As we continue to focus on Apple, which clearly remains one of the benchmark stocks in the computer and technology sector, we also focus on earnings reports from three other stocks in this sector, plus earnings from one stock in the business services sector and another in the industrial products sector.
The computer and technology sector is 25.4% overvalued with the business services sector 20.2% overvalued and the industrial products sector 21.4% overvalued.
Apple is a key component of the Nasdaq, which led the major averages higher last week with the Nasdaq setting a new multi-year high at 3731.84 on Sept. 12. When Apple declined to the 50-day and 200-day SMAs the Nasdaq stalled while the other four major equity averages continued higher.
At the Aug. 19 high at 513.74, Apple was rated hold and was testing my annual risky level at $510.64 and the 38.2% Fibonacci Retracement level of the decline from above $700 to below $400. This retracement level is $507.82. My annual value level remains $421.05 with an annual risky level at $510.64. Apple now has a buy rating with its 50-day SMA crossing above its 200-day SMA, which is a technical positive for the stock.
Chart Courtesy of Thomson/Reuters
The decline in Apple shares prevented the Nasdaq from having a weekly close above annual and monthly risky levels at 3759 and 3772, which delays calling for new all-time highs. The question today is whether or not the Nasdaq can pop above these risky levels on the euphoria that Larry Summers will not be the next Federal Reserve chief. A gain of 37 points for the Nasdaq gets it up to 3759.
My quarterly and annual value levels remain at 14,288/12,696 Dow Industrials, 1525.6 / 1348.3 S&P 500, 3284 / 2806 Nasdaq, 5348 / 5469 Dow transports, and 863.05 / 860.25 / 809.54 Russell 2000 with monthly and semiannual risky levels remain 16,336/16,490 Dow Industrials, 1766.8/1743.5 S&P 500, 3772/3759 Nasdaq, 7061/7104 Dow transports and 1093.07/1089.42 Russell 2000.
One of the five stocks previewed in this post is undervalued and three of the other five are overvalued by more than 20%. One stock is down 20.7% over the last 12 months, while three have gained between 17.7% and 45.6%. Four of the five are trading above their 200-day SMAs, which reflects the risk of reversion to the mean.
Reading the Table
OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
Software maker Adobe Systems ($47.76) is above its 50-day SMA at $47.02 with the 2013 high at $48.63 set on July 12. My semiannual value level is $44.85 with an annual risky level at $48.74.
The provider of identity uniforms Cintas ($49.70) set a multi-year high at $49.99 on Sept. 10. My semiannual value level is $47.48 with a weekly pivot at $49.68 and monthly risky level $50.07.
Office furniture and seating designer Herman Miller ($26.34) set a multi-year high at $29.70 on Aug. 1 then declined to $25.08 on Sept. 6 holding the 200-day SMA at $25.52. My annual value level is $24.37 with a weekly pivot at $25.51 and semiannual risky level at $28.80.
Software applications maker Oracle ($32.46) is trading between its 50-day and 200-day SMAs at $32.30 and $33.33. My annual value level is $30.81 with a monthly pivot at $32.33 and annual risky level at $34.68.
TIBCO Software ($24.61) set a 2013 high at $25.76 on Aug. 1 then declined to $22.23 on Aug. 23 holding the 200-day SMA at $22.10. My monthly value level is $21.86 with a weekly pivot at $23.56 and semiannual risky level at $33.66.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.