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Choppy Trading Continues As Ranges Hold

|Includes: DIA, GLD, QQQ, SPY, iShares 20+ Year Treasury Bond ETF (TLT), XLE
The ValuEngine Valuation Model shows fifteen of sixteen sectors as overvalued. The ValuEngine Forecasting Model shows downside risk to stocks for the next three years. The S&P 500, Dow Transports and Russell 2000 remain below 2011 highs at 1370.58, 5627.85 and 868.57 respectively with the highs for Transports and small caps being all time highs. My overall neutral zone is between my quarterly value levels at 12,478 Dow Industrials, 1305.4 SPX and 2777 NASDAQ and quarterly / annual risky levels at 1363.2 S&P 500, 5448 Dow Transports and 836.15 Russell 2000. The yield on the 10-Year note trades around its 50-day simple moving average at 1.941. Gold continues to fail between my quarterly pivots at $1725.5 and $1740.9 with the 50-day and 200-day SMAs at $1667.0 and $1657.4. Crude oil has moved above its quarterly pivot at $99.87. The euro vs the dollar remains above its 50-day SMA at 1.3025.

10-Year Note - (1.933) My annual value is 2.502 with weekly and daily value levels at 2.038 and 2.094, and annual, quarterly and monthly risky levels are 1.903, 1.797, 1.687 and 1.347.

Courtesy of Thomson / Reuters

Comex Gold - ($1721.8) Daily, semiannual, annual and weekly value levels are $1695.1, $1659.5, $1635.8, $1575.8, $1593.9 with weekly and quarterly pivots at $1735.0, $1725.5 and $1740.9 and monthly risky level at $1816.4.

Courtesy of Thomson / Reuters

Nymex Crude Oil - ($101.19) Monthly and semiannual value levels are $85.62 and $79.83 with my quarterly pivot at $99.87, and daily, weekly, semiannual and annual risky levels at $102.09, $104.54, $104.84, and $103.58 and $117.00.

Courtesy of Thomson / Reuters

The Euro - (1.3117) Semiannual, weekly, monthly, and quarterly value levels are 1.2980, 1.2971, 1.2945, and 1.2499 with daily, and annual and semiannual risky levels at 1.3227, 1.4239 and 1.4405.

Courtesy of Thomson / Reuters

Daily Dow: (12,878) Quarterly, annual, monthly and semiannual value levels are 12,478, 12,312, 11,557, 8,425 and 8,336 with my quarterly pivot at 12,796, and daily, weekly and annual risky levels at 13,026, 13,276 and 14,032.

Courtesy of Thomson / Reuters

S&P 500 - (1350.5) Monthly and semiannual value levels are 1176.1, 841.7 and 829.9 with my quarterly pivots at $1305.4 and $1331.7, and daily, annual and weekly risky levels at 1370.8, 1363.2, 1391.9 and 1562.9. The May 2, 2011 high is 1370.58.

NASDAQ - (2932) Quarterly, annual, monthly and semiannual value levels are 2849, 2777, 2698, 2512, 2012 and 1952 with daily, weekly and annual risky levels at 2974, 2984 and 3232.

NASDAQ 100 (NDX) - (2575) Quarterly, weekly, annual, monthly and semiannual value levels are 2471, 2422, 2412, 2300, 2280, 1851 and 1743 with daily, weekly and annual risky levels at 2608, 2610 and 2603.

Dow Transports - (5322) Monthly and semiannual value levels are 4522, 4407 and 3778 with a daily pivot at 5329, and weekly, quarterly, and annual risky levels at 5498, 5448, 5861 and 6111. The all time high was set at 5627.85 on July 11, 2011.

Russell 2000 - (824.79) Monthly and semiannual value levels are 662.90, 572.90 and 510.81 with a quarterly pivot at 824.46, and daily, quarterly, weekly, and annual risky levels at 837.76, 829.03, 843.28, 836.15 and 969.09. The all time high was set at 868.57 on May 2, 2011.

The SOX- (423.46) Quarterly, monthly, annual and semiannual value levels are 390.17, 323.52, 269.80, 277.90 and 194.47 with a quarterly pivot at 423.32, and daily, weekly and annual risky levels at 427.78, 444.44 and 520.61. The 2011 high is 474.33 set on February 18, 2011.

ValuEngine Valuation Model - Sectors have shifted to Overvalued from Undervalued.
 

  • 57.0% of all stocks are undervalued / 43.0% of all stocks are overvalued. Back on October 4th - 93.5% of all stocks were undervalued.
  • Fifteen of sixteen sectors are overvalued; ten are overvalued by double-digit percentages. (10.1% OV to 18.4% OV) Back in March 2009 the sectors were undervalued by 33% to 45%. - Check out and subscribe to www.ValuEngine.com.

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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 The December FDIC report with complete analysis of the Q3 Quarterly Banking Profile is now available. I track the continuing slow improvement to the housing market and banking system, but recognize that we are not out of the war.

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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 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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