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Stocks Remain Overvalued but Resilient

NEW YORK ( TheStreet) -- On Aug. 1 the Dow Transportation Average set a new all-time high at 6686.86 despite having a sector rating of "avoid-source of funds." The transportation sector has this rating because 70% of all stocks in this sector have sell or strong sell ratings according to

The Dow Jones Industrial Average set its all-time high at 15,658.43 on Aug. 2, and 14 stocks in this benchmark index have buy ratings, as I noted on Aug. 1 in " August Begins With New Highs and New Risky Levels." These stocks still have buy ratings today. I have been suggesting that investors allocating cash to the stock market focus on the buy-rated Dow components with 50% of investment dollars in cash.

The S&P 500 set its all-time high at 1709.67 on Aug. 2, and 139 stocks, or just 27.8% of these stocks have buy ratings. A warning is that only 15 of these stocks are undervalued.

[Read: <a target="blank" data-add-tracking="true" href=""><em>Low-Volatility Indexing Continues to Evolve</em></a>]

The Nasdaq set a new multiyear high at 3694.18 on Aug. 5, and in the Nasdaq 100 there are only 29 stocks with a buy rating. Of these, only six are undervalued.

The Russell 2000 set its latest all-time high at 1063.52 on Aug. 5. I do not have a breakdown for specific data points in this index.

After the first six trading sessions in August, the stock market remains overvalued but resilient.

My monthly pivot is 3663 on the Nasdaq. The semiannual risky level is 3759.

[Read: <a target="blank" data-add-tracking="true" href=""><em>A Private BlackBerry Won't Matter</em></a>]

Monthly and semiannual risky levels are 16,188 and 16,490, respectively, for the Dow industrials.

They're 1742.5 and 1743.5, respectively, for the S&P 500.

For the Dow transports, they're 7087 and 7104, respectively. And for the Russell 2000, they're 1092.24 and 1089.42, respectively.

My quarterly value levels are 14,288 for the Dow industrials, 1525.6 for the S&P 500, 3284 for the Nasdaq, 5348 for the Dow transports and 863.05 for the Russell 2000.

My annual value levels are 12.696 for the Dow industrials, 1348.3 for the S&P 500, 2806 for the Nasdaq, 5469 for the Dow transports and 809.54 for the Russell 2000.
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Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

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