NEW YORK ( TheStreet) -- The Nasdaq has been the best performing of the five major averages over the last few weeks setting a new multi-year high at 3817.98 on Oct. 1. The Russell 2000 joined the Nasdaq with a new all-time high set that day at 1087.78 on the Russell 2000. While this speculative phase of the stock market evolved Dow Industrials peaked at 15,709.59 on Sept. 18 with the S&P 500 peaking at 1729.86 on Sept. 19 and the Dow transports peaking at 6754.81 on Sept. 20. We are now on watch to confirm all five highs as cycle highs this week or next.
The weekly charts for Dow Industrials, S&P 500 and Dow transports will be negative with closes this week below their five-week modified moving averages at 15,125.10, 1676.02 and 6511.27 respectively.
The weekly chart for the Nasdaq shifts to neutral with a close this week below its five-week modified moving average at 3707.32, as its momentum reading will likely remain in overbought territory. The same will be true for the weekly chart of the Russell 2000 given a weekly close below its five-week MMA at 1052.50. We are thus a week away from a potential confirmation that of the recent all-time highs or the multi-year high on the Nasdaq are cycle highs.
Recent stock market weakness has made the fundamentals less overvalued, but we remain under the cloud of a ValuEngine valuation warning with 74.4% of all stocks overvalued 36.7% by 20% or more. 15 of 16 sectors remain overvalued, 13 by double-digit percentages seven by more than 20% overvalued.www.ValuEngine.com. Three are down 10.5% to 14.5% over the last 12 months while five are up between 105.4% and 138.1%. Two are below their 200-day simple moving averages while 11 are above reflecting the risk of reversion to the mean.