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Chipotle and Priceline Lead Momentum Stocks While Tesla Lags

Richard Suttmeier

NEW YORK ( TheStreet) -- When you look at momentum stocks -- stocks that continue higher even though they may be overvalued fundamentally and overbought technically -- Chipotle Mexican Grill has been the leader since Oct. 1 gaining 26.3% since then. Priceline.com is right behind and set an all-time high yesterday.

Meanwhile, Tesla Motors -- the biggest gainer over the last 12 months up 338.7% -- is down 28.1% since Oct. 1 as the stock's weekly chart profile shifted to negative at the end of October.

On Oct. 2, I wrote Apple, Google Lag Momentum Stocks and since then Apple gained 6.7% but in the process was downgraded to hold from buy according to www.ValuEngine.com. After Google reported its third quarter results the stock regained its momentum and beat Apple to the $1,000 a share price threshold.

On Oct. 28, I wrote A Closer Look at Apple, Google and 5 Really Big Stocks Over $200 when I added Chipotle and Priceline.com to my list of momentum stocks.

On Wednesday three of the five major equity averages set new intra-day all-time highs. Dow Industrial Average reached 15,822.98 and became overbought on its weekly chart and is 2.2% from its monthly risky level at 16,162 and 4.2% from its semiannual risky level at 16,490 and is up 20.7% year to date. The S&P 500 made it to 1782.00 just 1.2% from its monthly risky level at 1802.00 and 4.1% from its quarterly risky level at 1853.80 and is up 24.8% year to date. Dow transports reached 7,143.31 and is just 0.9% from its quarterly risky level at 7205 and is the year to date leader up 34.6%.

This is evidence that the Fed-induced equity bubble further inflated as Janet Yellen released comments to be presented to Senators this morning where she essentially pledged to continue current monetary policy. The stock market is now overvalued by 85.1% according to ValuEngine with 54.3% of all stocks overvalued by 20% or more. All five major equity averages now have overbought weekly chart profiles, as the stock market becomes a momentum driven casino.

President Obama pledged that if you liked your doctors and your health plan you can keep them under Obamacare. He also said that he would replace Fed Chief Bernanke with someone more friendly to Main Street. Opps! He said it again!

If you are a buy-and-trade investor here's my buy-and-trade parameters for the eight stocks on my momentum list. Seven stocks are overvalued with four overvalued by 28.8% to 60.9%. One is down slightly over the last 12 months while the others are up between 56.7% and 338.7%. All are well above their 200-day simple moving averages reflecting 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.

Apple ($520.63 vs. $487.96 on Oct. 1) traded as high as $539.25 on Oct. 29 then as low as $512.38 on Nov. 7 staying above my annual pivot at $510.64. When tracking momentum we look at Apple's weekly chart profile which is positive but overbought with its five-week modified moving average at $506.34. A weekly close below the five-week MMA with declining 12x3x3 weekly slow stochastic shifts this chart to negative. Apple's has a stochastic reading of 81.30 which is just above the overbought threshold of 80.00. My monthly value level is $490.51 with the annual pivot at $510.64 and weekly risky level at $539.99.

Amazon.com ($356.22 vs. $320.95 on Oct. 1) set an all-time high at $368.40 on Oct. 25. The low since then is $341.88 on Thursday. Amazon has a positive but overbought weekly chart profile with its five-week MMA at $337.61. My monthly value level is $333.53 with a weekly risky level at $371.91.

Chipotle ($537.56 vs. $425.67 on Oct. 1) set an all-time high at $546.80 on Nov. 6. The weekly chart profile is positive but overbought with its five-week MMA at $494.22. My monthly value level is $509.34 with a weekly risky level at $540.67.

Google ($1032.47 vs. $887.00 on Oct. 1) set an all-time high at $1041.52 on Oct. 31. The weekly chart profile is positive and is becoming overbought with its five-week MMA at $975.12. My quarterly value level is $986.18 with a weekly pivot at $1024.17.

Linkedin ($220.77 vs. $251.00 on Oct. 1) set its all-time high at $257.55 on Sept. 11 and has been moving sideways to down since then. The weekly chart profile is negative with its five-week MMA at $229.22 so a catalyst is needed to bring back its momentum status. My weekly value level is $217.83 with a quarterly pivot at $222.58 and monthly risky level at $243.20.

Netflix ($335.28 vs. $324.62 on Oct. 1) set its all-time high at $389.16 on Oct. 22 then traded as low as $309.20 on Oct. 29. The weekly chart profile is neutral with the stock above its five-week MMA at $320.78 with declining momentum. My monthly value level is $328.64 with a weekly risky level at $342.11.

Priceline.com ($1124.20 vs. $1038.27 on Oct. 1) set a new all-time high at $1125.89 yesterday, which is just above my weekly risky level at $1124.02. Priceline is the strongest momentum stock with a positive but overbought with the five-week MMA at $1050.04. My quarterly value level is $1022.97 with a monthly pivot at $1077.01.

Tesla Motors ($138.70 vs. $193.00 on Oct. 1) set its all-time high at $194.50 on Sept. 30 then traded as low as $132.32 on Friday. Tesla has a negative weekly chart profile with its five-week MMA at $158.49 so the stock needs a catalyst to regain its momentum status. My quarterly value level is $129.44 with a weekly pivot at $173.37 and a monthly risky at $212.62. 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.

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