This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Fed-Induced Stock Market Bubble Continues

NEW YORK ( TheStreet) -- The stock market remains fundamentally overvalued and the weekly charts for the major averages are overbought except for the Dow Industrial Average. New all time highs or multi-year highs were set as October came to an end.

The stock market has been trading under the cloud of a ValuEngine valuation warning since mid-May and today we show that 77% of all stocks overvalued, which is well above the 65% warning threshold. Technically, three attempts to confirm cycle highs were thwarted as all five major averages did not shift to having negative weekly chart. We enter November with four of the five with overbought 12x3x3 weekly slow stochastic with readings above 80.00.
[Read: <a target="blank" data-add-tracking="true" href=""><em> The Biggest Banks Have Elevated Debt Ratios</em></a>]

As I have been saying; 'if you cannot confirm cycle highs, new highs will follow.' My market pulse shows the latest market highs and the upside potential to risky levels and the downside risk to value levels.

The weekly chart for Dow industrials is positive with its five-week modified moving average at 15,362.70. The weekly chart for the S&P 500 is positive but overbought with its five-week MMA at 1719.16. The weekly chart for the Nasdaq stays positive but overbought with its five-week MMA at 3824.00. The weekly chart for Dow transports is positive but overbought with its five-week MMA at 6742.39. The weekly chart for the Russell 2000 remains positive but overbought with its five-week MMA at 1083.84.

My new monthly pivot is 6927 on Dow transports with monthly risky levels at 16,162 Dow industrials, 1802.0 S&P 500, 4014 Nasdaq and 1133.14 Russell 2000.

Semiannual and quarterly risky levels are 16,490 and 16,775 Dow Industrials, 1853.8 S&P 500, 4025 Nasdaq, 7104 and 7205 Dow Transports and 1163.21 Russell 2000. Semiannual pivots are 1743.5 S&P 500, 3759 Nasdaq and 1089.42 Russell 2000.
[Read: <a target="blank" data-add-tracking="true" href=""><em> China Watch: Wal-Mart's Growth Story</em></a>]

My annual value levels remain at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow Transports, and 809.54 Russell 2000.

Federal Reserve policy will not be jelling under Yellen! The federal funds rate has been at 0% to 0.25% since Dec. 16, 2008 and this has choked savers on Main Street, USA. Despite this ridiculously low interest rate, credit card rates are way too high and rates on small business loans have been on the rise. President Obama recently commented that the next Fed chairman needs to be more Main Street friendly. It seems to me that this commitment will not be jelling under Janet Yellen as Fed chief.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs