The retail-wholesale sector is the most overvalued sector by 22.5%, but the sector has 267 buy rated stocks out of 358. With 74.6% of all stocks in this sector rated buy the sector gets an overweight rating. Among the buy rated names are many of the discount retailers including two I mentioned when recording a segment on Yahoo Finance Breakout. Dollar Tree ( DLTR) peaked this year at $51.20 on May 23. The stock closed Friday at $49.12 with a semiannual value level at $47.35, and a semiannual pivot at $50.27. Ross Stores ( ROST) peaked this year at $66.60 on May 9. The stock closed Friday at $64.86 with a monthly value level at $56.55, and a semiannual risky level at $69.32. The transportation sector is overvalued by 20.8% but only 7 stocks out of 183 in the sector have buy ratings. There are 94 sell rated stocks and 44 strong sell rated stocks and thus 74.5% of all stocks in this sector are rated sell. This gives the sector an avoid-source of funds rating. I spoke to an industry insider last week who told me that commercial shipping is weakening and that margins slipped to 15% due to fierce competition. Before the recession margins were around 30%. I will cover this sector on Wednesday. The utilities sector is overvalued by 9.6% but 73 stocks are rated strong buy and 121 are rated buy. With 215 stocks in the sector 90.2% have buy ratings. This sector is thus rated overweight. This anomaly suggests that investors should be rotating into this dividend friendly sector.
Rather than pick names I suggest investing in the Utilities Select Sector SPDR ( XLU) which peaked this year at $41.44 on April 30 then dropped like a popped bubble to its 200-day simple moving average at $37.21 last week. The EFT closed Friday at $38.00 with a semiannual value level at $36.48, a monthly pivot at $38.51, and a quarterly pivot at $40.27. At the time of publication the author held no positions in any of the stocks mentioned.Follow @SuttmeierThis article is commentary by an independent contributor, separate from TheStreet's regular news coverage.