NEW YORK (TheStreet) -- So far this year bonds, gold and crude oil have outperformed the major equity averages. Tensions between Russia and Ukraine have accelerated the momentum of the trends in these markets -- bonds and commodities often rise in response to global uncertainty. The major equity averages have also had upward momentum since early February, but the uncertainties in Ukraine could slow down this momentum.
The consensus in the financial media for 2014 had been to avoid bonds and commodities, and that stocks remain cheap.
So far that has been dead wrong. So how can investors respond to this market, protect themselves and profit?
Today I will present a technical analysis of iShares 20+ Year Treasury Bond (TLT), Comex Gold Futures and Nymex Crude Oil Futures., as well as the major stock and commodity averages. Then I will summarize what may happen to the major equity averages given prolonged tensions related to Ukraine.
Investors can make a more informed investment plan based on these numbers.
A detailed technical analysis chart about these markets follows on page 3. It explains my number-crunching terms and gives an analysis about when to buy or sell.
iShares 20+ Year Treasury Bond ($109.03 yesterday vs. $101.17 on Dec. 31, up 7.8% YTD) trades like a stock. Its components are U.S. Treasuries with maturity dates longer than 20 years. This bond ETF is above four out of five key moving averages shown in my "Crunching the Numbers" table. Monday's intraday high for this ETF at $109.18 is in striking distance of its 200-week SMA at $109.50. The weekly chart has been positive since the first week of 2014. Its five-week modified moving average is at $107.04. My quarterly value level at $105.79 began the year as a pivot, and my annual risky levels are $114.99 and $116.12.
Comex Gold ($1351.20 yesterday vs. $1202.30 on Dec. 31, up 12.4% YTD) is also above four out of five key moving averages in my table. Gold is below its 200-week SMA at $1492. The weekly chart is positive but overbought, with the precious metal approaching my monthly and quarterly risky levels at $1373 and $1385. A breakout above these levels makes the 200-week SMA the next upside target.
Nymex Crude Oil ($104.92 yesterday vs. $98.42 on Dec. 31, up 6.6% YTD) is above all five of the key moving averages in my table and has tested my semiannual pivot at $104.97 on Monday, March 3. My annual and semiannual risky levels are at $107.52 and $110.30. The weekly chart is positive but overbought, with the five-week MMA at $100.50. Note that crude oil has been trading back and forth around its 200-week SMA, now at $93.15, since mid-2009.
Here are my profiles for the major equity averages.
The Dow Jones Industrial Average
The S&P 500
The Nasdaq 100 (NDX) (3668 yesterday vs. 3592 on Dec. 31, up 2.1% YTD) set a new multiyear intraday high at 3722.38 on Feb. 28. The Nasdaq 100 is above all five key moving averages shown in today's table. The weekly chart stays positive but overbought, with a close this week above its five-week MMA at 3614. Semiannual and annual value levels are 3456, 3458, 3078 and 2669 with a quarterly pivot at 3714 and monthly risky level at 3925.
The Dow Transportation Average (DJT) (7303 yesterday vs. 7401 on Dec. 31, down 1.3% YTD) traded below its 50-day SMA at 7303 on Monday, March 3, but closed right on this key level. Transports lag its all-time intraday high at 7591.43 set on Jan. 23. The weekly chart stays negative on a close this week below its five-week MMA at 7298. Quarterly and annual value levels are 7086, 6249 and 5935, with a semiannual pivot at 7245 and semiannual and monthly risky levels at 7376 and 7802.
The Russell 2000
The PHLX Semiconductor Index (SOX) (560.23 yesterday vs. 535.03 on Dec. 31, up 4.7% YTD) set a new multiyear intraday high at 568.24 on Feb. 26. The SOX is above all five key moving averages in today's table. The weekly chart stays positive but overbought, with a close this week above its five-week MMA at 547.26. Quarterly, semiannual and annual value levels are 548.36, 536.98, 490.52, 371.58 and 337.74, with a monthly pivot at 561.69.
The Dow Utility Average (DJU) (514.19 yesterday vs. 490.57 on Dec. 31, up 4.8% YTD) remains below its last multiyear intraday high at 537.86, set back on April 30, 2013. Utilities are above all five key moving averages in today's table. The weekly chart stays positive but overbought, with a close this week above its five-week MMA at 509.06. Semiannual, annual and quarterly value levels are 504.74, 497.53 and 496.84, with a monthly pivot at 510.88 and semiannual and annual risky levels at 524.37 and 548.70.
Overall, my scenario for additional upside for the five major equity averages are weekly closes above 16,245 for Dow Industrials, 4274 for Nasdaq, 7245 for Dow Transports and 1180.35 for Russell 2000, after traders and investors react to the February employment data released this Friday. Monday's closes straddled these levels.
To signal downside risk we need to have simultaneous weekly closes below the five-week MMAs shown in today's table with declining 12x3x3 weekly slow stochastics.
The five major averages are Dow Industrials, S&P 500, Nasdaq, Dow Transports and Russell 2000.
Remember that my market call for 2014 is that the five major averages will decline to their 200-day SMAs at some point during the year. These moving averages are shown in today's table.
Crunching the Numbers with Richard Suttmeier
In the column labeled YTD % ChangeI show the percent year-to-date gain or loss.
There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.
Interpretations: (stocks below a moving average listed in red are below that moving average)
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff