Key Levels Volatility Related to Ukraine, Waiting for Payrolls

NEW YORK (TheStreet) -- The two-day, two-way market volatility included new all-time or multiyear highs for three of the five major equity averages on Tuesday. Despite this volatility the underlying trends among the weekly charts for bonds, gold, crude oil and stocks remain the positive with some indices overbought.

Monday's upside for bonds, gold and crude oil did not define upside breakouts and Tuesday's downside stayed above key levels. Monday's downside for the major equity averages did not have closes below all key levels and the highs on Tuesday did not reach any risky levels.

On Tuesday I wrote, Ukraine Is Shaky -- How Can Investors Protect Themselves and Profit?, in which I stated that additional upside for the major equity averages are weekly closes above 16,245 on Dow Industrials, 4274 Nasdaq, 7245 Dow Transports and 1180.35 Russell 2000 after traders and investors react to the February em​ployment data released this Friday. Monday's closes straddled these levels, preventing technical deterioration; while Tuesday's closes were above all of these key levels, a setup for additional upside. (Note that there is not a nearby key level for the S&P 500, hence only four or the five major equity averages are above.)

All eight equity averages in today's 'Crunching the Numbers' table are above all five key moving averages. The Dow Transports which showed declining 12x3x3 weekly slow stochastics after Monday's weakness now has a rising stochastic and will have a positive weekly chart give a close on Friday above its five-week modified moving average at 7331. Events from Ukraine and reaction to Friday's payroll data will key this week's closes.

iShares 20+ Year Treasury Bond ($107.39 vs. $101.17 on Dec. 31, up 6.1% YTD) remains above four of the five key moving averages shown in today's table. The weekly chart remains positive with a close on Friday above its five-week modified moving average is at $106.72 with upside to the 200-week simple moving average at $109.49. My quarterly value level is $105.79 with my annual risky levels are $114.99 and $116.12.

Comex Gold ($1,337.9 vs. $1,202.3 on Dec. 31, up 11.3% YTD) also remains above four out of the five key moving averages in today's table. The weekly chart will remain positive but overbought with a close on Friday above its five-week MMA at $1295.5. The upside is to my monthly and quarterly risky levels at $1373.0 and $1385.0. A breakout above these levels makes the 200-week SMA the next upside target at $1491.9.

Nymex Crude Oil ($103.33 vs. $98.42 on Dec.31, up 5% YTD) remains above all five of the key moving averages in today's table and tested its semiannual pivot at $104.97 on Monday with my annual and semiannual risky levels at $107.52 and $110.30. The weekly chart remains positive but overbought with a close on Friday above its five-week MMA at $101.30.

The Dow Industrial Average (16395.88 vs. 16576.66 on Dec. 31, down 1.1% YTD) is above all five key moving averages but has not yet challenged its all-time high set on Dec. 31 at 16588.25. The weekly chart stays positive on a close this week above its five-week MMA at 16163. My annual value levels are 14835 and 13467 with the semiannual pivot at 16245 and monthly, quarterly and semiannual risky levels at 16644, 16761 and 16860.

The S&P 500 (1873.9 vs. 1848.36 on Dec. 31, up 1.4% YTD) set a new all-time intraday high at 1876.23 on Tuesday. The S&P is above all five key moving averages shown in today's table. The weekly chart stays positive on a close this week above its five-week MMA at 1834.3. My semiannual and annual value levels are 1764.4 and 1539.1 with quarterly and monthly risky levels at 1896.0 and 1930.7.

The Nasdaq (4351.97 vs. 4176.59 on Dec. 31, up 4.2% YTD) set a new multiyear intraday high at 4357.21 on Tuesday. The Nasdaq 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 4223. Semiannual and annual value levels are 3930, 3920, 3471 and 3063 with a semiannual pivot at 4274 and a monthly risky level at 4567.

The Nasdaq 100 (NDX) (3719.93 vs. 3592 on Dec. 31, up 3.6% YTD) set a new multiyear intraday high at 3723.00 on Tuesday. 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 3625. 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 (7466 vs. 7401 on Dec. 31, up 0.9% YTD) remains below its all-time intraday high at 7591.43 set on Jan. 23. The weekly chart shifts to positive on a close this week above its five-week MMA at 7331. Semiannual, quarterly and annual value levels are 7245, 7086, 6249 and 5935 with a semiannual pivot at 7376 and monthly risky level at 7802.

The Russell 2000 (1208.65 vs. 1163.60 on Dec. 31, up 3.9% YTD) set a new all-time intraday high at 1212.82 on Tuesday. The small cap index is above all five key moving averages in today's table. The weekly chart stays positive with a close this week above its five-week MMA at 1163.45. My semiannual and annual value levels are 1133.29, 1130.79, 966.72 and 879.39 with a quarterly pivot at 1180.35 and monthly risky level at 1253.12.

The PHLX Semiconductor Index SOX (570.13 vs. 535.03 on Dec. 31, up 6.6% YTD) set a new multiyear intraday high at 570.85 on Tuesday. 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 549.24. 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 (518.57 vs. 490.57 on Dec. 31, up 5.7% 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 509.93. 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.

To signal a correction all five major equity averages need to have simultaneous weekly closes below their five-week MMAs shown in today's table with declining 12x3x3 weekly slow stochastics for 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 on the rise and shown in today's table.

Crunching the Numbers with Richard Suttmeier

In the column labeled YTD % Change I 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 Levelsare 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.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at 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

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