NEW YORK (TheStreet) - If you haven't become more defensive in your investment strategies beware that market headwinds have intensified. Given higher yields, relatively weak crude oil prices and negative divergences in the major equity averages, its time to book profits before a stock marker peak is confirmed. This includes major benchmark stocks JPMorgan Chase (JPM), Wells Fargo (WFC) and Exxon Mobil (XOM).
Fundamentally the stock market remains under a ValuEngine valuation warning with 82.1% over all stocks overvalued 48.7% by 20% or more.
Technically the major equity averages remain overbought on their weekly charts, but beware that this week's stock market declines have these averages straddling their five-week modified moving averages at Thursday's closes. My technical signal for a stock market peak is weekly closes below the five-week modified moving averages with 12x3x3 weekly slow stochastic readings declining below 80.00 on a scale of 00.00 to 100.00.
The five-week MMAs are 15,800 Dow Industrial Average, 1774.1 S&P 500, 3957 Nasdaq, 7049 Dow transportation average, 1112.93 Russell 2000.
My proprietary analytics show that the major equity averages are trading within a longer term zone of pivots and risky levels. When markets enter risky levels its time to book profits!
Semiannual and quarterly pivots or risky levels are 16,490/16,775 Dow Industrials, 1743.5/1853.8 S&P 500, 3759/4025 Nasdaq, 7104/7205 Dow transports and 1089.42/1163.21 Russell 2000.
The rising yield in the 30-year Treasury bond is a headwind with its monthly value level at 4.006%. Given rising yields its time to book profits on two of the four 'too big to fail' money center banks as they are trading within the range of their all time highs, above levels of 2007/2008 before the Great Credit crunch began.
JPMorgan Chase ($56.31) has a hold rating according to ValuEngine and is 27.6% overvalued and closed Thursday within 1% of its one-year price target at $56.85. The stock has gained 31.7% over the last 12 months and is well above its 200-day simple moving average at $52.45. The weekly chart is overbought with its five-week MMA at $55.34. My semiannual value level is $50.37 with monthly and quarterly risky level at $59.28 and $59.44 vs. its multi-year intra-day high at $58.14 set on Nov. 25.
Wells Fargo ($43.50) has a hold rating and is 21.4% overvalued and closed Thursday within 1.7% of its one-year price target at $44.25, and the $45 price level has been a ceiling since July. The stock has gained 29.9% over the last 12 months and is well above its 200-day SMA at $40.94. The weekly chart is overbought with its five-week MMA at $41.39. My semiannual value level is $40.04 with a monthly risky level at $46.66.
Another market to focus on is Nymex crude oil which was a Fed-induced bubble that popped in mid-2008 into early-2009. Since mid-2009 the 200-week SMA has been a magnet, which was last tested with the intra-day low at $91.77 on Nov. 27. The rebound from this test was to the 200-day SMA at $98.66 this week. With crude oil below its 200-day since Oct. 22 its time to book profits on the big oil companies.
Exxon Mobil($95.36) has a hold rating according to ValuEngine and is 22.1% overvalued and closed Thursday 2.6% below its one-year price target at $92.90. The stock has gained 6.6% over the last 12 months and has been above its 200-day SMA at $90.21 since Nov. 4. The weekly chart is overbought with its five-week MMA at $93.09. My monthly and semiannual value levels are $90.63 and $89.50 with a multi-year intra-day high at $96.25 on Dec. 9.
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.