Stocks are even more overvalued as the Dow Jones Industrial Average, S&P 500 and the Russell 2000 set new all-time intra-day highs last Friday at 16,287.84, 1,823.75 and 1,147.12.
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At these highs the Dow tested my weekly risky level at 16,287 and the S&P 500 tested its weekly risky level at 1,823.4. The Russell had a weekly pivot at 1,116.90 which provided stability following a low of 1,110.43 last Monday.
Meanwhile the Nasdaq set another new multi-year intra-day high at 4,111.93 on Friday just shy of this month’s risky level at 4,114. The Dow Transportation Average stayed shy of its all-time intra-day high at 7,304.49 set on Dec. 2.
As 2013 nears its end, this week’s overall value level is 1,129.47 Russell 2000 with a weekly pivot at 4,090 Nasdaq and weekly risky levels at 16,365 Dow Industrials, 1,831.8 S&P 500 and 7,338 on Dow Transports. My monthly value level is 6,941 Dow Transports with monthly pivots at 16,093 Dow Industrials, 1,810.2 S&P 500, 4,114 Nasdaq and 1,143.82 Russell 2000.
If the major averages become volatile my semiannual and quarterly pivots are 1,743.5 S&P 500; 3,759 and 4,025 Nasdaq; 7,104 and 7,205 Dow Transports and 1,089.42 Russell 2000. Semiannual and quarterly risky levels are 16,490 and 16,775 Dow Industrials,; 1,853.8 S&P 500 and 1,163.21 Russell 2000. My annual value levels at 12,696 Dow Industrials; 1,348.3 S&P 500; 2,806 Nasdaq; 5,469 Dow Transports and 809.54 Russell 2000.
In two weeks I will have new monthly, quarterly, semiannual and annual value levels, risky levels and pivots based upon the December 31, 2013 closes. My preliminary analysis suggests that the upside will be limited to 3.5% to 5.5% while the downside risk will be 10% to 15%.
Meanwhile the ValuEngine valuation warning continues with 83.9% of all stocks overvalued with 54.7% overvalued by 20% or more. The stocks in the ValuTrader Model portfolio–a subscription product that I produce as chief market strategist at ValuEngine.com–did not change last week.
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Let’s review the profiles for the four Dow stocks that remain in the model portfolio.
Cisco Systems has a buy rating and is 1.2% undervalued. Subscribers have a GTC limit order to buy weakness to my annual value level at $17.77 and a GTC limit order to sell one of two positions on strength to my semiannual risky level at $22.39.
Coca Cola (KO) ($40.04) has a buy rating and is 9.4% overvalued. Subscribers have a GTC limit order to sell one of two positions on strength to my weekly risky level at $41.03.
McDonald's (MCD) ($96.51) has a buy rating and is 4.4% overvalued. Subscribers have a GTC limit order to sell one of four positions on strength to my semiannual risky level at $98.47.
AT&T has a buy rating and is 3.1% undervalued. Subscribers have a GTC limit order to buy weakness to my semiannual value level at $32.14 and a GTC limit order to sell one of three positions on strength to my weekly risky level at $34.69.
I have no positions in the stocks mentioned in today’s story.