manager. In 1977 I joined Loab Rhodes as a U.S. Treasury trader. Then my career advanced as noted above. I have been married to Linda since June 1969 and we are the parents of Stephen and Jason Suttmeier. Stephen has been married to Jennifer since 2004 and we have a granddaughter Emily and a grandson Robert. We have been living in Land O’ Lakes, Florida with Jason and his partner James since June 2009.
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 (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.”
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