A weak SOX can Trump a Dow Theory Buy Signal

We are now operating under a Dow Theory Buy Signal as the Dow Industrial Average closed at 12,400.03 on Monday above its February 18^th high at 12,391.29. Beware that the Philadelphia Semiconductor Index (SOX) is a drag in the opposite direction being down 9.5% from its February high. The Dow Industrials is up 0.1%, Dow Transports is up 1.4%, as is the Russell 2000 versus February highs. The SOX thus questions the sustainability of the Dow Theory Buy.

 

Stocks Remain Overvalued Fundamentally – We are operating under a ValuEngine Valuation Watch with more than 60% of all stocks overvalued. At Friday’s close 61.1% of all stocks were overvalued. In addition all 16 sectors are overvalued with 8 by double-digit percentages. A ValuEngine Valuation Warning occurs when more than 65% of all stocks are overvalued. This last occurred at the mid-February highs.

 

10-Year Note – (3.431) The 10-Year yield is back below its 50-day simple moving average at 3.466, which favors the flight to quality scenario. Daily, annual and quarterly value levels are 3.537, 3.796 and 4.016 with weekly and monthly risky levels at 3.275 and 3.181.

 

Comex Gold – ($1435.3) Gold is poised to move higher with daily closes above its 50-day simple moving average at $1394.1. Daily and annual value levels are $1416.0 and $1356.5 semiannual, weekly, quarterly and monthly risky levels at $1452.6, $1473.0, $1523.7 and $1559.9.

 

Nymex Crude Oil – ($108.31) The daily chart is overbought with a new high for the move at $108.78. My annual and monthly value levels are $101.92, $101.09 and $99.91 with daily and semiannual pivots at $106.88 and $107.14, and weekly and quarterly risky levels at $110.68, $114.27 and $120.52.

 

 

The Euro – (1.4215) My monthly pivot is 1.4170. The quarterly value level is 1.3401 with quarterly and weekly risky levels at 1.4308 and 1.4328.

 

Daily Dow: (12,400) Weekly, annual and semiannual value levels are 12,317, 11,491, 10,959, and 9,449 with monthly, daily, quarterly and annual risky levels at 12,481, 12,510, 13,774 and 13,890.

 

Courtesy of Thomson / Reuters

 

Key Levels for the Other Major Equity Averages – All major equity averages are overbought on their daily charts except for the Philadelphia Semiconductor Index (SOX), which has a negative daily chart. The SOX is below its 50-day simple moving average at 445.37.

 

Courtesy of Thomson / Reuters

 

S&P 500 – (1332.9) My weekly pivot is 1328.1 with daily and monthly risky levels at 13481. and 1360.0. My quarterly value level is 1277.7.

 

NASDAQ – (2789) My weekly pivot is 2762 with daily and monthly risky levels at 2833 and 2898.

 

NASDAQ 100 (NDX) – (2335) My weekly pivot is 2329 with daily, monthly, annual and quarterly risky levels at 2384, 2477, 2590 and 2685. 

 

Dow Utilities – (415.16) My semiannual value level is 397.84 with daily and weekly pivots at 417.28 and 412.49 and monthly and quarterly risky levels at 423.25 and 448.17.

 

Dow Transports – (5379) My annual, weekly and monthly pivots are 5179, 5341 and 5371 with daily risky level at 5474.  

 

Russell 2000 – (849.36) Annual and quarterly value levels are 784.16 and 778.81 with a weekly pivot at 848.50, and daily and monthly risky levels at 860.23 and 856.67.

 

The SOX– (429.05) My weekly pivot is 427.31 with daily, monthly, quarterly and annual risky levels at 444.45, 452.34, 498.75 and 531.14.

 

That’s today’s Four in Four. Have a great day.

  

Richard Suttmeier
Chief Market Strategist

ValuEngine.com
[phone]

 

To unsubscribe from this free email newsletter list, please click http://www.valuengine.com/pub/Unsubscribe?

 

Send your comments and questions to [e-mail]. 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 to http://www.valuengine.com/nl/mainnl to review sample issues and find out more about my research.

 

“I Hold No Positions in the Stocks I Cover.”