Against this backdrop the earnings bar has been raised this morning as stock futures traded significantly higher overnight following comments by Fed Chief Ben Bernanke after the close on Wednesday. Helicopter Ben told his audience in Cambridge, Mass., that Wall Street will continue to be flooded by QE3 and QE4 for the foreseeable future.
If market strength is sustained today, the Dow industrial average will test or exceed its monthly risky level at 15,437. If the S&P 500 trades up by 17 points its monthly risky level will be tested at 1669.0. The Nasdaq closed above its monthly pivot at 3510 on Wednesday, setting the trigger for these upside targets. The Nasdaq could set a new multi-year high above its May 22 intraday high at 3,532.04.
Stock market strength and an elevated 30-Year U.S. Treasury bond yield intensified the ValuEngine valuation warning with 74.4% of all stocks overvalued and with 39.4% of all stocks overvalued by 20% or more.
On Monday July 8 I wrote, Bank Indices Set Multi-Year Highs Pre-Earnings where I profiled seven stocks that reported or will report earnings this week. Here's a scorecard for the three that reported though Wednesday.
Alcoa ($7.92) reported EPS of 7 cents per share after the close on Monday, but was this a miss or a beat? Going into this earnings report estimates were lowered to between 6 cents and 9 cents, so to me the report was neither a miss nor a beat. Note that the hold rated stock simply traded back and forth around my weekly pivot at $7.90.
On Wednesday pre-market Family Dollar ($68.50) reported a beat of two cents with an EPS of $1.05. This stock has a buy rating according to ValuEngine so it's not surprising to see a pop to a new 2013 high at $69.70 versus my quarterly risky level at $70.03.
After the close on Wednesday Yum! Brands ($72.36) reported a beat of two cents with an EPS of 56 cents. This stock has a buy rating according to ValuEngine so a positive reaction to this earnings report is no surprise with my semiannual risky level at $73.12.
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.
Reporting pre-market on Monday is Citigroup ($49.63) set its multi-year high at $53.56 on May 20 and held its 50-day SMA at $49.48 on Wednesday. My semiannual value level is $47.14 with a monthly risky level at $50.85.
Companies reporting quarterly results pre-market on Tuesday:
Comerica ($41.63) set a multi-year high at $43.00 on July 8 and the close on Wednesday was above my monthly value level at $41.31 after trading below it intraday. My semiannual risky level is $44.83.
Goldman Sachs ($155.83) set its multi-year high at $168.20 on June 8. The stock has a buy rating and there's a wide range between its semiannual value level at $123.16 and its monthly risky level at $166.67.
Johnson & Johnson ($89.24) set its multi-year high at $89.99 on May 22 and is attempting to re-test that milestone. My semiannual value level is $82.49 with a monthly pivot at $87.52.
Coca Cola ($40.68) set its multi-year high at $43.43 on May 16. The 200-day SMA is $39.03 with the 50-day SMA at $41.25. The buy rated stock has a weekly value level at $39.60, a monthly pivot at $41.29 and a quarterly risky level at $42.46.
Mosaic ($55.60) set its 2013 low at $53.16 on July 2. My weekly value level is $51.76 with a monthly risky level at $63.24.
M&T Bank ($117.52) set a multi-year high at $118.36 on July 9. My semiannual value level is $108.57 with a semiannual risky level at $128.56.
Reporting after the close next Tuesday is Yahoo! ($26.56) set its multi-year high at $27.68 on May 15. My annual value level is $23.56 with a monthly risky level at $28.59.
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.