Stocks Are Up but Remain a Risky Asset Class in 2013

NEW YORK ( TheStreet) -- The new year is off to a solid start for U.S. equities, and while this strength can continue near term, I stand by the theme I wrote on Jan 2, in The Stock Market Is a Risky Asset Class in 2013 .

Next week is an important week for earnings, as 13 money center and regional banks with buy ratings report their quarterly results. I profiled them on Thursday, Jan. 10 in Buy-Rated Big-Bank Stocks to Trade Pre-Earnings . Positive results from the banking system should prolong the near term stock market rally. Otherwise, next week's closes could be disappointing as pivots from my proprietary analytics act as magnets pulling stocks back down.

As I have been reporting recently, the fundamentals for the stock market are not cheap. At www.ValuEngine.com we show that only 42.7% of all stocks are undervalued with 57.3% overvalued. In addition, all 16 sectors are overvalued with eight overvalued by double-digit percentages; consumer staples by 24.3%, construction by 20.3%, transportation by 20.0%, industrial products by 17.2%, finance by 13.4%, medical by 12.4%, computer and technology by 12.3% and retail-wholesale by 11.9%.

Here are the pivots that have been magnets already in January:

The Yield on the 10-Year Treasury Note (1.894%): The rise in yield so far in January has held my annual value level at 1.981%. The 1.981% yield should be a magnet for all of 2013 keeping the low yield environment in tact. My annual and semiannual value levels are 2.476% and 3.063% with my semiannual risky level at 1.413%.

Comex Gold ($1,673.50): My annual value level is $1,599.90 with a monthly pivot at $1,673.80 and semiannual, quarterly and annual risky levels at $1,719.20, $1,802.90 and $1,852.10. I expected the monthly pivot to be a magnet in January and it was tested on Thursday, but don't expect a re-inflation of the gold bubble.

Nymex Crude Oil ($93.89): My monthly value level lags at $74.23 with a quarterly risky level at $95.84 and annual risky levels at $115.23 and $115.42. While oil should trade up to my quarterly risky level, do not look for a re-inflation of the oil bubble either.

The Euro vs. the Dollar (1.3253): My semiannual value level is 1.2797 with an annual pivot at 1.3257 and quarterly risky level at 1.3346. My annual pivot was tested on strength Thursday and the euro is slightly above this level this morning. The supports a trading range environment I have predicted for 2013.

My main theme for 2013 is that the stock market is a risky asset class in 2013. The major averages ended 2012 below some key levels for 2013 and they soon became pivots after stocks began the year to the upside.