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New Monthly Risky Levels Stretch Upside Potential

The stock market is operating under a ValuEngine Valuation Watch with 61.8% of all stocks overvalued. We will issue a ValuEngine Valuation Warning when 65% of all stocks become overvalued. The last warning occurred on February 18th and was followed by a pullback of 6.7% on the Dow Industrial Average and 8.3% on the NASDAQ. All sixteen sectors are overvalued, eight by double-digit percentages. The Dow Industrial Average is overbought technically on daily, weekly and monthly charts. Volatility should increase in May as the range is wide between my annual value level at 11,491 and this month’s risky level at 13,663. This week’s value level at 12,574 reflects increased volatility in both directions. The death of Osama bin Laden has extended stock strength as the first week of May begins.
 
10-Year Note – (3.288) Monthly, annual and quarterly value levels are 3.757, 3.796 and 4.016 with daily and weekly pivots at 3.308 and 3.292, and annual, and semiannual risky levels at 2.690, 2.441, and 2.322. The 200-week simple moving average at 3.520 is the trend towards lower yields.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1562.0) Gold rallied $56.1 the Troy ounce last week thanks to the Fed’s continued easy money policy. Weekly, quarterly, semiannual and annual value levels are $1523.5, $1523.7, $1452.6 and $1356.5 with a daily pivot at $1548.1, and my monthly risky level at $1589.3. Gold tested another new all time high overnight at $1577.4.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($113.70) While Wall Street gains on oil speculation, Main Street gets stuck with the bill at the gas pump. Semiannual, annual and monthly value levels are $107.14, $101.92, $101.09 and $99.91 with a weekly pivot at $112.82, and daily, monthly and quarterly risky levels at $116.94, $119.17 and $120.52.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.4814) Semiannual and quarterly value levels are 1.4624 and 1.4308 with a weekly pivot at 1.4782, and daily and weekly risky levels at 1.5064 and 1.5144. The euro is below 2008 and 2009 highs lagging the gains in commodities and stocks. That difference is Wall Street speculation.
 
Courtesy of Thomson / Reuters
 
Weekly Dow: (12,811) The weekly chart shows overbought MOJO and is thus positive with the Dow above its five-week modified moving average at 12,373. This week’s value level is 12,574 with monthly, quarterly and annual risky levels at 13,663, 13,774 and 13,890. My annual value level lags at 11,491. There’s lots a room for a volatile month between 11,491 and 13,890, with the October 2007 all time high at 14,198.10.
 
Courtesy of Thomson / Reuters
 
S&P 500 (1363.6) Weekly and annual value levels are 1332.7 and 1210.7 with daily, monthly, quarterly and annual risky levels at 1385.1, 1490.5, 1500.4 and 1562.9. The October 2007 high is at 1576.06.
 
NASDAQ (2873) Weekly, semiannual and annual value levels are 2772, 2363 and 2335 with daily, quarterly, monthly and annual risky levels at 2938, 3209, 3228 and 3243. The NASDAQ is above its October 2007 high, which was 2861.51.
 
NASDAQ 100 (NDX) (2404) My weekly value level is 2305 with daily and annual risky levels at 2475 and 2590. The NASDAQ is above its November 2007 high, which was 2239.23.   
 
Dow Utilities (429.06) Weekly and semiannual value levels are 420.56 and 397.84 with daily, monthly and quarterly risky levels at 432.42, 432.28 and 448.17.
 
Dow Transports (5515) My annual value level is 5179 with a weekly pivot at 5516, and daily, monthly, annual and quarterly risky levels at 5560, 6028, 6131 and 6148. Transports traded above its May 2008 high at 5536.57, but did not end the week above that milestone at 5536.57.
 
Russell 2000 (865.28) Weekly and annual value levels are 846.16 and 784.16 with daily, quarterly, monthly and annual risky levels at 879.77, 949.02, 968.82 and 978.58. The small cap index is above its July 2007 high, which was 862.00.
 
The SOX– (449.56) My weekly value level is 414.19 with daily, quarterly, monthly and annual risky levels at 466.13, 498.75, 527.94 and 531.14. The SOX is well below its July 2007 high at 549.39.
 
Definition of MOJO – This is my term for technical momentum. I use what’s called “12x3x3 slow stochastic readings” from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0 is overbought and below 2.0 is oversold.
 
That’s today’s Four in Four. Have a great day.
  
Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576
 
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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.
 
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