Traders and investors all but ignored the Nasdaq trading freeze on Thursday. It appears that the Nasdaq suffered a technical glitch that was called a connectivity issue that lasted for nearly three hours. Thursday's market rebound also ignored the ValuEngine valuation warning with 76.3% of all stocks overvalued 44.2% by 20% or more. The retail-wholesale sector is 24% overvalued and is one of nine sectors overvalued by more than 20%.
Today's closes are likely to keep the weekly chart profiles mixed for the five major equity averages. Dow Industrials and the S&P 500 are below their five-week modified moving averages at 15,306 and 1666.8 respectively. The Nasdaq, Dow transports and Russell 2000 are above their five-week MMAs at 3573, 6426 and 1026.03 respectively.
If we cannot confirm the early-August highs as cycle highs, new highs are likely in September. Here's the upside and downside in today's market pulse.
After Thursday's market strength the Nasdaq is down just 1.5% from its Aug. 5 multi-year high at 3694.18. The upside to my semiannual risky level at 3759 is just 3.3%. The downside to my annual value level at 2806 is 22.9%. This profile continues to justify having 50% of your investment dollars on the sidelines in cash.
Here is today's earnings scorecard with my buy-and-trade parameters:
Best Buy ($35.20 vs. $30.37 on Aug. 16) beat EPS estimates by 20 cents a share earning 32 cents premarket on Tuesday. The stock closed Monday at $30.73 and gapped higher on Tuesday in a moon-shot to a multi-year high at $35.44 on Thursday. The upside price gap resulted in a downgrade to hold from buy according to ValuEngine. The stock is above my monthly pivot at $33.05, but the downgrade should be enough for buy-and-trade investors to consider booking profits.
Barnes & Noble ($14.46 vs. $17.54 on Aug. 16) beat EPS estimates by 4 cents reporting a loss of 86 cents a share. This stock was taken to the woodshed with a low of $13.81 on Aug. 20. This weakness caused the stock to be upgraded to strong buy from buy. My quarterly value level is $12.81 with an annual pivot at $14.33 and annual risky level at $17.58.
Bob Evans Farms ($52.39 vs. $47.74 on Aug. 16) beat EPS estimates by a penny earning 58 cents a share. The stock closed Monday at $47.57 and popped to a multi-year high at $52.89 on Wednesday for a test of my monthly risky level at $52.51, where buy-and-trade investors could have booked profits on this buy rated stock. My semiannual value level is $48.72 with a monthly pivot at $52.51 and weekly risky level at $53.08.
Home Depot ($74.00 vs. $75.38 on Aug. 16) beat EPS estimates by 4 cents earning $1.24 a share. The stock popped to $77.50 on the news then faded to a low of $73.35 on Thursday on profit-taking. The 200-day simple moving average for this buy rated stock is $71.06 with a semiannual pivot at $74.17 and a monthly risky level at $80.39, which was tested on Aug. 2.
JC Penney ($13.20 vs. $13.40 on Aug. 16) missed EPS estimates by $1.03 with a bigger loss than expected at $2.16 a share. The stock traded up to $14.39 on Tuesday then fell to $13.20 at Thursday's close. Share price weakness maintains a buy rating. My quarterly value level at $13.00 held at the Tuesday low at $12.81. My weekly risky level is $14.80.
TJX ($54.16 vs. $50.48 on Aug. 16) best EPS estimates by 3 cents earning 66 cents a share. This buy rated stock popped to a new multi-year high at $54.49 above my semiannual and annual pivots at $52.25 and $52.67 with my quarterly risky level at $57.66.
Urban Outfitters ($42.70 vs. $39.74 on Aug. 16) beat EPS estimates by 3 cents earning 51 cents a share. The buy rated stock popped to $44.15 on Tuesday then consolidated. My annual value level is $37.28 with a quarterly pivot at $39.11 and weekly risky level at $43.53, which was tested at the earnings reaction high.
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.