The Dow Industrial Average and S&P 500 Below Annual Value Levels
No matter how high the Dow Industrials and S&P 500 traded to in 2011 there was an 85% chance that these indices would test their annual pivots.
No matter how high the Dow Industrials and S&P 500 traded to in 2011 there was an 85% chance that these indices would test their annual pivots at 11,491 on the Dow and 1210.7 on the S&P 500. The yield on the 10-Year US Treasury is below my annual pivot at 2.690 and my semiannual pivot at 2.414 with a low yield at 2.334. I anticipated strength in the US Treasury market when the 10-Year had a weekly close below my quarterly value level at 3.052. Gold reached a new all time high at $1683.5 then returned to my semiannual pivot at $1644.8, which should be a magnet for the rest of the year. Crude oil plunged below my weekly pivot at $91.41 and with no other value levels hit its long term up trend - its 200-week SMA at $83.97.
(Charts courtesy of Thomson / Reuters)
10-Year Note – (2.418) Annual and weekly value levels are 2.690 and 2.886 with semiannual and daily pivots at 2.414 and 2.438 versus this morning’s low yield at 2.334. The Freddie Mac 30-Year fixed rate mortgage fell to 4.39% this week, which is about 200 basis points above the yield on the 10-Year Treasury. The 30-Year fixed rate mortgage should be closer to 100 above the 10-Year yield, which would make the mortgage rate 3.40%. Remember my Mortgage Mulligan Program?
Comex Gold – ($1651.6) My monthly and weekly value levels are $1604.1 and $1580.3 with daily, semiannual and quarterly pivots at $1657.0, $1644.8 and $1655.8. Thursday’s new all time high is at $1683.5. Note the key reversal on the daily chart.
Nymex Crude Oil – ($86.38) The 200-week simple moving average is $83.97 with daily and weekly pivots are $88.21 and $91.41 with my annual pivots at $99.91 and $101.92 and quarterly and semiannual risky levels at $102.40 and $103.92.
The Euro – (1.4106) My weekly and quarterly value levels are 1.3997 and 1.3728 with a daily pivot at 1.4193 and semiannual risky level at 1.4752.
Daily Dow – (11,384) Semiannual value levels are 9,635 and 8,468 with daily and annual pivots at 11,374 and 11,491, the 200-day simple moving average at 11,993, and weekly, monthly, quarterly and annual risky levels at 12,422, 13,460, 13,839 and 13,890.
S&P 500 – (1200.1) Semiannual value levels are 981.3 and 855.7 with daily and annual pivots at 1201.8 and 1210.7, the 200-day at 1286.5, and weekly, monthly, quarterly and annual risky levels at 1308.8, 1444.1, 1467.0 and 1562.9.
NASDAQ – (2556) Annual and semiannual value levels are 2335, 2199 and 2049 with a daily pivot at 2568, the 200-day at 2710, and weekly, monthly, quarterly and annual risky levels at 2767, 3038, 3109 and 3243.
NASDAQ 100 (NDX) – (2207) Semiannual and annual value levels are 1951, 1861 and 1723 with a daily pivot at 2221, the 200-day at 2285, and weekly, monthly, annual and quarterly risky levels at 2354, 2553, 2590 and 2630.
Dow Transports – (4712) Semiannual value levels are 4335 and 3868 with a daily pivot at 4672, the 200-day at 5166, my annual pivot at 5179, and weekly, monthly, quarterly and annual risky levels at 5373, 5654, 6112 and 6131.
Russell 2000 – (726.80) Semiannual value levels are 577.47 and 530.04 with daily and annual pivots at 725.94 and 784.16, the 200-day at 797.42, and weekly, monthly, quarterly and annual risky levels at 817.74, 910.11, 930.83 and 978.58.
The SOX – (357.32) Annual and semiannual value levels are 270.98, 258.97 and 204.67 with daily and weekly pivots at 359.41 and 379.02, and monthly, quarterly and annual risky levels at 459.15, 493.22 and 531.14.
Equity Fundamentals – Stocks are cheap but not as cheap as in March 2009
- 79.8% of all stocks are undervalued / 20.2% of all stocks are overvalued.
- All sixteen sectors are undervalued, fourteen by double-digit percentages – the laggards are Transportation and Utilities.
- P/E Ratios – Range from 16.6 times for Auto-Tires-Trucks to 47.5 times for Oils-Energy.
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.
Editor's Note: This article was written by Richard Suttmeier, chief market strategist at ValuEngine.com, which is a fundamentally based quant research firm in Princeton, New Jersey, that covers more than 5,000 stocks every day.
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