This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Bubble Risk With New Highs for Dow Industrials, Transports, S&P

NEW YORK (TheStreet) -- The major U.S. equity averages sustained a strong rally on Thursday as the European Central Bank eased monetary policy. The rally continues this morning on a solid jobs report for May.

As of 10 a.m., the Dow Industrial Average (DIA), S&P 500 (SPY) and Dow Transports set all-time intraday highs at 16,891.40, 1,946.25, 8,167.06, respectively.

While not among the five major averages, the Nasdaq 100 (QQQ - Get Report) and PHLX Semiconductor Index (SOXX) set multiyear intraday highs as of 10 a.m., at 3,793.19 and 617.09, respectively.

The Nasdaq remains below its multiyear intraday high at 4,371.71 set on March 7, with the Russell 2000 (IWM) below its all-time intraday high at 1,212.82 set on March 4. The main reasons these indices are lagging are the elevated price-to-earnings ratios for Internet stocks on the Nasdaq and small caps in the Russell 2000.

On Thursday, we profiled the 24 semiconductor stocks in "Letting the Chips (Stocks) Fall Where They May: A Mixed Bag." The SOX is the best performer year to date, with a gain of 15%.

Overlooked by investors is the year-to-date performance of the Dow Utility Average , which set an all-time intraday high at 558.29 on April 30, and is the second best performer YTD with a gain of 12%.

As 2014 began, we wrote "Stocks Begin 2014 With Inflating Bubbles." The bubble atmosphere continues, but it's been an environment where many stock-specific bubbles have popped, while many stocks traded to new highs.

Bubbles for the major averages have not yet popped, but that risk remains.

As the year began, I described my value levels and risky levels for the major equities as a tangled bowl of spaghetti. Today that remains the case. But we are only three weeks away from having new monthly, quarterly and semiannual levels from my proprietary analytics.

One of my predictions for 2014 was that the five major averages would test their 200-day simple moving averages at some point this year. In the first half of the year, only Dow Industrials and the Russell 2000 followed this script.

Since the beginning of the year we showed semiannual value levels are 3,930 and 3,920 on the Nasdaq, and a semiannual risky level at 16,860 on Dow Industrials, which is now a pivot. The year-to-date intraday low for the Nasdaq was 3,946 on April 15.

Given the new highs that the Dow Industrials set this morning, this range has now been violated -- to the upside.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
QQQ $108.64 0.00%
SPY $210.46 0.00%
AAPL $126.41 0.00%
FB $81.21 0.00%
GOOG $575.33 0.00%


DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs