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All Rallies End With A Cycle High – One Was May 2nd Last Year.

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

Markets in Review: Asian stocks were higher on Wednesday. The Nikkei 225 ended their session at 9,380 - up 0.31% on the day. The Hang Seng ended their session at 21,356 - up 1.24% on the day. European exchanges opened mixed this morning. As of 4:30 AM, The FTSE 100 was at 5,807 down 0.08%. The DAX was closed on May Day and is at 6,826 up 0.96%. The CAC 40 was also closed on May Day is at 3,252 up 1.23%. The yield on the 10-Year US Treasury ended Tuesday at 1.952 below its 50-day and 200-day simple moving averages converged at 2.077 and 2.072. Tuesday's stock market rally was fueled by the better than expected ISM manufacturing index, but gains faded in afternoon trading. The Russell 2000 closed slightly in the red. Gold declined from $1672.3 the Troy ounce to $1657.5, and traded as low as $1652.4 overnight still below the 50-day and 200-day simple moving averages at $1673.8 and $1698.3. Crude oil traded between $104.39 per barrel and $106.43 above its 50-day simple moving average at $105.21. The euro versus the dollar slipped below its 50-day simple moving average at 1.3209 overnight. The Dow Industrial Average traded down to 13,174.65 then rebounded to 13,338.66 taking out the March 16th high at 13,289.08. The NASDAQ's traded down to 3041.62 then rebounded to 3085.40 staying below its March 27th high at 3134.17.

Today's Four in Four Key Levels:
 

  1. Yields - Traders and investors have had numerous opportunities to sell the 10-Year US Treasury at my semiannual pivot at 1.903.
  2. Commodities - Gold held my semiannual pivot at $1659.4 on Tuesday in an effort to return to the 50-day and 200-day simple moving averages at $1673.8 and $1698.3. Crude oil is above my semiannual pivot at $104.84 with this month's risky level at $108.53.
  3. Currencies - The euro versus the dollar remains above my semiannual value level at 1.2980 with my weekly pivot at 1.3180 and quarterly risky level at 1.3366.
  4. Equities - I called for choppy trading in May, and "May Day" was an example of this call. Dow Industrials set a new 2012 high at 13,338.66 shy of May's risky level at 13,354. The S&P 500 tested my weekly risky level at 1415.8, and is shy of its March 12th high at 1419.15. The NASDAQ held its monthly pivot at 3041 well below its March 2012 high at 3134.17. Dow Transports stayed shy of its weekly and monthly risky levels at 5336 and 5386 and well below its July 7, 2011 all time high at 5627.85. The Russell 2000 tested its quarterly risky level at 829.34 then closed at 815.89, down slightly on the session. The small cap index is well below its all time high of 868.57 set a year ago today.
  5. ValuEngine Valuations - Stocks remains reasonably priced fundamentally with 58.5% of all stocks undervalued with six undervalued sectors and ten overvalued sectors. Aerospace is 10.6% UV, Computers & Technology 19.2% OV, Finance 11.7% OV, Medical 15.4% OV, and Retail-Wholesale 14.3% OV.

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