Act Two of This Week's Retail Earnings
We began the week with a "key reversal" day on the Dow Jones Industrial Average . After setting a new multi-year high at 14,081.58, the Dow plunged to 13,784.17, well below Friday's low at 13,880.62. With a new multi-year high we are on watch for a weekly "key reversal" with a close on Friday below last week's low at 13,834.40.
Back in October 2007 the Dow Industrials had weekly closes above 14,000 only twice on Oct. 6, 2007, and Oct. 13, 2007. The following week the Dow closed at 13,522, so a quick and fierce market reversal can happen.
With Monday's stock market decline and with a decline in the U.S. Treasury bond yield to 3.067%, the percentage of overvalued stocks fell to 56.6% from 65.8% on Feb 21 when www.ValuEngine.com issued a valuation warning.
ValuEngine still shows that 15 of 16 sectors are overvalued, but sectors overvalued by more than 10% fell to 7 from 10 on Monday. Today's focus sectors are overvalued: consumer discretionary by 5.4%, consumer staples by 21.9% and retail-wholesale by 8.4%. The consumer staples sector is the most overvalued.
The retailers profiled today are not the best performers within their sectors as six of seven are trading below their 200-day simple moving averages (SMA).
Reading the TableOV/UN Valued -- The 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 elack 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 is the 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: is the price at which to enter a GTC Limit Order to sell on strength.
Here's my "buy and trade" strategies for these retail-related stocks: