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The weekly charts are positive for the major equity averages.

The daily and monthly charts are overbought for the major equity averages, the weekly charts are positive, and the fundamentals are overvalued. With the Transports and NASDAQ 100 (NDX) testing an all time high and year to date highs, the May 2nd highs loom at 12,876 Dow Industrial Average, 1370.58 SPX, 2887.75 NASDAQ, and 868.57 Russell 2000. This week’s value levels are 12,047 Dow Industrials, 1285.1 SPX, 2679 NASDAQ, 2239 NDX, 5317 Transports and 803.82 for the Russell 2000. The spreads between levels reflect the increased volatility I am expecting.
 
10-Year Note – (3.021) The weekly chart shows that the decline in yield on the 10-Year US Treasury is overdone, but this is offset by the weekly close below my quarterly pivot at 3.052. My daily value level is 3.283 with the 200-week simple moving average at 3.434 and weekly risky level at 2.870.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1543.5) The weekly chart is neutral with a daily pivot at $1538 5, and monthly and weekly risky levels at $1547.9 and $1560.3. My semiannual value level is $1469.9. We need a weekly close in July above $1547.9 to inflate the bubble further as semiannual and quarterly risky levels are $1644.8 and $1655.1. A trading range was set in early May when gold dropped from $1577.4 on May 2nd to $1462.5 on May 5th.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($96.28) The weekly chart remains negative with a weekly close below the five-week modified moving average at $97.21. The 200-day simple moving average is $93.60 with the 50-day at $99.15. My weekly value level is $94.24 with annual pivots at $99.91 and $101.9, and quarterly and semiannual risky levels at $102.40 and $103.93.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.4257) The weekly chart remains negative on a weekly close below the five-week modified moving average at 1.4331. Monthly and quarterly value levels are 1.4133 and 1.3728 with daily, weekly and semiannual risky levels at 1.4483, 1.4553, 1.4752 and 1.4872. The 200-week simple moving average at 1.4021 is important support.
 
Courtesy of Thomson / Reuters
 
Weekly Dow: (12,657) The weekly chart is positive with rising MOJO and a weekly close above the five-week modified moving average at 12,346. My weekly and annual value levels are 12,047 and 11,491 with monthly, quarterly and annual risky levels at 13,155, 13,839 and 13,890. The up trend support that held in June is now at 11,954. This trend has to break to target 11,491, and potentially to the 200-week simple moving average at 10,789.
 
Courtesy of Thomson / Reuters
 
S&P 500 (1343.8) The weekly chart stays positive on a weekly close above the five-week modified moving average at 1314.3.My weekly value level is 1285.1 with daily, monthly and quarterly risky levels at 1382.6, 1422.8 and 1467.0.
 
NASDAQ (2860) The weekly chart stays positive on a weekly close above the five-week modified moving average at 2760. My weekly value level is 2679 with daily, monthly, quarterly and annual risky levels at 2936, 2975, 3109 and 3243.
 
NASDAQ 100 (NDX) (2406) The weekly chart stays positive on a weekly close above the five-week modified moving average at 2316. My weekly value level is 2239 with daily, monthly, annual and quarterly risky levels at 2468, 2483, 2590 and 2630. Set a new multi-year high at 2418.99 last week.
 
Dow Transports (5548) The weekly chart stays positive on a weekly close above the five-week modified moving average at 5356. My weekly and annual value levels are 5317 and 5179 with daily, monthly, quarterly and annual risky levels at 5728, 5736, 6112 and 6131. Set a new all time high at 5627.85 last week.
 
Russell 2000 (852.57) The weekly chart stays positive on a weekly close above the five-week modified moving average at 822.85. My weekly and annual value levels are 803.82 and 784.16 with daily, monthly, quarterly and annual risky levels at 873.69, 924.95, 930.83 and 978.58.
 
The SOX– (413.80) The weekly chart shifts to positive on a weekly close above the five-week modified moving average at 415.20. My weekly value level is 384.47 with daily, monthly and quarterly risky levels at 428.04, 482.54 and 493.22.
 
Equity Fundamentals – Overvalued
  • 49.2% of all stocks are undervalued / 50.8% of all stocks are overvalued
  • Only three sector is undervalued - Basic Materials by just 3.1%
  • Thirteen sectors are overvalued – Transportation by 10.6%
  • P/E Ratios – Range from 22.5 times for Aerospace to 57.8 times for Oils-Energy. 12-month forward P/E ratio is an over-quoted metric that in my opinion is inaccurate. It’s based upon Wall Street estimates, which are more and more questionable as coverage gets diluted. There are several sources for P/E ratios and their figures seldom match.
 
It’s more important to learn how to “Buy and Trade”
Buy and Trade Strategies for Long Positions
  • Value Level – The price at which you establish an additional long position on share price weakness. This is done on a GTC Limit Order to buy weakness to the Value Level.
  • Risky Level – The price at which you remove a single long position or reduce a multiple long position on share price strength. This is done on a GTC Limit Order to sell strength to the Risky Level.
 
Buy and Trade Strategies for Short Positions
  • Value Level – The price at which you remove a single short position or reduce a multiple short position on share price weakness. This is done on a GTC Limit Order to buy weakness to the Value Level.
  • Risky Level – The price at which you establish an addition short position on share price strength. This is done on a GTC Limit Order to sell strength to the Risky Level.
 
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.”