NEW YORK (TheStreet) -- My theme that stocks are a risky asset class in 2013 remains in place, but the Dow Industrial Average ended February with its first-ever monthly close above 14,000. I still show overhead risky levels that can be tested before the market reverses.We have had two ValuEngine valuation warnings so for this year, and two potential technical key reversals that could not be confirmed. In recent weeks I have been suggesting that investors reduce allocations to the U.S. equities market by 50% or back to the allocation dollar amounts equal to their holdings as March 2009 began, four years ago. The key reason for the huge four year rally has been Federal Reserve policy, with the latest quantitative easing programs, QE3 and QE4 projected to continue until the unemployment rate falls to 6.5%. I view Fed Chief Ben Bernanke as the pied piper leading investors down a path to the river of U.S. equities, which remains a risky asset class. On Thursday we learned that the preliminary reading for Q4 GDP came in at an anemic +0.1% up from the advanced reading of -0.1%. Either GDP reading reminds me of the grade point average of Delta House in the movie "Animal House." Investors and traders who continue to disagree with my call that stocks are a risky asset class should remember that I have not yet called a market top, and have not yet suggested any specific short position. What I have done so far is to give traders buy-and-trade parameters for specific markets and stocks, and investors the opinion to use strength to raise cash. Also remember that I "pounded the table" as a stock market bull four years ago. The 2013 stock market is being led by old economy stocks in the transportation and industrial sectors. Only the Dow industrials and Dow transports set new multi-year or all-time highs on Thursday at 14,149.15 and 6035.34 respectively. We have not yet had that elusive Dow Theory Buy Signal I have been tracking since 2013 began. This requires a close on the Dow Industrial Average above its all time closing high at 14,164.53 set on Oct. 9, 2007.
We begin March with ValuEngine 59.5% of all stocks overvalued with 15 of 16 sectors overvalued, eight by double digit percentages. Consumer staples is the most overvalued by 22.9% followed by construction overvalued by 22.4%, then transportation by 20%. The major equity averages have overbought weekly and monthly charts. The 12x3x3 weekly slow stochastic readings are 91.42 for the Dow Industrials up from 89.02 last week, 91.30 for the S&P 500 up from 90.08 last week, 87.39 for the Nasdaq up from 86.71 last week, 94.50 for the Dow transports up from 92.38 last week, and 91.60 on the Russell 2000 slipping slightly from 91.77 last week. Readings above 80.00 are overbought.
Dow Transportation Average (5993): Monthly, annual and quarterly value levels are 5522, 5469 and 5094 with my annual and semiannual pivots at 5925 and 5955. The Russell 2000 (911.11): Annual, quarterly and annual value levels are 860.25, 821.01 and 809.54 with a monthly pivot at 901.68 and semiannual risky level at 965.51. In sum, closes today above all new monthly pivots at 13,949 Dow industrials, 1528.6 S&P 500, 3197 Nasdaq, and 901.68 Russell 2000 indicates potential strength to the risky levels at 14,323 Dow industrials, 1566.9 S&P 500 and 965.51 Russell 2000. Closes below these monthly pivots indicates risk to the monthly value level at 5522 Dow transports. The other first value levels are 13,668 Dow industrials, 1431.1 S&P 500, 3071 Nasdaq and 860.25 Russell 2000. I project that there will be additional weekly risky levels for next week's trading. At the time of publication the author held no positions in any of the stocks mentioned. Follow @Suttmeier This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.