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Stock Market Resiliency and Vulnerability

Stock Market Resiliency and Vulnerability

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Published by ValuEngine.com
The resiliency of the US stock market is its ability to bend but not break. The major equity averages had a 7% pullback from mid-February to mid-March, but then traded to new year to date highs on May 2nd. Stocks have moved lower in May, but weekly closes have not been able to confirm longer term down trends. Fundamentally stocks are overvalued. ValuEngine issued a ValuEngine Valuation Warning on February 18th and a ValuEngine Valuation Watch on May 2nd. The Dow Industrial Average remains overbought on its weekly chart. A close this week below the five-week modified moving average at 12,468 shifts the weekly chart profile to negative. The downside is my annual value level at 11,491. The S&P 500, NASDAQ, Dow Transports and Russell 2000 need to close below 1332.3, 2802, 5366 and 834.65 for a full set of negative weekly charts. New monthly value and risky levels on June 1st could decide the story.

The resiliency of the US stock market is its ability to bend but not break. The major equity averages had a 7% pullback from mid-February to mid-March, but then traded to new year to date highs on May 2nd. Stocks have moved lower in May, but weekly closes have not been able to confirm longer term down trends. Fundamentally stocks are overvalued. ValuEngine issued a ValuEngine Valuation Warning on February 18th and a ValuEngine Valuation Watch on May 2nd. The Dow Industrial Average remains overbought on its weekly chart. A close this week below the five-week modified moving average at 12,468 shifts the weekly chart profile to negative. The downside is my annual value level at 11,491. The S&P 500, NASDAQ, Dow Transports and Russell 2000 need to close below 1332.3, 2802, 5366 and 834.65 for a full set of negative weekly charts. New monthly value and risky levels on June 1st could decide the story.

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Published by: ValuEngine.com on May 31, 2011
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Richard Suttmeier is the Chief Market Strategist at
www.ValuEngine.com
.
 ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks,and commentary can be found
http://www.valuengine.com/nl/mainnl
 To unsubscribe from this free email newsletter list, please click
http://www.valuengine.com/pub/Unsubscribe?
 
May 31, 2011 Stock Market Resiliency and Vulnerability
The resiliency of the US stock market is its ability to bend but not break. The major equityaverages had a 7% pullback from mid-February to mid-March, but then traded to new year todate highs on May 2
nd
. Stocks have moved lower in May, but weekly closes have not been ableto confirm longer term down trends. Fundamentally stocks are overvalued. ValuEngine issueda ValuEngine Valuation Warning on February 18
th
and a ValuEngine Valuation Watch on May2
nd
. The Dow Industrial Average remains overbought on its weekly chart. A close this weekbelow the five-week modified moving average at 12,468 shifts the weekly chart profile tonegative. The downside is my annual value level at 11,491. The S&P 500, NASDAQ, DowTransports and Russell 2000 need to close below 1332.3, 2802, 5366 and 834.65 for a full set ofnegative weekly charts.
New monthly value and risky levels on June 1
st 
could decide the story.
10-Year Note
– (3.072)
This yield moved from 3.052 to 3.108 overnight not holding its 200-day simple moving average at 3.087.
Daily and weekly pivots are 3.118 and 3.066 as stocks gain.
Courtesy of Thomson / Reuters
 
 
Comex Gold –
($1535.7) The five-week modified moving average is $1494.6 with my quarterly pivotat $1523.7, and daily, monthly and weekly risky levels at $1552.4, $1589.3 and $1594.5.
Courtesy of Thomson / Reuters
Nymex Crude Oil
– ($100.65) My annual pivots are $99.91 and $101.92 with daily and weekly pivotsat $102.41 and $102.31, and my semiannual risky level at $107.14.
Courtesy of Thomson / Reuters
 
 
The Euro –
(1.4289) My daily value level is 1.4131 with my quarterly pivot at 1.4308, and weekly,semiannual and monthly risky levels at 1.4534, 1.4624 and 1.5144.
Note how the 200-week simple moving average provided support last week at 1.4000.
Trading above 1.4308 favors stock rally.
Courtesy of Thomson / Reuters
Weekly Dow:
(12,442) The weekly chart shifts to neutral with overbought MOJO and weekly closebelow the five-week modified moving average at 12,463. My daily pivot is 12,431. My annual valuelevel is 11,491 with weekly risky level is 12,661.
Courtesy of Thomson / Reuters

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