This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

QE Fatigue Spreads from Transports to Semiconductors

Stocks in this article: FDX NSC SOX CAT

Analysis of the euro vs. the dollar (1.2911): The weekly chart stays positive today with a close above the five-week modified moving average at 1.2700. My semiannual pivot remains at 1.2917.

Analysis of the Dow Industrial Average (13,486): The weekly chart remains positive but overbought with the five-week modified moving average at 13,268. My annual value level lags at 12,312 with an annual risky level at 14,032.

Analysis of the Dow Transportation Average (4941): The weekly chart stays negative on a close today below its five-week modified moving average at 5075. My semiannual value levels are 4449 and 4129. A new year to date closing low below the current closing low at 4847.73 set on June 4 would be a Dow Theory Sell Signal. Keep in mind that Dow industrials generated a Dow Theory Buy Signal with a new 2012 closing high at 13,596.93 set on Sept. 20. This tug of war continues.

Analysis of the S&P 500 (1460.3): The weekly chart remains positive but overbought with a close today above the five-week modified moving average at 1422.2. My annual value level lags at 1363.2 with annual risky level at 1562.9.

Analysis of the Nasdaq (3137): The weekly chart remains positive but overbought with a close today above the five-week modified moving average at 3085. My annual value level is 2698 with my annual risky level at 3232.

Analysis of the Russell 2000 (843.54): The weekly chart remains positive but overbought with a close today above the five-week modified moving average at 827.66. My annual pivot remains at 836.15 with the all time at 868.57 set on May 2, 2011.

Analysis of the Semiconductor Index or SOX (385.46): The weekly chart shifts to negative on a close today below the five-week modified moving average at 395.54. My semiannual value level is 326.30 with the Sept. 14 high at 410.82.

It appears that QE fatigue is spreading the SOX as shown on the daily chart below. The chart shows the quick deterioration from the Sept. 14 high at 410.82 then the break of the 50-day and 200-day simple moving averages on Sept. 24 to a low of 372.00 on Sept. 26.

The SOX is still below its 50-day and 200-day simple moving averages at 392.23 and 395.73. The decline from high to low totaled 9.5%, which is a significant divergence given the hype of QE3, and is thus the next symptom of QE fatigue.

Source: Thomson/Reuters

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs