Since these highs could not be confirmed by negative weekly chart profiles, a new set of highs were set in early August. Again these highs could not be confirmed by all five weekly charts of the major equity averages. New highs followed again between Sept. 18 to Sept. 25 and so far positive weekly charts for the Nasdaq and Russell 2000 have prevented these highs from being confirmed as the fourth quarter begins.
The Nasdaq remains influenced by my semiannual pivot at 3759 after setting a multi-year high at 3798.76 on Sept. 20. The all time highs are 15,709.59 Dow Industrials set on Sept. 18, 1729.86 S&P 500 on Sept. 19, 6754.81 Dow transports on Sept. 20 and 1082.00 Russell 2000 on Friday.
If the Nasdaq ends the week above 3759 the upside potential monthly and semiannual risky levels at 15,932/16,490 Dow Industrial Average, 1746.4/1743.5 S&P 500, 3830 Nasdaq, 6811/7104 Dow transports and 1092.46/1089.42 Russell 2000.
Given a weekly close below 3759 on the Nasdaq, stocks become vulnerable towards annual value levels at 12,696 Dow Industrials, 1348.3 S&P 500, 2806 Nasdaq, 5469 Dow transports, and 809.54 Russell 2000. This week's value levels are 14,696 Dow Industrials, 1641.5 S&P 500, 3695 Nasdaq, 6318 Dow transports and 1034.93 Russell 2000.
I have liked the prospects for the discount retailers throughout this period and they continue to perform well and maintain buy ratings. On June 3 I wrote Discount Retailers Track Slow Consumer Spending.
Since then seven of the nine buy-rated names gained into my next post on Sept. 5, Big Lots, Dollar General, Costco, Remain Buy Rated. All nine have maintained a buy rating and six of nine continued to gain into today's post.
All nine stocks continue to have buy ratings and are overvalued by 3.5% to 23.2%. All have gained over the last 12 months five by 12.7% to 25.9%. Two are below their 200-day simple moving averages and seven are above reflecting the risk of a reversion to the mean. Today's table includes new monthly and quarterly levels where designated.
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.
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.
- Russell 2000