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NEW YORK ( TheStreet) -- To confirm the May 22/May 20 highs as cycle highs for the five major equity averages, there needs to be simultaneous weekly closes below all five-week modified moving averages.
The five-week MMAs are 14,973
Dow Industrials; 1613.8
S&P 500; 3397
Nasdaq, 6242; Dow Transports; and 971.81 Russell 2000.
While we wait for a moving average confirmation, random trading will continue as there's a wide range between new quarterly value levels and new monthly risky levels. My quarterly value levels are 14,288 Dow Industrials; 1525.6 S&P 500; 3284 Nasdaq; 5348 Dow Transports; and 863.05 on the Russell 2000.
The risky levels for July are 15,437 Dow Industrials; 1669.0 S&P 500; 3510 Nasdaq; 6758 Dow Transports; and 1030.75 Russell 2000. These risky levels straddle the May 20/May 22 highs at 15,542.40 Dow Industrials; 1687.18 S&P 500; 3532.04 Nasdaq; 6568.41 Dow Transports; and 1008.23 Russell 2000.
Weekly closes above the monthly risky levels on Dow Industrials, and S&P 500 and Nasdaq set the stage for new all time or multiyear highs. Weekly closes below the quarterly value levels indicates risk to my annual value levels at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq and 809.54 Russell 2000.
Without confirming a market top for the major equity averages, the June 24 lows should be the low end of the trading ranges at; 14,551.27 on Dow Industrials; 1560.33 S&P 500; 3294.95 Nasdaq; 5952.18 Dow Transports; and 942.79 Russell 2000.
The bottom line is that the low ends of the trading ranges have been set on comments by
Federal Reserve officials that quantitative easing will continue. The upside should be limited to monthly risky levels as the extent of continued money printing has been anticipated. Tapering is thus a market consideration, and that limits the upside potential. Remember that stocks are trading under a ValuEngine valuation warning and that the weekly chart profiles could turn negative this week.
If you are maintaining core holdings in buy-rated Dow stocks, the list is down to these eight:
Reading the Table
OV / UN Valued - The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating - A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.
Last 12-Month Return (%) - Stocks with a Red number declined by that percentage over the last twelve months. Stocks with a Black number increased by that percentage.
Forecast 1-Year Return - Stocks with a Red number are projected to decline by that percentage over the next twelve months. Stocks with a Black number in the Table are projected to move higher by that percentage over the next twelve months.
Value Level: is the price at which to enter a GTC Limit Order to buy on weakness. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: is the price at which to enter a GTC Limit Order to sell on strength.