Apple, Amazon and Google Earnings Preview

NEW YORK (TheStreet) - Let's straighten out financial TV about hyping Friday's closes for the Dow industrials and S&P 500 as new all-time highs. These indices did not end the week at new all-time highs! Three of the five major averages remain below their May 20/May 22 all-time highs at 15,542.40 Dow industrials, 1687.18 S&P 500 and 6568.41 Dow transports.

I am not saying that new all-time highs are out of the question.I have been saying that if you cannot confirm cycle highs, then new highs are likely. To confirm market highs, all five major averages need to have negative weekly chart profiles, and that has not happened. Weekly momentum (12x3x3 weekly slow stochastic) readings are now rising again with weekly closes well above the five-week modified moving averages at 15,101 Dow industrials, 1630.2 S&P 500, 3451 Nasdaq, 6290 Dow transports and 990.29 Russell 2000.

This week's value levels are 14,981 Dow industrials, 1608.4 S&P 500, 3445 Nasdaq, 6070 Dow transports and 994.17 Russell 2000 with monthly pivots at 15,437 Dow industrials, 1669.0 S&P 500, 3510 Nasdaq and 1030.75 Russell 2000 and a monthly risky level at 6758 on Dow Transports.

My quarterly value levels are 14,288 Dow industrials, 1525.6 S&P 500, 3284 Nasdaq, 5348 Dow Transports and 863.05 Russell 2000. My annual value levels are 12.696 Dow industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow transports and 809.54 Russell 2000. My semiannual risky levels are 16,490 Dow industrials, 1743.5 S&P 500, 3759 Nasdaq, 7104 Dow transports and 1089.42 Russell 2000.

New all-time highs are thus feasible as my semiannual risky levels are 16,490 Dow industrials, 1743.5 S&P 500, 3759 Nasdaq, 7104 Dow transports, and 1089.42 Russell 2000.

Stock market fundamentals do not justify sustaining new highs, as the ValuEngine valuation warning continues to intensify. We now show that 75.3% of all stocks are overvalued with 41.7% overvalued by 20% or more. We also show that 15 of 16 sectors are overvalued, 13 by double-digit percentages.

In this environment the momentum stocks must lead, and between July 17 and July 25 this test will be front and center. Here are my profiles of five mojo stocks:

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Apple ( AAPL) ($426.51) set its 52-week low at $385.10 on April 19 and a secondary low at $388.87 on June 28. Apple has a buy rating, is 6.8% undervalued, but is down 28.8% over the last 12 months. Apple can return to mojo status if the company can beat on earnings and list their upcoming must-have innovative products. My monthly value level is $325.25 with my annual pivot at $421.05 and annual risky level at $510.64.

Amazon.com ( AMZN) ($307.55) set a new all time high at $307.55 on Friday as the daily chart goes parabolic pre-earnings. Amazon has a hold rating, is 37.9% overvalued and is up 42.8% over the last 12 months. For this mojo run to continue beyond July 25 when they report quarterly results, investors must be convinced that the company's innovations will continue its proven leadership in online retailing. My quarterly value level is $272.68 with a monthly pivot at $295.45 and semiannual risky level at $313.60. Investors should consider locking in some gains on strength to $313.60 pre-earnings.

eBay ( EBAY) ($57.04) set its multi-year high at $58.01 on April 11. eBay has a buy rating, is 15.3% undervalued and is up 45.1% over the last 12 months. Recent upward momentum has the stock among my quarterly value level at $55.68, my semiannual pivot at $56.21 with my monthly risky level at $58.11. Investors should be reducing positions if the stock tests $58.11 pre-earnings with the company reporting on July 17 after the close.

Google ( GOOG) ($923.00) set a new all-time high at $923.00 on Friday. Google has a hold rating, is 32.2% overvalued and is up 61.8% over the last 12 months. Mojo stocks tend to run into trouble once a Wall Street firm gives a company a $1,000 price target as was the case last week. We will learn if such was appropriate after the close on July 18. I do not show a risky level for the stock, but on weakness the key levels to hold are a quarterly value level at $915.63 and my monthly pivot at $922.67.

Intuitive Surgical ( ISRG) ($429.04) was sent to the woodshed to a low at $406.69 on lowered earnings guidance on July 9, and Wall Street lowered EPS estimates to $4.12 per share from $4.32. The stock has a buy rating, is 13.1% undervalued and is down 19.7% over the last 12 months as the stock lost its mojo characteristics back in April 2012 with an all time high at $594.89. I do not show a value level as my annual pivot at $475.74 becomes a risky level.

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 www.ValuEngine.com 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 RSuttmeier@Gmail.com.

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