A close today below 965.51 on the Russell 2000 indicates risk to my semiannual pivots at 1566.9 S&P 500 and 5955 Dow transports. Below is my semiannual value level at 14,323 on Dow industrials. These levels will be with us until the end of June.
My prediction remains that the major equity averages will test my annual value levels at some point in 2013 at: 12,696 Dow industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow transports and 809.54 Russell 2000.
The Dow utilities mini bubble pops: The utility average set a multi-year high at 537.86 on April 30 between my quarterly pivot at 524.16 and my annual risky level at 540.37. This index still has the largest distribution of buy rated stocks so downside to my monthly value level at 509.53 should provide a buying opportunity. There are 63 strong buy rated stocks and 125 buy rated stock in this sector of 215 names, thus 87.4% of all utility stocks have buy ratings.
On April 30 I wrote, Homebuilder Downgrades Cloud Earnings and since then there has been five downgrades even as the PHLX Housing Sector Index (^HGX) set a new multi-year high at 205.95 on Thursday.Beazer Homes (BZH) ($20.17 vs. $16.38 on April 30): Has been downgraded to sell from hold and set a new 2013 high at $20.65 on May 9. Hovnanian (HOV) ($5.99 vs. $5.56 on April 30): Has been downgraded to hold from buy and tested $6.08 on May 7. This gave buy-and-trade investors the opportunity to sell at my semiannual risky level at $6.00.
Lennar (LEN) ($42.40 vs. $41.42 on April 30): Has been downgraded to sell from hold and tested $43.62 on May 9. MDC Holdings (MDC) ($38.06 vs. $37.80 on April 30): Has been downgraded to sell from hold and tested $39.25 on May 2.
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