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Key Levels Hold, Pivots Drive Cheap Stocks Higher.

|Includes: DIA, GLD, QQQ, SPY, iShares 20+ Year Treasury Bond ETF (TLT)
The daily charts for the major equity averages remain overbought, as weakness holds the five-week modified moving averages on the weekly charts. The Dow Industrial Average held its five-week MMA at 11,301 on Tuesday and the Dow and SPX returned to their annual pivots at 11,491 and 1210.7 yet again, and then these averages powered to tests of their week’s risky levels at 11,650 and 1230.6 respectively. The 50-day simple moving averages are key levels: the 10-Year yield above 2.062. Gold is well below $1750.5. Crude oil is above $84.98. The euro versus the dollar is below 1.3909. Those following my methodology of using GTC Limit Orders to Buy Weakness to Value Levels and to Sell Strength to Risky Levels know that this strategy takes the emotions out of trading, even in short time horizons! Let the volatility work for you!!!!
 
10-Year Note – (2.192) Semiannual, daily, quarterly and annual value levels are 2.414, 2.415, 2.669 and 2.690 with my monthly pivot at 2.222, and weekly, and semiannual risky levels at 2.033 and 1.672, which was tested on September 23rd. The 50-day SMA is 2.062.
 
Courtesy of Thomson / Reuters
 
Comex Gold – ($1663.4) Weekly, semiannual and annual value levels are $1625.8, $1469.9 and $1,356.5 with my semiannual pivot at $1644.8, and daily, quarterly, monthly risky levels at $1686.7, $1738.4 and $1811.4, and the September 6th all time high at $1923.7. The 200-day is $1543.5 with the 50-day at $1750.5.
 
Courtesy of Thomson / Reuters
 
Nymex Crude Oil ($88.31) The October 4th year-to-date low is $74.95 with my weekly pivot at $87.14, the 200-week at $83.55, the 50-day at $84.98, and daily, monthly, quarterly and annual risky levels at $89.42, $98.51, $100.34, $99.91 and $101.92.
 
 
Courtesy of Thomson / Reuters
 
The Euro – (1.3762) Weekly, and quarterly value levels are 1.3202 and 1.2598 with daily, monthly and semiannual risky levels at 1.3988, 1.4579, 1.4752 and 1.4872. The 50-day, 200-day and 200-week SMAs are 1.3909, 1.4079 and 1.3991.
 
Courtesy of Thomson / Reuters
 
Daily Dow - (11,577) The October 4th YTD low is 10,404.49 with annual and weekly pivots at 11,491 and 11,650, and daily, monthly and quarterly risky levels at 11,798, 12,091 and 12,507 with the YTD high at 12,876.00. Semiannual value levels are 9,635 and 8,468. The 50-day is 11,213 with the 200-day at 11,966.
 
Courtesy of Thomson / Reuters
 
S&P 500 (1225.4) The October 4th YTD low is 1074.77 with semiannual value levels at 981.3 and 855.7, my annual pivot at 1210.7, weekly and daily risky levels at 1230.6 and 1242.4, and monthly, quarterly and annual risky levels at 1259.8, 1303.7 and 1562.9. The YTD high is 1370.58. The 50-day is 1174.5 with the 200-day at 1275.0.
 
NASDAQ (2657) The October 4th YTD low is 2298.89 with my annual value level at 2335, semiannual value levels at 2199 and 2049, monthly, weekly, daily and quarterly risky levels at 2680, 2717, 2705 and 2807, and the YTD high at 2887.75. My annual risky level is 3243. The 50-day is 2511 with the 200-day at 2693.
 
NASDAQ 100 (NDX) (2365) The YTD low is 2034.92 with semiannual and annual value levels at 1951, 1861 and 1723, my monthly pivot at 2312, weekly, daily and quarterly risky levels at 2427, 2415 and 2440, the YTD high at 2437.42 and annual risky level at 2590. The 50-day is 2207 with the 200-day at 2293.
 
Dow Transports (4700) The October 4th YTD low is 3950.66 with semiannual value levels at 4335 and 3868, my weekly pivot at 4687, and daily, monthly, annual and quarterly risky levels at 4757, 4980, 5179 and 5359, and the YTD high at 5627.85. The 50-day is 4454 with the 200-day at 5037.
 
Russell 2000 (709.34) The October 4th YTD low is 601.71 with semiannual value levels at 577.47 and 530.04, my weekly pivot at 713.00, and daily, monthly, annual and quarterly risky levels at 714.87, 778.77, 784.16 and 802.96, and the YTD high at 868.57. The 50-day is 683.94 with the 200-day at 781.71.
 
The SOX– (378.66) The October 4th YTD low is 322.24 with annual and semiannual value levels at 270.98, 258.97 and 204.67, my monthly pivot at 363.01, and daily, weekly and quarterly risky levels at 387.83, 392.52 and 417.63, and the YTD high at 450.79. The 50-day is 354.88 with the 200-day at 409.17.
 
Equity Fundamentals – Stocks are extremely undervalued.
  • 81.5% of all stocks are undervalued / 18.5% of all stocks are overvalued. In March 2009 we saw 91.1% of all stocks undervalued.
  • All sixteen sectors are undervalued, fifteen by double-digit percentages, five by 20.0% to 24.6, as the 30-Year bond yield starts to rise putting a drag on valuations. 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
 
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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.
 
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