Our Less-Than-Robust Bull Market Since May

NEW YORK (TheStreet) -- When you cannot confirm market highs new highs will follow. This happened at the May highs, then at the August highs and now following the September highs. However, the bull market extension since May has not been as robust as Wall Street and the media have been touting.

The Market Pulse above shows the performances of the indices I follow including the five major equity averages. Since the May highs the Dow Jones Industrial Average is down 1.4% despite setting a new all-time high at 15,709.59 on Sept. 18. Both the S&P 500 and Dow transports are higher by just 0.7% and 1.1% respectively. The winners since the May highs are the tech-heavy Nasdaq and the small cap Russell 2000 up 7.2% and 7.0% respectively. In the table, I also show the upside to semiannual risky levels and the downside to the annual value levels.

Fundamentally the stock market has been trading under a ValuEngine valuation warning since those May highs. Today 77.4% of all stocks are overvalued 44.2% by 20% or more. A total of 15 out of 16 sectors are overvalued; 13 by double-digit percentages; 10 by more than 20%.

The Nasdaq remains influenced by my semiannual pivot at 3759 after setting a multi-year high at 3798.76 on Sept. 20. The all time highs are 15,709.59 Dow Industrials set on Sept. 18, 1729.86 S&P 500 on Sept. 19, 6754.81 Dow transports on Sept. 20 and 1082.00 Russell 2000 on Sept. 25.

If the Nasdaq ends the week above 3759 the upside potential elsewhere is to semiannual risky levels at 16,490 Dow Industrials, 1743.5 S&P 500, 7104 Dow transports and 1089.42 Russell 2000.

Given a weekly close below 3759 on the Nasdaq, stocks become vulnerable towards annual value levels at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow transports, and 809.54 Russell 2000. Next Tuesday we will have new monthly and quarterly levels, which could temper this downside risk.

Today's table profiles the 12 Dow components that have buy ratings according to www.ValuEngine.com:

Only one of the 12 buy-rated Dow components is undervalued, but only three are overvalued by more than 20%. Two are down over the last 12 months, but only four are higher by 28% to 39.6%. Four are trading below their 200-day simple moving averages and the others are above their 200-day simple moving averages.

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.

Cisco ( CSCO) ($23.77) is trading between its 200-day and 50-day SMAs at $22.60 and $24.80. My annual value level is $22.76 with a semiannual pivot at $23.47 and monthly risky level at $25.66.

General Electric ( GE) ($24.23) is trading above its 50-day and 200-day SMAs at $24.05 and $23.08. My annual value level is $21.09 with a semiannual risky level at $26.68.

Home Depot ( HD) ($76.07) is trading between its 200-day and 50-day SMAs at $72.48 and $76.76. My semiannual value level is $62.82 with a semiannual pivot at $74.17 and quarterly risky level at $80.48.

IBM ( IBM) ($190.22) is on the cusp of its 50-day SMA at $189.58 with the 200-day SMA at $198.55. My annual value level is $171.70 with a monthly risky level at $203.66.

Coca Cola ( KO) ($38.74) is below its 50-day and 200-day SMAs at $39.31 and $39 56 with the recent low at $37.80. My semiannual risky level is $43.12.

McDonalds ( MCD) ($98.19) is above its 50-day and 200-day SMAs converged at $97.01 and $97.09. My semiannual pivot is $98.47 with an annual risky level at $104.63.

3M ( MMM) ($120.66) is above its 50-day SMA at $117.03. My quarterly value level is $92.40 with a semiannual pivot at $115.00 and semiannual risky level at $123.39.

Procter & Gamble ( PG) ($78.05) is between its 200-day and 50-day SMAs at $77.03 and 79.68. My annual value level is $75.13 with an annual pivot at $78.73 and semiannual risky level at $81.86.

AT&T ( T) ($34.23) is below its 50-day and 200-day SMAs at $34.58 and $35.54. My semiannual value level is $32.14 with a semiannual risky level at $38.14.

United Technologies ( UTX) ($109.66) is well above its 50-day SMA at $105.28. My annual value level is $90.05 with a semiannual pivot at $107.61 and no risky levels.

Verizon Communications ( VZ) ($47.67) is below its 50-day and 200-day SMAs at $48.44 and 48.18. My semiannual value level is $42.34 and semiannual risky level at $49.86.

Wal-Mart ( WMT) ($74.19) is between its 200-day and 50-day SMAs at $74.19 and $75.51. My semiannual value level is $61 55 with a semiannual pivot at $74.96 and monthly risky level at $79.88.

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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