Stocks are Cheap, but the Technicals are Weak!

8/4/2019 Stocks are Cheap, but the Technicals are Weak!

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks

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August 22, 2011 St ock s are Cheap, but t he Technic als are Weak!

At ValuEngine we cover more than 5,500 stocks and 89.1% are undervalued. All sixteen sectors

are undervalued with thirteen undervalued by 22.7% to 34.0%. The technicals for the majorequity averages have deteriorated quickly since the Dow Transports reached an all time high a5,627.85 on July 7th. Transports are down 25.0% since then and below its 200-week simplemoving average at 4334. The Russell 2000 and SOX are down 25.0% and 27.6% since their May2nd highs. Focusing on the Dow Industrial Average a close this week below the 200-weeksimple moving average at 10,729 is the next technical warning. A monthly close below the 120-month simple moving average at 10,568 leaves us with no value levels until my semiannualvalue levels at 9,635 and 8,468 as the monthly chart turns negative. Another warning would becloses below my NASDAQ annual pivot at 2335.

10-Year Note (2.071) Semiannual, weekly, annual and quarterly value levels are 2.414, 2.428, 2.690and 3.053 with a daily pivot at 2.079, and my semiannual risky level at 1.672.

Courtesy of Thomson / Reuters


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Comex Gold ($1853.3) Weekly, quarterly, semiannual and monthly value levels are $1825.1,$1655.8, $1644.8 and $1604.1 with a daily pivot at $1854.5, and todays all time high at $1898.6.


Nymex Crude Oil ($82.64) The 200-week simple moving average is $83.96 with daily and weeklyrisky levels at $88.79 and $91.54, my annual pivots at $99.91 and $101.92 and quarterly and

semiannual risky levels at $102.40 and $103.92.



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The Euro (1.4393) My quarterly value level is 1.3728 with daily and weekly pivots at 1.4345 and1.4492, and semiannual risky level at 1.4752.


Weekly Dow: (10,818) The 200-week and 120-month simple moving averages are 10,729 and 10,568with a daily pivot at 10,995, my annual pivot at 11,491, the five-week modified moving average at11,767 and weekly risky level at 11,819. Semiannual value levels are 9,635 and 8,468.



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S&P 500 (1123.5) Semiannual value levels are 981.3 and 855.7 with daily and annual risky levels at1149.9 and 1210.7.

NASDAQ (2342) My annual value level is 2335 with daily and weekly risky levels at 2414 and 2637.

NASDAQ 100 (NDX) (2038) Semiannual and annual value levels are 1951, 1861 and 1723 withdaily and weekly risky levels at 2097 and 2309.

Dow Transports (4222) My semiannual value level is 3868 with a semiannual pivot at 4335, anddaily, weekly and annual risky levels at 4364, 4744 and 5179.

Russell 2000 (651.69) Semiannual value levels are 577.47 and 530.04 with daily, weekly andannual risky levels at 669.81, 730.16 and 784.16.

The SOX (326.32) Annual and semiannual value levels are 270.98, 258.97 and 204.67 with daily

and weekly risky levels at 344.05 and 357.94.

Equity Fundamentals Stocks are cheap, but not as cheap as in March 2009. 89.1% of all stocks are undervalued / 10.9% of all stocks are overvalued. In March 2009, 91.1%

of all stocks were undervalued. All sixteen sectors are undervalued, all by double-digit percentages, thirteen by 22.7% to

34.0%. Back in March 2009 the sectors were undervalued by 33% to 45%. Check out andsubscribe to www.ValuEngine.com.

The FDIC kicked bank failures down the road. The FDIC closed 68 community banks so far onBank Failure Fridays in 2011, and almost all had significant overexposures to Commercial Real Estateloans including Construction & Development loans. Based upon the regulatory guidelines the FDIC

should have begun to close overexposed banks in 2007, but they ignored the guidelines and onlybegan to seize failed banks in 2008 with just 25 failures. 140 banks failed in 2009 with a peak of 50 inthe third quarter. 157 banks failed in 2010. We know have 68 bank failures in 2011, and 390 since theend of 2007. I still predict 500 to 800 bank failures in total by the end of 2012 into 2013. There arstill 759 of the 7,574 FDIC-Insured Financial Institutions overexposed to C & D loans. Another 1,466community banks are overexposed to CRE. Pipeline Risk, the ratio of CRE loans to CRE loancommitments, 3,810 community banks have a Pipeline of 80% or higher of their real estate loansfunded, 50.3% of all FDIC- insured banks. C&D loans total $295.5 billion and including CRE loans tota$1.06 trillion, a total of $1.356 trillion in legacy problem loans that remain on bank balance sheets.There is talk that community banks may be allowed to amortize loses on CRE loans over a seven yeaperiod, when most should be liquidated.

VE Morning Briefing If you want expanded analysis of the US Capital Markets including a FearlessPrediction of the Week and a Stock of the Day go to this link and sign up:http://www.valuengine.com/nl/mainnl?nl=D

ValuTrader Model Portfolio If you want to learn how to Buy and Trade use this link and sign up:http://www.valuengine.com/nl/mainnl?nl=V

ETF Weekly If you want my Value Levels and Risky Levels for 30 Electronically Traded Funds usethis link and sign up: http://www.valuengine.com/nl/mainnl?nl=U


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ValuEngine FDIC Evaluation Report In this report I slice and dice the FDIC Quarterly BankingProfile. My August report will be published today. We publish a ValuEngine List of Problem Banks

in this publication: http://www.valuengine.com/nl/mainnl?nl=CDefinition of MOJO This is my term for technical momentum. I use whats called 12x3x3 slowstochastic readings from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0is 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 tothe Risky Level.

Buy and Trade Strategies for Short Positions

Value Level The price at which you remove a single short position or reduce a multipleshort position on share price weakness. This is done on a GTC Limit Order to buy weaknesto the Value Level.

Risky Level The price at which you establish an addition short position on share pricestrength. This is done on a GTC Limit Order to sell strength to the Risky Level.

Richard SuttmeierChief Market StrategistValuEngine.com

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As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, andquarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. Mynewest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. You can go tohttp://www.valuengine.com/nl/mainnl to review sample issues and find out more about my research.

I Hold No Positions in the Stocks I Cover.

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Stocks are Cheap, but the Technicals are Weak!