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Nasdaq, DJIA, S&P, Russell 2000 Are Poised to Test Risky Levels

NEW YORK (TheStreet) -- The major equity averages were poised for negative weekly chart profiles a week ago, but the Nasdaq did not close below its five-week modified moving average and this prevented the confirmation of cycle highs for the stock market.

This week traders and investors heard stabilizing comments by our new Federal Reserve Chair Janet Yellen who re-iterated that tampering of quantitative easing would continue as long as economic growth continued as expected, but that the federal funds rate would remain low even if the unemployment rate slipped below 6.5%.

The lack of any negative comments from Yellen re-fueled Wall Street speculation in both commodities and equities.

The year-to-date rebound for gold continued with the precious metal closing above $1,300 the Troy ounce on Thursday up $100 so far in 2014. Gold has been below its 200-day simple moving average since Feb. 11, 2013 and could move above this milestone at $1309.5 as early as today. The weekly chart for gold has been positive with the five-week modified moving average at $1261.2 with my quarterly risky level at $1,385.

Crude oil began 2014 below its 200-day SMA at $99.56 trading as low as $91.24 on Jan. 9 and this week moved back above the 200-day. At the January low oil tested its 200-week SMA, which has been a magnet since mid-2009. After my quarterly pivot at $93.35 was a stabilizing factor, my semiannual risky level may soon be tested at $104.97.

Speculation in the stock market has been even among the major equity averages, but the leaders have been the Nasdaq 100, the PHLX Semiconductor Index (SOXX) and the Dow Utility Average. The Nasdaq 100 and SOXX set new multiyear intraday highs yesterday at 3659.56 and 556.04 respectively, up 1.9% and 3.9% year-to-date. Believe it or not the leader so far in 2014 is the Dow Utility Average up 5.2% which means that investors are looking for the safety of dividend stocks in addition to the more speculative technology and semiconductor names.

The Dow Industrial Average (^DJI) (16,028) is still down by 3.3% in 2014 and is between its monthly and semiannual pivots at 15,986 and 16,245 after setting its all-time intraday high at 16,588.25 on Dec. 31. My annual value levels are 14,835 and 13,467 with quarterly and semiannual risky levels at 16,761 and 16,860.

The S&P 500 (^GSPC) (1829.8) is down just 1% so far in 2014 with a monthly risky level in reach at 1832.9. My annual value levels are 1539.1 and 1442.1 with semiannual pivots at 1764.4 and 1797.3, the Jan. 15 all-time intraday high at 1850.85 and quarterly risky level at 1896.0.

The Nasdaq (^IXIC) (4241) is up 1.5% so far in 2014 and stayed well above its semiannual value levels at 3930 and 3920 with a 2014 low at 3968 on Feb.5. My annual value levels are 3471 and 3063 with the Jan. 22 multiyear intraday high in reach at 4246.55 and monthly and quarterly risky levels within reach at 4267 and 4274.

The Dow Jones Transportation Average (^DJT) (7282) is down 1.6% so far in 2014 and traded to a 2014 low at 7010 on Feb. 5, then rebounded back above its quarterly pivot at 7086 and is between my semiannual pivots at 7245 and 7376. My annual value levels are 6249 and 5935 with this month's risky level at 7412 and the Jan. 23 all-time intraday high at 7591.43.

The Russell 2000 (^RUT) (1147.79) traded to a 2014 low at 1082.72 on Feb. 5 then rebounded back above its semiannual pivots at 1130.79 and 1133.29. My annual value levels are 966.72 and 879.39 with the Jan. 22 all-time intraday high at 1182.04 vs. quarterly and monthly risky levels at 1180.35 and 1189.18.

The whipsaw pattern continues with the price action continuing to be between my monthly, quarterly and semiannual value levels, pivots and risky levels. The major averages are no longer overbought on the weekly charts.

I still project that the 200-day simple moving averages will be tested at some point this year but cannot rule out new highs first.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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