Let's Start a Bull vs. Bear Market Debate!

NEW YORK (TheStreet) -- Two weeks ago four of the five major equity averages set new all-time or multiyear highs and the exception was the Dow Industrial Average which stalled on Dec. 31 after setting its all-time high at 16588.25.

The other major averages continued higher with the Russell 2000 setting its all-time high at 1212.82 on March 4 then the Nasdaq set its multiyear high at 4371.71 on March 6. The S&P 500 and the Dow transportation average set their all-time highs at 1883.57 and 7627.44 respectively on March 7.

This morning the major averages recouped some of last week's losses under the influence of quarterly and semiannual pivots as the 'tangled bowl of spaghetti' continues. Friday's closes were below my semiannual pivot at 16245 on Dow Industrials and my quarterly pivot at 4274 on the Nasdaq, but Friday's close on the Russell 2000 was above its quarterly pivot at 1180.35.

This morning the Dow and Nasdaq recaptured their pivots putting the bulls in control as traders and investors wait for the FOMC Statement following Fed Chief Janet Yellen's first FOMC meeting.

Meanwhile, don't ignore the messages from bonds, gold and the Dow Utilities Average.

The yield on the Treasury 10-year note(2.649%) is down a significant 37.7 basis points year-to-date when most investment strategists have been saying 'avoid bonds'.

The price of Comex gold($1372.4) is up $169.90 the Troy ounce year-to-date when Wall Street told investors that gold would continue to decline in 2014.

The word from most money managers has been to avoid utilities and the Dow utility average is the leading equity average so far in 2014 up 6.5% as investors seek dividends.

Here are my 'buy-and-trade' profiles for three ETFs that trade like bonds, gold and utilities:

iShares 20+Year Treasury Bond ETF (TLT) ($108.52) trades like a stock and its components are Treasuries with maturity dates longer than 20 years. This bond ETF is above its 21-day, 50-day and 200-day simple moving averages converging at $107.25, $106.42 and $106.30. The weekly chart has been positive since the first week of 2014 with its five-week modified moving average is at $107.10 with its 200-week SMA reachable at $109.60.

On March 4 I wrote, Ukraine Is Shaky -- How Can Investors Protect Themselves and Profit? In this story I profiled the bond ETF and on March 7 weakness to $105.60 tested my quarterly value level at $105.67. My monthly value level is $102.79 with the quarterly pivot at $105.67, a weekly risky level at $109.48 and annual risky levels are $114.99 and $116.12.

SPDR Gold Shares ETF (GLD) ($133.10) is above its 21-day, 50-day and 200-day SMAs at $129.24, $124.43 and $125.71 trading to a new 2014 high at $133.69 on Friday which was a test of my quarterly pivot at $133.61. The weekly chart is positive but overbought with its five-week MMA at $127.92. Holding the weekly, monthly and quarterly pivots at $132.89, $132.17 and 133.61, targets the 200-week SMA at $145.08.

Select Sector Utilities Sector SPDR ETF (XLU) ($40.89) is above its 21-day, 50-day and 200-day SMAs at $40.31, $39.18 and $38.36. The weekly chart profile is positive but overbought with the five-week MMA at $40.03. Annual, semiannual, quarterly and monthly pivots are $39.12, $38.88, $38.11 and $38.13 with a semiannual pivot at $40.46, and annual and weekly risky levels at $41.19 and $41.72.

Back to the bull/bear stocks debate.

In my first post of 2014, Stocks Begin 2014 With Inflating Bubbles I described that my value levels, pivots and risky levels for the major equity averages were like a 'tangled bowl of spaghetti' and the semiannual levels will be with use until the end of June and the annual levels will last until the end of the year. Two weeks from now we will have new monthly and quarterly levels.

My semiannual value levels are 3930 and 3920 on the Nasdaq with semiannual pivots at 16245 Dow Industrials, 1797.3 and 1764.4 on the S&P 500, 7376 and 7245 Dow transports and 1133.29 and 1130.79 Russell 2000 and semiannual risky level at 16,860 Dow Industrials.

The only levels not yet crossed in 2014 are 3930 and 3920 Nasdaq and 16,860 Dow Industrials. The bulls win the debate if the Dow Industrials sets a new all-time high and tests 16,860 on or before June 30, up 4.9% from Friday's close at 16,065.67. The bears win the debate if the Nasdaq declines to 3920 on or before June 30, which is down 7.7% from Friday's close at 4245.40.

I am on the bear side of the debate as my prediction for 2014 remains that the major equity averages will test their 200-day simple moving averages in 2014 and these ended last week at; 15620 Dow Industrials, 1737.5 S&P 500, 3859 Nasdaq, 6841 Dow transports and 1086.42 Russell 2000.

To confirm significant market highs require negative weekly chart profiles. The major averages have rising or overbought 12x3x3 weekly slow stochastic readings and they need to be declining to confirm market highs. There also needs to be weekly closes below the five-week modified moving averages and last week close on Dow Industrials was below its five-week MMA at 16158. The others were above at; 1837.1 S&P 500, 4226 Nasdaq, 7385 Dow Transports and 1166.48 Russell 2000.

Given negative weekly charts the downside is to annual value levels at 14835 and 13467 Dow Industrials, 1539.1 and 1442.1 S&P 500, 3471 and 3063 Nasdaq, 6249 and 5935 Dow Transports and 966.72 and 879.39 Russell 2000.

The downside risks from Friday's closes to the lowest annual value levels are: 16.2% Dow Industrials, 21.7% S&P 500, 27.9% Nasdaq, 20.6% Dow transports and 25.6% Russell 2000.

If these levels are tested before year-end the bulls must buy the bears fresh picnic baskets.

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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