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Buy weakness when more than 90% of all stocks are undervalued.

|Includes: DIA, GLD, QQQ, SPY, iShares 20+ Year Treasury Bond ETF (TLT)

So far this week I have reported that more than 90% of all stocks were undervalued according to ValuEngine. Subscribers to my ValuTrader Model portfolio were alerted to cover one of three shorts on Diamonds (NYSEARCA:DIA) and S&P Sector SPDRs (NYSEARCA:SPY) and to add to long positions in five names in the model portfolio on weakness Monday and Tuesday. I noted that the technicals for the Dow Industrial Average were negative on monthly, weekly and daily charts. It was a case of buying weakness on cheap valuations as Value Levels are tested and sell strength to Risky Levels on market rebounds. This has been the investment strategy even with new year-to-date lows on Tuesday. The key technical was that the Dow Industrial Average closed above its 200-week and 120-month simple moving averages at 10,648 and 10,606 after a low of 10,404.49.

 
10-Year Note – (1.896) Daily, monthly, semiannual, quarterly and annual value levels are 1.972, 2.222, 2.414, 2.669 and 2.690 with semiannual and weekly risky levels at 1.672 and 1.465. My semiannual risky level at 1.672 was tested on September 23rd.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1641.4) Daily, semiannual and annual value levels are $1616.9, $1469.9 and $1,356.5 with my semiannual pivot at $1644.8, and quarterly, monthly, and weekly risky levels at $1738.4, $1811.4 and $1866.8, and the September all time high at $1923.7. The 200-day simple moving average is $1531.6 with the 50-day at $1747.0 with the magnet at $1644.8..
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($79.74) Tuesday’s year-to-date low is $74.95 with daily and weekly pivots at $79.97 and $80.30 with monthly, quarterly and annual risky levels at $98.51, $100.34, $99.91 and $101.92.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.3345) My quarterly value level is 1.2598 with daily and weekly pivots at 1.3351 and 1.3511, and monthly and semiannual risky levels at 1.4579, 1.4752 and 1.4872. The daily chart shows the 50-day simple moving average at 1.4017 falling below the 200-day at 1.4056 in what’s called a “Death Cross”.
 
Courtesy of Thomson / Reuters
 
Daily Dow - (10,940) The new YTD low is 10,404.49 with the 200-week and 120-month simple moving averages at 10,648 and 10,606, my weekly pivot at 10,713, daily risky level at 11,152, my annual pivot at 11,491, the 50-day SMA at 11,284, and monthly and quarterly risky levels at 12,091 and 12,507. Semiannual value levels are 9,635 and 8,468.
 
Courtesy of Thomson / Reuters
 
S&P 500 (1144.0) The new YTD low is 1074.77 with semiannual value levels at 981.3 and 855.7, my weekly pivot at 1116.8, daily risky level at 1150.8, the 50-day SMA at 1183.4, and annual, monthly, quarterly and annual risky levels at 1210.7, 1259.8, 1303.7 and 1562.9.
 
NASDAQ (2461) The new YTD low is 2298.89 with my annual pivot at 2335, semiannual value levels at 2199 and 2049, my weekly and daily pivots at 2404 and 2431, the 50-day SMA at 2521, and monthly, quarterly and annual risky levels at 2680, 2807 and 3243.
 
NASDAQ 100 (NDX) (2183) The YTD low is 2034.92 with semiannual and annual value levels at 1951, 1861 and 1723, my weekly and daily pivots at 2140 and 2154, the 50-day and 200-day SMAs at 2204 and 2290, and monthly, quarterly and annual risky levels at 2312, 2440 and 2590.
 
Dow Transports (4329) The new YTD low is 3950.66 with my semiannual value level at 3868, my weekly, daily and semiannual pivots at 4058, 4312 and 4335, the 50-day SMA at 4521, and monthly, annual and quarterly risky levels at 4980, 5179 and 5359.
 
Russell 2000 (658.09) The new YTD low is 601.71 with semiannual value levels are 577.47 and 530.04, my weekly and daily pivots at 630.55 and 654.02, the 50-day SMA at 696.19, and monthly, annual and quarterly risky levels at 778.77, 784.16 and 802.96.
 
The SOX– (350.78) The new YTD low is 322.24 with annual and semiannual value levels at 270.98, 258.97 and 204.67, my daily and weekly pivots at 337.53 and 346.91, the 50-day SMA at 356.32, and monthly and quarterly risky levels at 346.91, 363.01 and 417.63.
 
Equity Fundamentals – Stocks are extremely undervalued.
  • 89.5% of all stocks are undervalued / 10.5% of all stocks are overvalued. In March 2009 we saw 91.1% of all stocks undervalued.
  • All sixteen sectors are undervalued by double-digit percentages, fourteen by 22.8% to 32.3%. Back in March 2009 the sectors were undervalued by 33% to 45%. – Check out and subscribe to www.ValuEngine.com.
 
VE Morning Briefing – If you want expanded analysis of the US Capital Markets including a Fearless Prediction of the Week and a Stock of the Day go to this link and sign up: http://www.valuengine.com/nl/mainnl?nl=D
 
ValuTrader Model Portfolio – If you want to learn how to “Buy and Trade” use this link and sign up: http://www.valuengine.com/nl/mainnl?nl=V
 
ETF Weekly – If you want my Value Levels and Risky Levels for 30 Electronically Traded Funds use this link and sign up: http://www.valuengine.com/nl/mainnl?nl=U
 
ValuEngine FDIC Evaluation Report – In this report I slice and dice the FDIC Quarterly Banking Profile. We publish a ValuEngine List of Problem Banks in this publication: http://www.valuengine.com/nl/mainnl?nl=C
 
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.
 
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.
 
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.”