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Disclosure: I have no positions in Transocean or AutoNation.

Last week was another volatile one for investors. The S&P 500 continued to decline from its all-time intraday high at 2,019.26 set on Friday, Sept. 19 trading as low as 1,926.03 on Oct. 2, down 4.6% from the high. Then on Friday, a better than expected employment report triggered a significant rebound occurred to a weekly close at 1,967.90.

On its daily chart the S&P 500 still closed below its 50-day simple moving average at 1,974.76 and is still 2.5% below the high up 6.5% year-to-date.

On its weekly chart the S&P 500 tested its five-week modified moving average at 1,979.98 on Tuesday and despite Friday’s rally closed below this average for the week. This week’s reading of momentum, the 12x3x3 weekly slow stochastic will be declining below the 80.00 overbought threshold. A close this week below 1,979.98 would thus shift the weekly chart profile to negative.

When the broad market average becomes volatile and potentially signaling a stock market correction it’s tough to choose a value stock.

Two week’s ago I thought that energy stocks were too cheap to ignore. This proved to be a wrong call as they continued to become cheaper. One was Transocean Transocean , which was downgraded to hold from buy according to ValuEngine.com on Friday, following monthly benchmark revisions to the ValuEngine data base.

Transocean still has characteristics of a value stock given a 12-month trailing P/E ratio of just 6.7 and dividend yield of 8.7%. Non-the-less the stock was downgraded. The stock traded as low as $30.07 on Friday, a level not seen in 10 years. In mid-June the stock had a failed test of its 200-day simple moving average then at $45.13.

Transocean’s weekly chart is negative but extremely oversold with its five-week modified moving average at $35.65 and its 200-week simple moving average at $51.40. The stock broke below its 200-week back in October 2008 as the crude oil bubble was popping when the average was $92.55.

When I screen for value stocks using ValuEngine only 10% of the S&P 500 qualify. This limits my choices for which stocks belong in the ValuTrader Model Portfolio, eight of the 50 are already members.

Last week’s featured stock was AutoNation (AN) ($53.58), which entered the model portfolio on Sept. 22 at $50.52. The gain since then is 6.1%. The stock is still rated a buy but the upside potential would not make this company a candidate for entry this week.

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AutoNation closed just above its 200-day simple moving average at $53.50 and is above its 50-day SMA at $53.04. The weekly chart is neutral with its five-week modified moving average at $53.24 and 200-week SMA at $42.47. The stock’s 12x3x3 weekly slow stochastic remains oversold.

This week’s value level is $51.67 with a new quarterly pivot at $53.99 and monthly risky level at $57.53.

Remember my suggested buy and trade strategy:

If you are a buyer of AutoNation shares use a ‘good ‘til canceled’ limit order to buy weakness to $51.67. If you are a seller of AutoNation shares use a ‘good ‘til canceled’ limit order to sell strength to $57.53.

Richard Suttmeier is chief market strategist for ValuEngine.com and Niagara International Capital, editor of ValuTrader Portfolio and founder of Global Market Consultants.