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Stocks Cascade Lower – Gold Rebounds Above My Annual Pivot.

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

Markets in Review: Asian stocks were lower on Friday. The Nikkei 225 ended their session at 8,611 - down 2.99% on the day. The Hang Seng ended their session at 18,952 - down 1.30% on the day. European exchanges opened lower on Friday after a weak day on Thursday. The FTSE 100 ended Thursday at 5,338 - down 1.24%. The DAX ended Thursday at 6,309 - down 1.18%. The CAC 40 ended Thursday at 3,012 - down 1.20%. The yield on the 10-Year US Treasury declined to a new year to date low at 1.689 with the September 23rd record low yield at 1.671 after my monthly value level at $1525.8 held. Gold rebounded above my annual pivot at $1575.8 to $1589.5 this morning. In my Wednesday TheStreet.com story, I recommended buying gold for a short-term trade. Crude oil traded as low as $91.60 per barrel this morning well below its 200-day simple moving average at $96.24. The euro versus the dollar traded down to 1.2646 this morning well below my semiannual pivot at 1.2980.

Today's Four in Four Key Levels:
 

  1. Yields - The yield on the 10-Year Treasury is below my semiannual pivot at 1.903 with a monthly pivot at 1.734, the Sept 23rd low yield at 1.671 and quarterly risky level at 1.407.
  2. Commodities - Gold has a monthly value level at $1525.8 the Troy ounce with an annual pivot at $1575.8 and semiannual risky level at $1635.8. For Crude oil my semiannual value level is $79.83 with the 200-day SMA at $96.24.
  3. Currencies - The euro versus the dollar shows a monthly value level at 1.2257 with my semiannual pivot at 1.2980.
  4. Equities - The Dow Industrial Average is below my quarterly pivot at 12,794 with my annual value level at 12,312. The S&P 500 is below quarterly and annual pivots at 1337.7 and 1363.2. The NASDAQ is below my quarterly pivot at 2911 with my annual value level at 2698. Dow Transports is down 1.6% YTD with my semiannual value level at 4407 and monthly risky level at 5385. The Russell 2000 has a semiannual value level at 572.90 with a monthly risky level at 813.56. It appears that my prediction that Dow Transports and Russell 2000 will not return to their lag 2011 all time highs at 5627.85 set on July 7, 2011 and 868.57 set on May 2, 2011 in 2012 is on the money.
  5. ValuEngine Valuations - Stocks remain cheap fundamentally with 76.3% of all stocks undervalued, but keep in mind that on October 4th 93.5% were undervalued. A factor is the low 30-Year bond yield at 2.80%. Ten sectors are undervalued with six overvalued. Autos-Tires-Trucks - 25.0% UV, Basic Materials - 21.9% UV, Oils-Energy - 13.1% UV, Business Services - 11.1% UV, and Consumer Discretionary - 10.8%.

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