The Ups And Downs Among Internet Stocks

NEW YORK ( TheStreet) -- The Nasdaq has been the best performing of the five major averages over the last few weeks setting a new multi-year high at 3817.98 on Oct. 1. The Russell 2000 joined the Nasdaq with a new all-time high set that day at 1087.78 on the Russell 2000. While this speculative phase of the stock market evolved Dow Industrials peaked at 15,709.59 on Sept. 18 with the S&P 500 peaking at 1729.86 on Sept. 19 and the Dow transports peaking at 6754.81 on Sept. 20. We are now on watch to confirm all five highs as cycle highs this week or next.

The weekly charts for Dow Industrials, S&P 500 and Dow transports will be negative with closes this week below their five-week modified moving averages at 15,125.10, 1676.02 and 6511.27 respectively.

The weekly chart for the Nasdaq shifts to neutral with a close this week below its five-week modified moving average at 3707.32, as its momentum reading will likely remain in overbought territory. The same will be true for the weekly chart of the Russell 2000 given a weekly close below its five-week MMA at 1052.50. We are thus a week away from a potential confirmation that of the recent all-time highs or the multi-year high on the Nasdaq are cycle highs.

Recent stock market weakness has made the fundamentals less overvalued, but we remain under the cloud of a ValuEngine valuation warning with 74.4% of all stocks overvalued 36.7% by 20% or more. 15 of 16 sectors remain overvalued, 13 by double-digit percentages seven by more than 20% overvalued.

In this environment many Internet stocks have recently hit new multi-year highs and have since stumbled. Today I provide my buy-and-trade parameters to 13 Internet stocks. Since slumping four have gains of 18.7% to 24.8% since Aug. 5 and five are down 4.7% to 12.5% since Aug. 5. Five have buy ratings and eight have hold ratings according to www.ValuEngine.com. Three are down 10.5% to 14.5% over the last 12 months while five are up between 105.4% and 138.1%. Two are below their 200-day simple moving averages while 11 are above reflecting the risk of reversion to the mean.

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.

AOL ( AOL) ($32.89) has slipped 7.1% since Aug. 5 after being above its 200-day SMA at $35.48 on Oct. 2. The stock has a buy rating with a weekly value level at $31.13 and a monthly risky level at $41.37.

Expedia ( EXPE) ($50.63) is up just 1.9% since Aug. 5 and gapped below its 200-day SMA at $58.67 on July 26. The buy rated stock has a monthly value level at $44.73 with a weekly pivot at $49.82 and semiannual risky level at $61.18.

Facebook ( FB) ($47.14) is up 20.3% since Aug. 5 even after setting an all-time high at $51.60 on Sept. 30. The stock has a hold rating with a monthly value level at $37.55 and a weekly risky level at $52.17.

F5 Networks ( FFIV) ($88.79) is flat since Aug. 5 and is above its 200-day SMA at $86.65 after trading as high as $94.66 on Sept. 20. The stock has a hold rating with a weekly value level at $87.98 with a quarterly risky level at $121.71.

Google ( GOOG) ($853.67) is down 5.7% since Aug. 5 after making three attempts to trend above $900 since mid-May. The stock has a hold rating with the 200-day SMA in sight at $836.70 and my semiannual pivot and risky level at $880.49 and $892.48.

Linkedin ( LNKD) ($222.73) is down 4.7% since Aug. 5 after breaking below its 50-day SMA at $239.34 on Tuesday. The stock has been upgraded to buy from hold this morning with its 200-day SMA at $183.81, a quarterly pivot at $222.58 and weekly risky level at $254.04.

Netease ( NTES) ($66.37) is up 4.3% since Aug. 5 even after breaking below its 50-day SMA at $69.94 on Tuesday. The stock has been upgraded to buy from hold this morning with a semiannual value level at $65.71 and a quarterly risky level at $78.20.

OpenTable ( OPEN) ($67.66) is up just 1.7% since Aug. 5 and has been below its 50-day SMA at $71.76 since Oct. 4. The stock has a buy rating with a quarterly value level at $61.08, a semiannual pivot at $69.33 and monthly risky level at $76.82.

Pandora ( P) ($24.26) is up 24.8% since Aug. 5 after fading from a new all-time high at $27.93 set on Oct. 3. The stock has a hold rating with a quarterly value level at $15.14, a monthly pivot at $24.64 and weekly risky level at $26.68.

Trulia ( TRLA) ($41.61) is down 8.9% since Aug. 5 after setting a multi-year high at $52.71 on Sept. 19. The buy rated stock broke below its 50-day SMA at $45.12 on Tuesday with the 200-day SMA at $33.06, a monthly pivot at $44.59 and weekly risky level at $48.30.

Yelp ( YELP) ($64.60) is up 19.6% since Aug. 5 after setting a multi-year high at $73.45 on Oct. 4. The hold rated stock has a monthly value level at $59.35 with a 50-day SMA at $58.56 and a weekly risky level at $73.43.

Yahoo ( YHOO) ($32.93) is up 18.7% since Aug. 5 after setting a multi-year high at $35.06 on Oct. 4. The stock has a hold rating with a quarterly value level at $30.84 with a weekly pivot at $33.23 and monthly risky level at $34.27.

Zillow ( Z) ($78.79) is down 12.5% since Aug. 5 after setting a multi-year high at $103.00 on Sept. 4 and has been below its 50-day SMA at $89.83 since Oct. 3 with the 200-day SMA at $60.08. My weekly pivot is $86.15 with a monthly risky level at 97.24.

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 is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

If you liked this article you might like

Twitter Is Too Valuable to Not Be Acquired by Disney

Twitter Is Too Valuable to Not Be Acquired by Disney

Cramer: I Want to See Lower Prices From the 5% Dividend Yield Gang

Cramer: I Want to See Lower Prices From the 5% Dividend Yield Gang

Yahoo! CEO Mayer Not Joining New Leadership Team Under Verizon

Yahoo! CEO Mayer Not Joining New Leadership Team Under Verizon

Here's Who Killed It in October Dealmaking Advice

Here's Who Killed It in October Dealmaking Advice

Media Consolidation Could be on Menu as Moguls Descend on Sun Valley for Allen Conference

Media Consolidation Could be on Menu as Moguls Descend on Sun Valley for Allen Conference