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