This column was originally published on RealMoney on March 17 at 12:30 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

I can't be bullish on stocks right now, because valuations are not cheap according to my model. But I can't be bearish unless all of the equity averages turn technically negative, and currently, only the Philadelphia Stock Exchange Semiconductor Index (SOX) has a negative weekly chart profile. The SOX was in a leadership role off the April 2005 market lows, but is a drag now, providing a market warning.

Sector Valuations Are Not Cheap

Of the 11 market sectors, technology is the only one that's currently undervalued. But it's undervalued by only 4.1% now, vs. 10.5% at the end of 2005. More dramatically, the semiconductor industry is only 6.4% undervalued now, vs. 32.9% undervalued when the SOX bottomed at 376.64 on April 29, 2005. The SOX reached 559.60 on Jan. 27, up 48.6% from low to high. The SOX's January 2006 high was just below its January 2004 high of 560.68, as shown on the weekly chart below.

The weekly chart profile for the SOX is negative. Momentum is declining, as I've shown below with the 12x3 weekly slow stochastic study. In addition, a weekly close below the five-week modified moving average at 521.06 would indicate risk to my quarterly support of 488.82, which has held so far intraday, having reached a low of 489.31. A close below 488.82 would deepen the correction to the 200-day SMA at 478.22.

The SOX should be showing leadership, but isn't. From the Jan. 27 high at 559.60 to today's intraday low so far at 489.31, the SOX is on the rocks, down 12.5%.

Semi Over Easy

Each of the SOX component stocks profiled below rates a hold with ValuEngine. Three are overvalued components I've been saying to sell on strength. Five components are more than 20% undervalued, and for investors looking to start new positions in semiconductor stocks, these are the names to consider buying, but only on weakness to value levels.

Slippery SOX
It's less undervalued than at the start of the year
Source: Athena Graphics, available on Telerate Plus, a Reuters product

Advanced Micro Devices ( AMD) is 43.1% overvalued, with fair value at $23.81. The weekly chart profile shows declining momentum with the five-week modified moving average at $37.45. This confirms the March 3 high at $42.70 as a significant top. As long as the weekly chart profile remains negative, I show risk to my annual value level of $28.61.

Broadcom ( BRCM) is 17.1% overvalued with fair value at $38.25, but was more than 20% overvalued until Thursday's close. Its weekly chart profile still shows overbought momentum, and a weekly close below the five-week MMA at $43.42 would confirm the March 3 high at $50 as a significant top. Over the near term, Broadcom has quarterly pivots at $44.17 and $48.61. Failure to hold $44.17 and a weekly close below the five-week MMA would indicate risk to the Jan. 19 high at $39.92, which would fill a price gap.

Intel ( INTC) is 27.1% undervalued, with fair value at $27.13. The weekly chart profile shows oversold momentum, with the five-week MMA at $21.41. Thursday's close was a penny below my semiannual value level of $19.66, where long-term investors will want to add to this holding. My quarterly value level is $17.30, with my quarterly risky level at $23.41.

Micron ( MU) is 35.4% undervalued, with fair value at $22.58. The weekly chart profile shows declining momentum. A weekly close below the five-week MMA of $15.18 would indicate risk to the 200-week simple moving average at $13.14.

National Semiconductor ( NSM) is 15.1% overvalued, with fair value at $23.68, but was more than 20% overvalued until Thursday's close. The weekly chart profile shows declining momentum, and a weekly close today below the five-week MMA at $27.69 would confirm the March 2 high at $30.10 as a significant top. Over the near term, Nat Semi appears stuck between my quarterly pivot of $26.55 and my monthly pivot of $29.96. A trend below $26.55 would indicate risk to the 200-day SMA at $25.22.

Novellus ( NVLS) is 29.6% undervalued, with fair value at $34.62. The weekly chart profile shows declining momentum, with the five-week MMA at $26.41. A close below my quarterly pivot at $24.26 would indicate risk to my semiannual value level of $21.23, where long-term investors will want to add to positions. My monthly risky level is at $27.93.

Teradyne ( TER) is 33.7% undervalued, with fair value at $22.25. The weekly chart profile shows declining momentum, with the five-week MMA at $16.98. Below the 200-day SMA of $15.20 is risk to the October 2005 low, $12.98.

Xilinx ( XLNX) is 25.6% undervalued, with fair value at $34.73. The weekly chart profile shows declining momentum, with the five-week MMA at $26.97. As long as the weekly chart profile is negative, there is risk to the October 2005 low at $21.25.

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
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Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of TheStreet.com Technology Report newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury bond trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback -- click here to send him an email.

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