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New Multi-Year Highs with Overvalued, Overbought Stocks

|Includes: DIA, DUG, GLD, iShares 20+ Year Treasury Bond ETF (TLT)
The major equity averages remain extremely overbought technically, and stocks have been trading under the cloud of a ValuEngine Valuation Warning for the past month. None-the-less stocks move higher and Thursday’s highs were multi-year highs. The NASDAQ is just a percent below its October 2007 high at 2861.51. The NASDAQ 100 (NDX) has exceeded its November 2007 high by 7.1%. Given this environment we cannot rule out strength to my annual risky levels at 13,890 Dow Industrial Average, 1562.9 SPX, 3243 NASDAQ, 2589.81 NDX, 6131 Dow Transports and 978.58 Russell 2000. The key will be a weekly close above my quarterly risky level at 2853 on the NASDAQ.
 
 
New Highs for the Move for the Major Equity Averages
  • The Dow Industrial Average (12,318) remains extremely overbought and tested 12,331.31 on Thursday with daily and annual risky levels at 12,371 and 13,890. The 21-day simple moving average rises to 12,087 as support.
  • The S&P 500 (1340.4) remains extremely overbought and tested 1341.50 on Thursday with a daily pivot at 1341.8 and my annual risky level at 1562.5. The 21-day simple moving average rises to 1309 as support.
  • The NASDAQ (2832) remains extremely overbought and tested 5306.54 on Thursday with a daily pivot at 2837 and my quarterly risky level at 2853. The 21-day simple moving average rises to 2761 as support.
  • The NASDAQ 100 (NDX) (2398) remains extremely overbought and tested 2403.52 on Wednesday with a daily risky level at 2413 and my quarterly risky level at 2438. The 21-day simple moving average rises to 2335 as support.
  • Dow Transports (5298)has become overbought and tested 5306.54 on Thursday with today’s risky level at 5355. The 21-day simple moving average rises to 5117 as support.
  • The Russell 2000 (834.02) remains extremely overbought and tested 835.52 on Thursday with today’s pivot at 836.15. The 21-day simple moving average rises to 801.17 as support.
 
We continue to trade under a ValuEngine Valuation Warning - 16 of 16 sectors overvalued with only 32.1% of all stocks undervalued on Wednesday, below the 35% threshold by this measure. This also means that 67.9% of all stocks are overvalued.
 
10-Year Note – (3.571) The near term decline in yields reached 3.546 on Thursday versus this week’s risky level at 3.568. The 50-day simple moving average is 3.426.
 
Comex Gold – ($1385.0) Is back above its 50-day simple moving average at $1371.6 with monthly risky level at $1412.4.
 
Nymex Crude Oil ($86.45) Continues to trade below my semiannual pivot at $87.52 and is now oversold on its daily chart with today’s value level at $84.65.
 
The Euro – (1.3602) Still above its 50-day simple moving average at 1.3392 with the February 2nd high at 1.3860.
 
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.”