NEW YORK ( TheStreet) -- Today I preview nine companies that report quarterly results on Wednesday. Six are buy-rated retail-wholesale stocks, one is a buy-rated stock in the computer and technology sector, another is a hold-rated stock in the consumer staples sector and one is a hold-rated homebuilder in the construction sector.
The fundamental backdrop for the stock market remains difficult as the ValuEngine valuation warning continues with 75% of all stocks overvalued, 42% by 20% or more. The retail-wholesale sector is 23.9% overvalued with the computer and technology sector 22% overvalued, the consumer staples sector 17.7% overvalued, and the construction sector 16.5% overvalued.
The technical backdrop is deteriorating. Dow industrials and Dow transports have negative weekly chart profiles, and the S&P 500 is lined up to follow this week. The downside is to quarterly and annual value levels at 14,288 / 12,696 Dow industrials, 1525.6 / 1348.3 S&P 500, 3284 / 2806 Nasdaq, 5348 / 5469 Dow transports, and 863.05 / 860.25 / 809.54 Russell 2000. Weekly closes below the five-week modified moving average are 15,306 Dow industrials, 1666.8 S&P 500, 3573 Nasdaq, 6426 Dow transports and 1026.03 Russell 2000 with the 12x3x3 weekly slow stochastic readings declining below 80.00 across all five major averages will confirm the early August highs as cycle highs.
Seven of the nine stocks are overvalued, two by more than 25%. One stock is down more than 20% over the last 12 months, while four gained more than 25%. Two are trading below their 200-day simple moving averages, while seven show risk of a reversion to the mean by being above their 200-day SMAs.