14 Indices Tell the Stock Market Story

NEW YORK (TheStreet) -- The Dow Industrial Average, S&P 500 and the Dow Transportation Average set all-time intraday highs on Thursday, and today's opening levels are new highs for at least the Dow and S&P.

Meanwhile, the Nasdaq and Russell 2000 lag their highs, which were set on March 6 and March 4, respectively. The message is that investors are shifting asset allocation from the momentum stocks in the Nasdaq and the more risky small cap names, into the brand name industrials, transports and components of the S&P 500.

On March 23 I wrote, Pop! Goes the Momentum Bubble that showed the popping bubbles in Amazon.com (AMZN), Linkedin (LNKD), Netflix (NFLX), Priceline (PCLN) and Tesla (TSLA). This defines the drag in the Nasdaq.

Some technicians say that new highs for Transports and Industrials is a Dow Theory buy signal. That's a pre-tech theory! Today, the more important index is the PHLX Semiconductor Index which set a multiyear intraday high on Thursday. The message is that almost every consumer product contains some sort of computer chip, and thus strength in semiconductors. I covered this theme on March 25 in, Semiconductors Are Leading the Market, where I profiled the 24 semiconductor stocks in the Market Vectors Semiconductor ETF (SMH).

Today's "Crunching the Numbers'"tables profiles the 14 indices that tell these market stories and more. The first table provides the five major moving averages and stochastic readings. The second table provides the value levels at which to buy on weakness and the risky levels at which to sell on strength.

iShares 20+Year Treasury Bond ETF (TLT) ($107.74, up 6.5% YTD) has outperformed the S&P 500 gain of just 2.2%. What some investors still don't understand is that the bond ETF trades like a stock and its components are U.S. Treasuries with maturity dates longer than 20 years. The weekly chart shifts to negative with a close today below the five-week modified moving average at $107.60 after trading above its 200-week simple moving average at $109.71 on March 31. A monthly value level is $105.94 with an annual risky level at $114.99.

Comex Gold ($1284.6, up 6.8% YTD) has been below its golden cross, defined when its 50-day SMA crossing above its 200-day SMA on March 26 with these averages now at $1,308.5 and $1,296.9. This morning gold is back above its 200-day SMA. The weekly chart is negative given a close today below its five-week MMA at $1307.6. Monthly and quarterly value levels are $1,264.2 and $,1215.7.

Nymex Crude Oil ($100.29, up 1.9% YTD) has been trading back and forth around its 200-day SMA at $100.50 all year with a low of $91.24 on Jan. 9 and a 2014 high at $105.22 on March 3. The weekly chart shifts to negative given a close today below its five-week MMA at $100.16, otherwise this chart is neutral. The weekly chart also shows that crude oil has been trading back and forth around its 200-week SMA now at $93.71 since mid-2009.

PHLX Housing Sector Index HGX (202.31, down 0.5% YTD) tracks 19 housing-related stocks including 11 of the 12 homebuilders we have been profiling. On March 19 I wrote, Is It Time to Sell Homebuilder Stocks? The message is that the housing market has peaked at 60% of potential with the National Association of Home Builders Housing Market index below the neutral reading of 50. The most recent reading on single-family housing starts was below 600,000 when the potential is 1.1 to 1.2 million. Housing is associated with consumer sentiment and all readings have been below the neutral range of 90 to 110 since the end of 2007. This indicates that the message from Main Street is that Federal Reserve policy is not working.

The housing index continues to trade back and forth around the 61.8% Fibonacci retracement of the decline from its mid-2005 high to the March 2009 low with this level at 202.05. The weekly chart stays negative given a close today below its five-week MMA at 201.67, otherwise this chart is neutral.

On March 10 I wrote, Five Years from the Bottom: Keep an Eye on Housing and Banks and this post summarizes the recovery of the banking system. Upcoming earnings for banks could be problematic as it gets tougher to decrease reserves for losses. Some banks will be underwater on securities held for trading. And, the mortgage market has slowed to a trickle.

America's Community Bankers Index ABAQ (245.73, up 3.4% YTD) set its 2014 intraday high at 249.50 on March 21 the day the bigger banks passed their stress tests. The weekly chart stays positive with a close today above its five-week MMA at 239.00. This index is above its 61.8% retracement at 236.33.

KBW Banking Index BKX (72.69, up 5.0%) set its 2014 intraday high at 73.90 on March 21 the day 18 of 19 banks in this index, that were subjected to the Federal Reserve stress tests, passed their tests. The weekly chart stays positive given a close today above its five-week MMA at 70.66. The banking index is above the 50% retracement at 69.37 but below the 61.8% retracement at 81.54.

The Dow Industrial Average (16573, flat YTD) set an all-time intraday high at today's open above the 16604.15 high set on April 3. The weekly chart remains positive given a close today above its five-week MMA at 16283. Monthly and semiannual value levels are 16297 and 16245 with a quarterly pivot at 16462 and semiannual risky level at 16860. Our annual value levels lag at 14835 and 13467.

The S&P 500 (1888.8, up 2.2% YTD) set an all-time high intraday high at today's open above the 1893.80 high set on April 3. The weekly chart is positive but overbought with its five-week MMA at 1854.0. Quarterly and semiannual value levels are 1853.5, 1797.3 and 1764.4 with a monthly risky level, now a pivot at 1895.6. Annual value levels lag at 1539.1 and 1442.1.

The Nasdaq (4238, up 1.5% YTD) is between its 50-day and 21-day SMAs at 4224 and 4267. The weekly chart stays negative on a close today below its five-week MMA at 4223, otherwise this chart is neutral. Quarterly and semiannual value levels are 4039, 3930 and 3920 with its multiyear intraday high at 4371.71 set on March 7, and monthly risky level at 4446. Annual value levels lag at 3471 and 3063.

The Nasdaq 100 (3638, up 1.3% YTD) is between its 50-day and 21-day SMAs at 3624 and 3654. The weekly chart stays negative on a close today below its five-week MMA at 3621, otherwise this chart is neutral. Semiannual and quarterly value levels are 3458 and 3424 with its multiyear intraday high at 3738.32 set on March 6, and monthly risky level at 3834.

The Dow Transportation Average (7783, up 3.8% YTD) set an all-time intraday high at 7715.91 on April 3. The weekly chart is positive with its five-week MMA at 7469. Quarterly and semiannual value levels are 7407, 7376 and 7245 with a weekly pivot at 7531 and a monthly risky level at 7812. Annual value levels lag at 6249 and 5935.

The Russell 2000 (1181.12) is between its 50-day and 21-day SMAs at 1163.40 and 1184.58. The weekly chart stays negative given a close today below its five-week MMA at 1170.40, otherwise this chart is neutral. Quarterly and semiannual value levels are 1169.22, 1133.29 and 1130.79 with and a monthly risky level at 1211.52, which is below the March 4 all-time intraday high at 1212.82.

The PHLX Semiconductor Index (595.99, up 11.4% YTD) set a multiyear intraday high at 601.40 on April 3. The weekly chart is positive but overbought with its five-week MMA at 569.05. Semiannual and quarterly value levels are 548.36 and 507.19 with a monthly pivot at 581.64 and this week's risky level at 602.78.

The Dow Utility Average (529.71, up 8% YTD) set its 2014 intraday high at 533.80 on March 30. The weekly chart is positive but overbought with its five-week MMA at 519.02. Quarterly and semiannual value levels are 528.10 and 504.03 with a quarterly pivot at 528.10 and annual risky level at 548.70.

Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks or indices profiled in today's report.

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)


Crunching the Numbers with Richard Suttmeier: Where to Buy & Where to Sell

This table presents where to buy on weakness and where to sell on strength.

EPS Date is the day the company reports their quarterly results.

EPS Estimate is the earnings per share estimate from Wall Street analysts.

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.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

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.

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