NEW YORK (TheStreet) -- As the stock market evolves to a full-fledged bear market, beware that negative divergences have been evolving since mid-September in what I have call "QE fatigue." Now that almost all sectors and major equity averages have negative weekly chart profiles "QE fatigue" is becoming an epidemic.

With President Obama winning a second term the stock market became worried about several macro issues such as: the "fiscal cliff," the implementation of Obamacare and potential increased taxes particularly on income from dividends.

After investors and traders ran up the stock market on Election Day, massive high volume selling fueled the Dow's 313-point decline and the Nasdaq 75-point decline on Wednesday. These losses expanded on Thursday to a post-election decline of 435 points for the Dow and 116 points for the Nasdaq.

With stocks down significantly over the past two days and with the yield of the 30-Year U.S. Treasury bond down 22 basis points to 2.727%, stocks have become cheaper fundamentally.

At www.ValuEngine.com we now show that 66.4% of all stocks are undervalued. In an environment of declining stock prices this alone is not a buy signal. At the market lows on March 6, 2009, when I made a pound-the-table buy signal, more than 95% of all stocks were undervalued.

Looking at sector valuations 11 of 16 are overvalued, but only two by double-digit percentages; construction by 12.6% and consumer staples by 11.3%.

Let's look at the technical damage to the weekly charts:

Analysis of the Yield on the 10-Year Treasury Note (1.594%): The weekly chart continues to favor lower yields but my scenario is that the trading range continues between my semiannual value level at 1.853% and my monthly risky level at 1.452%.

Analysis of Comex Gold ($1732.2): The weekly chart will be upgraded to neutral from negative on a close today above the five-week modified moving average at $1,717.30 the Troy ounce, as my semiannual pivot at $1,702.50 provided a magnet after an Election Day low of $1,672.5. My semiannual, monthly and annual value levels are $1,643.30, $1,639.80 and $1,575.80 with quarterly risky levels at $1,844.90 and $1,881.40.

Analysis of Nymex Crude Oil ($85.00): The weekly chart for crude oil stays negative on a close Friday below the five-week MMA at $89.73. The 200-week simple moving average is a major support at $82.85 with my monthly value level at $76.96, and my annual and quarterly risky levels are $103.58 and $107.31.The 200-week SMA at $82.85 has been a magnet since mid-2009.

Analysis of the euro vs the dollar (1.2736): The weekly chart remains negative on a close today below the five-week MMA at 1.2865. My monthly value level lags at 1.2289 with semiannual and quarterly risky levels at 1.2917 and 1.3048. A stronger dollar has put pressure on U.S. stocks as expected.

Analysis of the Dow Industrial Average (12,811): The weekly chart stays negative with a close Friday below the five-week MMA at 13,265. My annual value level lags at 12,312 with a monthly pivot at 13,143 and annual and quarterly risky levels at 14,032 and 14,192.

Analysis of the Dow Transportation Average (5054): The weekly chart for the Dow Transports shifts to neutral from positive on a close today below the five-week MMA at 5063. A weekly close below my monthly pivot at 5053 indicates that Transports are vulnerable for a second bout of "QE Fatigue."

Analysis of the S&P 500 (1377.5): The weekly chart stays negative with a close Friday below the five-week MMA at 1425.7. My annual value level is 1363.2 with a monthly pivot at 1418.7, and quarterly and annual risky levels at 1513.3 and 1562.9.

Analysis of the Nasdaq (2896): The weekly chart stays negative on a close Friday below the five-week MMA at 3042. The November 2007 high is 2861.51 with my annual value level at 2698, a monthly pivot at 3028, and annual and quarterly risky levels at 3210, 3232 and 3295.

Analysis of the Russell 2000 (793.65): The weekly chart stays negative on a close Friday below the five-week MMA at 823.60. My semiannual value level is 686.25 with a monthly pivot is 807.15 and annual risky level at 836.15.

Analysis of the Semiconductor Index or SOX (368.80): The weekly chart remains negative on a close Friday below the five-week MMA at 377.69. The 200-week simple moving average is 357.53 with my monthly value level at 354.06 and the Sept. 14 high at 410.82.

Most sector ETFs shift to negative or remain negative on closes Friday below five-week MMAs as "QE Fatigue" becomes an epidemic:

  • Materials Select Sector SPDR ( XLB) ($35.63) remains negative on a close today below the five-week modified moving average (MMA) at $36.33.
  • Industrial Select Sector SPDR ( XLI) ($36.17) shifts to negative on a close Friday below the five-week MMA at $36.58.
  • Consumer Discretionary Sector SPDR ( XLY) ($45.64) shifts to negative on a close Friday below the five-week MMA at $46.24.
  • Consumer Staples Sector SPDR ( XLP) ($34.60) remains negative on a close Friday below the five-week MMA at $35.41.
  • iShares DJ US Consumer Services Sector Index Fund ( IYC) ($84.33) shifts to negative on a close Friday below the five-week MMA at $85.54.
  • Energy Select Sector SPDR ( XLE) ($69.57) stays negative on a close Friday below the five-week MMA at $71.90.
  • Financial Select Sector SPDR ( XLF) ($15.48) shifts to negative on a close Friday below the five-week MMA at $15.72.
  • Health Care Select Sector SPDR ( XLV) ($39.06) shifts to negative on a close Friday below the five-week MMA at $39.86.
  • Utilities Select Sector SPDR ( XLU) ($34.88) shifts to negative on a close Friday below the five-week MMA at $36.25.
  • Technology Select Sector SPDR ( XLK) ($28.11) stays negative on a close Friday below the five-week MMA at $29.47.
  • iShares Dow Jones Transportation Average ( IYT) shifts to neutral on a close Friday below the five-week MMA at $89.86.

    This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

    Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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