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QE Fatigue Spreads on Weak Earnings

NEW YORK ( TheStreet) -- The stock market needs to rally significantly Friday to avoid the spread of "QE Fatigue" to additional equity averages and to ETFs that represent stock market sectors. The cause of this contagion is weaker-than-expected earnings reports as companies miss on the bottom line, or lower forward earnings guidance.

Stocks are not fundamentally cheap. At www.ValuEngine.com we show 11 of 16 sectors are overvalued, six by double-digit percentages: construction by 18.5%, medical by 12.6%, finance by 11.7%, retail-wholesale by 11.6%, consumer staples by 11.3% and utilities by 11%.

On Monday, I profiled six stocks that reported quarterly results on Monday and Tuesday in Earnings, It's All About the Bottom Line. Five of six stocks missed on the revenue line including three Dow components: DuPont (DD), 3M Company (MMM) and United Technologies (UTX).

On Tuesday, I profiled another seven stocks that reported quarterly results Wednesday through Friday in Apple, Amazon Face Tougher Scrutiny Reporting Earnings. Dow components Boeing (BA) and AT&T (T) missed on the revenue line, as did Amazon (AMZN). Apple (AAPL) missed on earnings, with revenue slightly ahead of expectations.

Analysis of the Yield on the 10-Year Treasury Note (1.828): The weekly chart continues to show risk to higher yields given a close today with the yield above the five-week modified moving average at 1.703%. My quarterly and annual value levels 2.109% and 2.502% with my semiannual pivot at 1.853% and monthly and semiannual risky levels at 1.681% and 1.389%. My semiannual pivot at 1.853% held on Thursday.

Analysis of Comex Gold ($1713.2): The weekly chart for gold will be downgraded to neutral on a close Friday below the five-week MMA at $1731.2. A close below the five-week MMA next week pulls momentum out of overbought territory and results in a negative weekly chart. My semiannual, monthly and annual value levels are $1,643.30, $1,606 and $1,575.80 with my semiannual pivot at $1,702.50, and quarterly risky levels at $1,844.90 and $1,881.40.

Analysis of Nymex Crude Oil ($86.12): The weekly chart for crude oil stays negative on a close Friday below the five-week MMA at $92.16. The 200-week simple moving average is a major support at $82.44 with monthly, annual and quarterly risky levels at $91.34, $103.58 and $107.31. The 200-week SMA has been a magnet since mid-2009.

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