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Caterpillar, Apple Ratings Peeled To Hold

NEW YORK ( TheStreet) -- The yield on the U.S. Treasury 30-Year bond rose by 13.5 basis points on Friday to 2.954% following the so called solid employment report for April.

Dow Industrials, S&P 500 and Russell 2000 set new all-time highs with the Nasdaq setting a new multi-year high. Dow transports did not set a new all-time high.

As a result of higher yields, higher stocks prices and the benchmark revisions we begin the first full week of May with a ValuEngine Valuation Watch with 62.9% of all stocks overvalued.

With significant changes occurring overnight several brand names stocks have been downgraded to hold from buy including these two:

Apple (AAPL - Get Report) ($449.98 vs. $385.10 on April 19) is no longer a value play even though the stock is 13.4% undervalued. With a projected 12 month gain down to 4.1% the rating has been peeled to hold from buy. If you are a momentum trader the weekly chart profile is now positive with the five-week modified moving average at $434.92. My weekly value level is $436.93 with semiannual risky level at $470.21.

Caterpillar (CAT - Get Report) ($86.98 vs. $79.49 on April 22) has outrun its 12 month price target at $84.12 hence the downgrade to hold from buy. If you are a momentum trader the weekly chart profile is now positive with the five-week modified moving average at $86.46. My weekly value level is $81.05 with a monthly risky level at $90.84.

Welcome to the Obamacare Labor Market

Consumer spending accounts for nearly 70% of the U.S. economy. Many retailers and eateries have cut back hours worked by employees to less than 30 hours a week to avoid the requirement to provide healthcare insurance under Obamacare. To fill the lost hours additional part-time or temporary jobs have been created. I have noticed that our favorite restaurants in Tampa Bay have many new servers and kitchen help to keep the number of full time employees at five or less.

This Obamacare labor market will continue as companies adjust work forces to minimize the cost of providing healthcare benefits. Meanwhile employees working fewer hours face the cost of healthcare on their own, which increases their cost of living. If a worker takes on a second part-time job, that job is counted as an increase in the nonfarm payroll number. In other words if a worker enters the workforce with two new part-time jobs, nonfarm payrolls will rise by two not one.
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AAPL $110.78 0.36%
CAT $69.18 5.30%
DE $78.21 6.31%
DIS $103.85 0.83%
PSA $220.11 1.80%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

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