NEW YORK ( TheStreet) -- As major equity averages power to new multi-year highs or new all-time highs, individual stocks are becoming overvalued fundamentally, and their weekly chart profiles become overbought technically. Recently, this process has resulted in numerous stock-specific downgrades to sell, particularly in the transportation and construction sectors.The stock market has been operating under a valuation watch or warning consistently in 2013. A watch is when 60% to 65% of all stocks are overvalued and a warning is when 65% or more of all stocks are overvalued. Today, this measure is a warning at 65.2%. As an added concern, 15 of 16 sectors have been overvalued, with 14 overvalued by double-digit percentages, led by consumer staples overvalued by 27.1%, transportation by 26.1% and construction by 25.1%. My reading of technical momentum is a 12x3x3 weekly slow stochastic where readings above 80.00 on a scale of 00.00 to 100.00 are overbought. All major averages have mojo readings above 90.00. So far in March, www.ValuEngine.com has downgraded numerous stocks to sell. In addition, when a stock rated hold or buy reaches its one-year price target, it becomes a source of funds at least on a partial sale in a buy-and-trade strategy. When Apple ( AAPL) ($452.08) traded above $700 per share on Sept. 21, 2012, the stock reached the ValuEngine one-year price target at that time, where it became a partial source of funds. On Wall Street, analysts covering Apple raised their price target. On March 6, I wrote Apple Buy, Google Hold, Amazon Sell, and followed with Apple Wins the Search for Value on March 14. Apple tested my annual value level at $421.05 on March 4 and March 5, while Wall Street was lowering its price targets. Today, Apple remains buy-rated, is 19.5% undervalued and has a one-year price target at $480.41. My semiannual pivot is $470.21, with my annual risky level at $510.64.
Amazon ( AMZN) ($257.28) had a sell rating on March 6 and was thus a source of funds when it traded between my monthly pivot at $275.15 and my weekly risky level at $277.07. Google ( GOOG) ($814.71) had a hold rating on March 6 and when it spiked to a new all time high at $844.00 it was a partial source of funds testing the ValuEngine one-year price target at $841.81. Wall Street celebrated the record high with raised price targets, not a call for profit-taking. On March 18, I wrote 12 Sell Downgrades Threaten Dow Transports and Con-Way ( CNW), JB Hunt Transport ( JBHT), Norfolk Southern ( NSC) and Old Dominion Freight ( ODFL) had sell ratings and were thus a source of funds. This morning, US Airways ( LCC) has been downgraded to sell and becomes a source of funds. On March 19, I wrote Sell Downgrades Weaken Homebuilder Foundations, and seven of eight homebuilder stocks profiled in this post were sell-rated and thus a source of funds. On Wednesday, DR Horton ( DHI) traded above its weekly risky level at $25.02, KB Home ( KBH) could have been sold as a source of funds on strength to my weekly risky level at $21.69, and Lennar ( LEN) traded above my monthly risky level at $42.27. This morning, Toll Brothers ( TOL) becomes a source of funds on a downgrade to sell from hold, and the stock tested its monthly risky level at $36.49 yesterday. Within the construction sector, every homebuilder now has a sell or strong-sell rating. Other Notable Sell Rated Stocks That Are a Source of Funds: Boeing ( BA) ($85.37): My quarterly value level is $79.34 with a weekly pivot at $82.63 and annual risky level at $88.82 Ford Motor ( F) ($13.36): My quarterly value level is $6.98 with a monthly pivot at $13.11 and semiannual risky level at $15.71. General Motors ( GM) ($29.10): My annual value level is $20.40 with a weekly pivot at $26.79 and monthly risky level at $30.59. Let me reiterate that there is nothing wrong with profit-taking. It is much easier to book profits and raise cash on stock-specific strength. My suggested allocation to stocks is a maximum of 50% given overvalued valuations, overbought technicals and now the wave of downgrades. I have no positions in the stocks mentioned today, and no other conflicts. At the time of publication the author had no position in any of the stocks mentioned. Follow @suttmeier This article was written by an independent contributor, separate from TheStreet's regular news coverage.