NEW YORK ( TheStreet) -- On Wednesday, Federal Reserve chief Bernanke testified that it was premature to remove the stimulus on the quantitative easing measures, and stocks surged to new highs. Then in afternoon trading, the Fed minutes suggested otherwise, indicating that the FOMC discussed slowing down the QE purchases.

Stocks soured, with the major equity averages closing below their lows of Tuesday. Wednesday was thus a key reversal for U.S. equities and lower closes today and Friday will confirm the key reversals.

A key reversal day occurs when a market sets a new high for a move then closes below the prior day's low. A key reversal is confirmed by lower closes the next two days. The Dow Industrial Average set a new all-time high, at 15,542.40, on Wednesday, then closed at 15,307.17, below Tuesday's low at 15,325.68.

The S&P 500 set a new all-time high, at 1687.18, then closed at 1655.35, below Tuesday's low at 1662.67. The Nasdaq set a new multi-year high, at 3532.04, then closed at 3463.30, below Tuesday's low at 3486.88.

The Russell 2000 set a new all-time high, at 1008.23, then closed at 982.26, below Tuesday's low at 995.20.

Setting a negative tone this morning is the 7.3% overnight plunge in Japan's Nikkei, down 1,143.28 points, to 14,483.98. In the U.S. markets, I say, Nasdaq 3583, or bust! Or, Nasdaq 3583, then bust!

Including today, there are six trading days left in May to proclaim "sell in May and walk away."

When bubbles inflate, stocks move in an orderly manner to the upside. Once the S&P 500 cleared my semiannual pivot at 1566.9, the upside was to my semiannual pivot at 965.51 on the Russell 2000. Having cleared the small-cap hurdle, my next target has been my semiannual risky level, at 3583, on the Nasdaq, which is only 1.4% above Wednesday's intraday high, at 3532.04. When equity bubbles pop, the major averages cascade back down to these pivots, like magnets!

While the major equity averages traded higher, the yield on the U.S. 30-Year bond has also moved higher. This yield was as low as 2.808% on May 1, and traded as high as 3.244% on Wednesday. Higher stock prices and a higher bond yield resulted in a U.S. equities market with 72.0% of all stocks overvalued. This continues the ValuEngine valuation warning.

Today's ValuEngine shows that 15 or 16 sectors are overvalued, with 14 overvalued by double-digit percentages. Six sectors are overvalued by 20% or more; retail-wholesale by 24.3%, transportation by 23.5%, autos-tires-trucks by 23.5%, finance by 21.4%, consumer staples by 21.0%, and consumer discretionary by 20.0%.

Technical momentum is also becoming more overbought. For the Nasdaq, its 12x3x3 weekly slow stochastic reading is 88.48 on a scale of 00.00 to 100.00, where readings above 80.00 are overbought. The Dow Industrial Average is the most overbought, with a reading of 92.16.

Since the year 2000, all major equity averages have crossed their 200-day simple moving averages as a reversion to the mean. Nasdaq is well above its 200-day simple moving average, at 3133.

To trade the Nasdaq 100, consider the PowerShares QQQ Trust ( QQQ) ($74.26). My quarterly value level is $68.95, with a semiannual risky level at $78.39. The 200-day SMA is 67.71, last crossed as 2013 began. Wednesday was a key reversal day.

Keep an eye on the PHLX Housing Sector Index ( HGX) (202.63) as a close this week below last week's low of 203.33 is a weekly key reversal. For the major equity averages to have weekly key reversals, they would have to close below last week's lows: 15,053.46 Dow Industrials, 1626.74 S&P 500, 3426.67 Nasdaq, 6324.48 on Dow Transports and 971.24 Russell 2000.

At the time of publication the author held no positions in any of the stocks mentioned.

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 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