The stock market is still trading under a ValuEngine valuation warning with 70.2% of all stocks overvalued. The finance sector is 15.5% overvalued.

My benchmark for community banks is the America's Community Bankers Index (193.91) has a neutral weekly chart profile with the five-week modified moving average at 190.44 and the May 28 high at 197.27. My monthly value level is 190.61 with weekly risky level at 194.18. My quarterly value level is 174.20 with a semiannual risky level at 198.58.

Chart Courtesy of Thomson/Reuters

Most strategists say that the housing marker is robust. The chart below questions that notion:

In the first quarter of 2013 total real estate loans were down $36.7 billion sequentially. Comprising this reduced lending, residential mortgages on the books of the banks declined $18.3 billion with C&D loans down $268,000 million and home equity loans down $16.0 billion. This sounds like reduced lending to me.

We recently learned that mortgage applications plunged 11.5% as mortgage rates rise. This was the worst drop since June 2009. Without increased lending how can the housing market be described as robust, and statistics say banks are not increasing lending to the real estate market.

On May 9 I wrote, 7 Buy Rated Community Banks, and today I profile how they performed since then. In addition I have added six more buy rated community banks as four of the seven profiled a month ago have been downgraded to hold from buy.

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