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Stock Market Resiliency and Vulnerability

The resiliency of the US stock market is its ability to bend but not break. The major equity averages had a 7% pullback from mid-February to mid-March, but then traded to new year to date highs on May 2nd. Stocks have moved lower in May, but weekly closes have not been able to confirm longer term down trends. Fundamentally stocks are overvalued. ValuEngine issued a ValuEngine Valuation Warning on February 18th and a ValuEngine Valuation Watch on May 2nd. The Dow Industrial Average remains overbought on its weekly chart. A close this week below the five-week modified moving average at 12,468 shifts the weekly chart profile to negative. The downside is my annual value level at 11,491. The S&P 500, NASDAQ, Dow Transports and Russell 2000 need to close below 1332.3, 2802, 5366 and 834.65 for a full set of negative weekly charts. New monthly value and risky levels on June 1st could decide the story.
 
10-Year Note – (3.072) This yield moved from 3.052 to 3.108 overnight not holding its 200-day simple moving average at 3.087. Daily and weekly pivots are 3.118 and 3.066 as stocks gain.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1535.7) The five-week modified moving average is $1494.6 with my quarterly pivot at $1523.7, and daily, monthly and weekly risky levels at $1552.4, $1589.3 and $1594.5.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($100.65) My annual pivots are $99.91 and $101.92 with daily and weekly pivots at $102.41 and $102.31, and my semiannual risky level at $107.14.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.4289) My daily value level is 1.4131 with my quarterly pivot at 1.4308, and weekly, semiannual and monthly risky levels at 1.4534, 1.4624 and 1.5144. Note how the 200-week simple moving average provided support last week at 1.4000. Trading above 1.4308 favors stock rally.
 
Courtesy of Thomson / Reuters
 
Weekly Dow: (12,442) The weekly chart shifts to neutral with overbought MOJO and weekly close below the five-week modified moving average at 12,463. My daily pivot is 12,431. My annual value level is 11,491 with weekly risky level is 12,661.
 
Courtesy of Thomson / Reuters
 
S&P 500 (1331.1) The weekly chart profile stays negative with a weekly close below the five-week modified moving average at 1332.3. The daily chart is positive with daily closes above the 50-day simple moving average at 1329.3. My daily value level is 1328.7 with weekly risky level at 1339.2.
 
NASDAQ (2797) The weekly chart profile stays negative with a weekly close below the five-week modified moving average at 2802. The daily chart is positive with daily closes above the 50-day simple moving average at 2789. My daily value level is 2791 with weekly risky level at 2831.
 
NASDAQ 100 (NDX) (2336) The weekly chart profile stays negative with a weekly close below the five-week modified moving average at 2352. The daily chart stays negative with daily closes above the 50-day simple moving average at 2342. My daily value level is 2326 with weekly risky level at 2367.
 
Dow Transports (5409) The weekly chart profile shifts to negative with a weekly close below the five-week modified moving average at 5366. The daily chart stays positive with daily closes above the 50-day simple moving average at 5341. My weekly pivot is 5394 with a daily risky level at 5486.
 
Russell 2000 (836.26) The weekly chart profile shifted to neutral with a weekly close above the five-week modified moving average at 834.65. The daily chart is positive with daily closes above the 50-day simple moving average at 834.44. Weekly and daily pivots are 832.65 and 834.37.
 
The SOX– (433.09) The weekly chart profile stays negative with a weekly close below the five-week modified moving average at 438.74. The daily chart is neutral with daily closes below the 50-day simple moving average at 436.07. My daily value level is 429.68 with weekly risky level at 445.06.
 
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.
 
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.
 
“I Hold No Positions in the Stocks I Cover.”