Santa Claus Mojo Continues Despite the Cliff
NEW YORK (TheStreet) -- Today is month end and thus today's closes are inputs to my proprietary analytics. On Monday we will have new weekly and monthly value levels, pivots and risky levels. It appears that stock Mojo should be strong enough to continue the Santa Claus rally that began from the lows of two weeks ago.
Stocks are fundamentally neutral according to www.ValuEngine.com as 60% of all stocks are undervalued, but 11 of 16 sectors are overvalued. The construction sector is the most overvalued by 14.6% followed by the consumer staples sector overvalued by 14.4%. The cheapest sector is multi-sector conglomerates at 6.9% undervalued.
On Monday, I wrote, Amazon, Google Wake Up To Downgrades as these stocks were downgraded to hold from buy, and thus became buy-and-trade stocks based upon pure Santa Claus Mojo.
On Tuesday, I wrote, Apple Wakes Up to a Downgrade to hold from buy and thus also became a buy-and-trade stock based upon Santa Claus Mojo.Amazon, Apple & Google were the subject of my Nov. 21 story Santa Claus Rally Eyed for Online Leaders Apple, Amazon and Google where I explained why these stocks had the ability to lead a Santa Claus rally. On Wednesday, I wrote, Homebuilders Are Risky Bets Despite Positive Data where I explained that the home builders continued to be overvalued and trading on pure Mojo and that investors should book profits in these stocks. On Thursday, I wrote, Retail Bubble Stocks Play On Earnings Momentum and these names were seeing improving Mojo and remain stocks to consider in buy-and-trade strategies.
Analysis and Key Levels for U.S. Capital Markets:Analysis of the Yield on the 10-Year Treasury Note (1.622%): The monthly chart shows that the decline in yield is overdone, but with a potential QE4 on the way yields should stay low. The five-month modified moving average is 1.755% with the 120-month simple moving average at 3.647%. The weekly chart continues to favor a trading range between my semiannual value level at 1.853% and my semiannual risky level at 1.389% with the five-week MMA at 1.675% and the 200-week SMA at 2.777%. Analysis of Comex Gold ($1,725.70): The monthly chart remains positive with the five-month MMA at $1,679.7. The weekly chart is neutral with the five-week MMA at $1,725.30. This favors a trading range between my semiannual pivot at $1,702.50 and quarterly risky levels at $1,844.90 and $1881.40. My semiannual and annual value levels are $1,643.30 and $1,575.80.
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