This Day On The Street
Continue to site
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

Warning Flags Fly, But Stock Top Unconfirmed

On March 26 I wrote, Allocate U.S. Holdings to 14 Top Dow Stocks. Since this post two of these have been downgraded to hold. I will recap these and profile next week's earnings from nine Dow components on Monday through Wednesday. I still consider buy rated Dow stocks as appropriate names in an investment portfolio with allocations to stocks reduced by 50%.

On April 2 I wrote, Dow Utilities Outperform S&P 500 in First Quarter where I showed that stocks in this sector were heavily weighted to buy rated stocks. This sector is 7.9% overvalued, but among the 215 stocks in the sector we have 64 stocks rated strong buy and another 130 rated buy. The utilities sector contains 64.0% of all strong buy stocks in the ValuEngine universe. With 78.4% of all stocks in this sector buy rated, I give the sector an overweight rating.

The Dow utility average set a multi-year high at 524.35 on April 16 and is now the best performing index year to date, up 15.0% compared to 8.1% for the S&P 500.

To sum it up, the buy rated stocks have migrated to the safely of utilities stocks and the brand names of the Dow industrial average. The Dow transports and Russell 2000, which led to new all time highs in mid-March, are trying to lead U.S. equities into a bear market.

Looking at my semiannual levels, a weekly close below 1566.9 on the S&P 500 indicates risk to 14,323 Dow industrials. Annual and semiannual pivots have been magnets at 5925 and 5955 on Dow transports. The Russell 2000 remains well below its semiannual risky level at 965.51.

With the neutral zone between 14,323 Dow industrials and 1566.9 S&P 500 intact a market top cannot yet be confirmed but the warning flags wave. A weekly close below my semiannual value level at 14,323 on Dow industrials is my signal calling for a market top.

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 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
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AMZN $671.32 -1.83%
BA $132.49 -1.13%
F $13.43 -1.40%
GM $31.25 -1.57%
AAPL $95.18 1.64%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs