The S&P 500 (SPX: 1,411.94) fell 1.48% last week and is now down 3.67% over the past 4 weeks. SPX closed below its 50-day SMA for the 6th consecutive trading day on Friday. SPX also fell below its lows of the previous 7 weeks on Friday.
On-Balance Volume for the SPX has been demonstrating bearish divergence by lagging below its 2012 high as the SPX index made higher highs in September. On-Balance Volume remains below both its 50-day and 200-day SMAs and is closer to its lows than its highs for the year.
The 2 X 3 Point-and-Figure Chart* for the S&P 500 shows a Double Bottom Breakdown with a downside objective of 1350.
NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks has been lagging the SPX index for 18 months, since April, 2011, thereby demonstrating relative weakness and bearish divergence. Clearly, volume has not been confirming the price up move for many months.
Most stocks have turned corrective. A 54% majority of stocks in the S&P 500 Composite Price Index are now below their own 50-day SMAs. As the chart* shows, the percentage above their own 50-day SMAs is now at 46%, down from 85% six weeks ago, and down from a peak of 90% in February, 2012.
The percentage of these same S&P 500 stocks that are above their own 200-day SMAs (now at 64%, down from 82% six weeks ago, and down from a peak of 85% in March) is in a down trend, below both 50-day and 200-day SMAs.
The percentage in bullish Point-and-Figure Chart uptrends (now at 70%, down from 79% six weeks ago, and down from a peak of 85% in February) also is trending downward, below both 50-day and 200-day SMAs.
The SPX clearly shows lower highs and lower lows since its intraday peak at 1474.51 set on 9/14/12 (the day after the Fed’s QE3 generous gift to banks). That is the definition of a downtrend. Each rally attempt has been weaker than the previous one, and each decline has been weaker than the than the previous one. Failed rally attempts and lower lows may lead the bullish majority to question their assumptions.
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The technical condition of the stock market does not support the months-long excessive optimism of the bullish majority of stock investors and traders. Fed and ECB plans to buy bonds in unlimited quantities (with fiat currencies printed out of thin air and backed by nothing but a theory and a hope) do not guarantee that stock prices will continue to rise, especially now that the news is out. Typically, action is followed by reaction, and so a downside correction seems overdue. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
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*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.
Meanwhile, one money manager made gains for 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) 50-day SMA fell below the 200-day SMA on 10/2/12, thereby turning systematically bearish. UUP closed below its 50-day SMA on 8/3/12 and fell below its 200-day SMA on 8/31/12. Support 21.57, 21.07, and 20.84. Resistance 21.96, 22.36, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below its lows of the previous 3 months on 10/15/12, confirming a loss of upside momentum. DBA turned systematically neutral on 9/17/12 when price crossed below its 50-day SMA. Price remains above its 200-day SMA, and the 50-day SMA remains well above the 200-day SMA.
Crude Oil, United States Oil ETF (USO) fell below its lows of the previous 15 weeks on 10/24/12, confirming its preexisting bearish trend. USO turned systematically bearish on 9/19/12, when price fell below its 50-day SMA. USO price fell below its 200-day SMA on 9/17/12, and the 50-day SMA remains below its 200-day SMA. Support 31.35, 29.02, 26.28, and 22.74. Resistance 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) fell below its lows of the previous 7 weeks on 10/24/12, confirming its preexisting corrective trend. GLD turned systematically neutral on 10/23/12, when price fell below its 50-day SMA. GLD price rose above its 200-day SMA on 8/22/12. GLD 50-day SMA rose above the 200-day SMA on 9/20/12. Support: 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 174.07, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically bullish on 10/19/12, when the 50-day SMA rose above the 200-day SMA. GDX/GLD rose above its 50-day SMA on 8/16/12 and rose above its 200-day SMA on 9/13/12 .
Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 7 weeks on 10/24/12, confirming its preexisting corrective trend. SLV fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral again. SLV price 50-day SMA crossed above the 200-day SMA on 10/1/12, and SLV crossed above its 200-day SMA on 8/31/12. Support 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 32.23, 33.23, 34.08, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral again. SLV/GLD crossed back above its 200-day SMA on 10/24/12. Longer term, SLV/GLD 50-day SMA crossed above the 200-day SMA on 10/9/12.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 7 weeks on 10/25/12, confirming its preexisting bearish trend. JJC price fell below its 50-day SMA on 10/22/12, thereby turning systematically bearish again. JJC fell below its 200-day SMA on 10/19/12, and the 50-day SMA has remained below the 200-day SMA every day since 5/31/12. “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, and so this bearish signal may be taken as a warning about economic conditions ahead.
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Spotlight on event stocks: Here is a stock screen I designed to pick out potential event stocks, both Bullish and Bearish. Sometimes, stocks with large changes in price and volume are later revealed to be deal stocks or are the subject of some other extraordinary events, positive or negative.
Bullish Stocks: Rising Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
24.93% , DV , DeVry, Inc.
13.12% , NFLX , Netflix, NFLX
12.19% , EMN , EASTMAN CHEM
9.79% , PKI , PERKINELMER
4.73% , QLGC , QLOGIC
6.48% , FII , FED INVESTORS STK B
4.75% , MCO , MOODYS CORP
2.39% , ETR , ENTERGY
6.87% , AMZN , Amazoncom Inc
5.99% , SHLD , SEARS HOLDINGS
3.30% , CMCSA , COMCAST HOLDINGS STK A
0.55% , EWK , Belgium Index, EWK
2.04% , MHP , MCGRAW HILL
2.49% , NWL , NEWELL RUBBER
2.41% , KMX , CarMax
1.83% , ADBE , ADOBE SYS
0.34% , MYY , Short 100% MidCap 400, MYY
1.82% , EXPD , Expeditors International WA
0.93% , LM , LEGG MASON
2.80% , QCOM , QUALCOMM
1.49% , EOG , EOG RESOURCES
2.85% , AON , AON
1.52% , KSU , Kansas City Southern, KSU
1.86% , COL , ROCKWELL COLLINS
1.68% , CINF , CINCINNATI FIN
1.10% , WAT , WATERS
1.27% , TGT , TARGET
1.05% , MMC , MARSH & MCLENNAN
1.58% , JNS , JANUS CAPITAL
0.98% , BSX , BOSTON SCIENT
0.52% , ECL , ECOLAB
0.96% , MAR , MARRIOTT INTL STK A
3.38% , PMCS , PMC SIERRA
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-15.47% , VRSN , VeriSign Inc
-10.41% , GT , GOODYEAR TIRE
-1.90% , XBI , Biotech SPDR, XBI
-4.30% , ERIC.O , LM Ericsson Telephone Company
-4.24% , CTB , COOPER TIRE
-8.28% , UIS , UNISYS
-2.38% , PWER , POWER ONE
-4.17% , MBI , MBIA
-2.41% , FLEX , Flextronics International Ltd
-0.26% , EFG , Growth EAFE MSCI, EFG
-0.63% , IYH , Healthcare DJ, IYH
-1.80% , CB , CHUBB
-2.11% , CTSH , Cognizant Technology Solutions
-0.33% , ADRE , Emerging 50 BLDRS, ADRE
-3.43% , HIG , HARTFORD FINL
-0.10% , IWC , Microcap Russell, IWC
-1.48% , NOC , NORTHROP GRUMMAN
-1.35% , LOW , LOWES
-0.94% , IGT , INTL GAME TECH
-1.74% , VIAB.O , VIACOM STK B
-1.43% , EWH , Hong Kong Index, EWH
-2.46% , IPG , INTERPUBLIC GRP
-1.25% , NWSA , News Corporation, NWSA
-1.08% , GWW , WW GRAINGER
-0.41% , IJR , SmallCap S&P 600, IJR
-0.39% , IWD , Value 1000 Russell, IWD
-1.50% , TJX , TJX
-0.91% , AAPL , APPLE COMPUTER
-0.27% , IWS , Value MidCap Russell, IWS
-1.73% , CHD , Church & Dwight
-0.75% , RFV , Value MidCap S&P 400, RFV
-1.58% , BK , BANK OF NEW YORK
-0.98% , CLX , CLOROX
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.47% Bond, 20+ Years Treasury, TLT
1.17% Semiconductor SPDR, XSD
1.03% Networking, IGN
0.90% South Africa Index, EZA
0.70% France Index, EWQ
0.64% Italy Index, EWI
0.64% Bond, 10 Year Treasury, IEF
0.55% Belgium Index, EWK
0.50% Bond, TIPS U.S. Treasury iS, TIP
0.49% Bond, Long-Term Corp iBoxx iS, LQD
0.46% Austria Index, EWO
0.45% Telecom DJ US, IYZ
0.42% EMU Europe Index, EZU
0.40% Basic Materials DJ US, IYM
0.33% Consumer Discretionary SPDR, XLY
0.32% Semiconductor iS IGW, SOXX
0.31% Germany Index, EWG
0.29% QQQ Nasdaq 100 Trust, QQQ
0.29% Sweden Index, EWD
0.27% Bond, Intermediate US Aggregate iS, AGG
0.25% Frontier Markets Guggenheim , FRN
0.25% Capital Markets KWB ST, KCE
0.22% Transportation Av DJ, IYT
0.22% Commodity Tracking, DBC
0.22% Info Tech VIPERs, VGT
0.19% Materials SPDR, XLB
0.19% LargeCap Growth Russell 1000 iS, IWF
0.18% Energy Global, IXC
0.17% Technology SPDR, XLK
0.16% Bond Ex-US Treas, BWX
0.13% Technology DJ US, IYW
0.13% Energy SPDR, XLE
0.13% Bond, Muni S&P ATM-Free iS, MUB
0.12% Bear, Short S&P 500, SH
0.11% Energy VIPERs, VDE
0.10% Energy DJ, IYE
0.09% Dividend ex-U.S. DJ iS, IDV
0.08% Industrial SPDR, XLI
0.07% LargeCap Growth S&P 500 iS, IVW
0.07% Growth MidCap Russell, IWP
0.07% European VIPERs, VGK
0.06% Growth VIPERs, VUG
0.05% Financial Preferred, PGF
0.05% Utilities VIPERs, VPU
0.03% Oil, Crude, U.S. Oil Fund, USO
0.03% Preferred Stock iS, PFF
0.02% Bond, 1-3 Year Treasury, SHY
0.01% DIAMONDS (DJIA), DIA
0.00% Bond Treasury Short-Term iS, SHV
0.00% Oil Fund PowerShares, DBO
0.00% Utilities SPDR, XLU
-0.03% Europe 350 S&P Index, IEV
-0.05% Value LargeCap Dynamic PS, PWV
-0.05% Dividend U.S. DJ iS, DVY
-0.05% Gold Shares S.T., GLD
-0.06% S&P 500 SPDRs LargeCap Blend, SPY
-0.06% LargeCap Blend S&P 500 iS, IVV
-0.07% Dividend Appreciation Vipers, VIG
-0.08% Chile MSCI iS, ECH
-0.09% Metals & Mining SPDR, XME
-0.09% LargeCap Blend S&P 100, OEF
-0.10% LargeCap Blend Russell 3000 iS, IWV
-0.10% Global 100, IOO
-0.10% LargeCap Blend S&P=Weight R, RSP
-0.10% Microcap Russell, IWC
-0.10% LargeCap Blend Russell 1000 iS, IWB
-0.10% Energy & Nat Res iS GS, IGE
-0.10% Water Resources, PHO
-0.11% Netherlands Index, EWN
-0.11% LargeCap VIPERs, VV
-0.11% Value EAFE MSCI, EFV
-0.11% Blend Total Market VIPERs, VTI
-0.11% United Kingdom Index, EWU
-0.13% SmallCap Blend EAFE MSCI iS, SCZ
-0.13% Silver Trust iS, SLV
-0.13% Malaysia Index, EWM
-0.15% MidCap Russell, IWR
-0.15% Bond, High-Yield Junk, JNK
-0.15% Foreign LargeCap EAFE MSCI iS, EFA
-0.20% Switzerland Index, EWL
-0.20% MidCap Growth S&P 400 iS, IJK
-0.21% Latin Am 40, ILF
-0.21% Spain Index, EWP
-0.22% Turkey MSCI iS, TUR
-0.22% Dividend SPDR, SDY
-0.24% Bond, High Yield Corp iBoxx iS, HYG
-0.26% Value VIPERs, VTV
-0.26% LargeCap Value S&P 500 iS, IVE
-0.26% Growth EAFE MSCI, EFG
-0.27% MidCap Blend S&P 400 iS, IJH
-0.27% Value MidCap Russell, IWS
-0.27% Bond, Emerg Mkt JPM iS, EMB
-0.27% SmallCap Growth S&P 600 iS, IJT
-0.29% MidCap S&P 400 SPDRs, MDY
-0.31% Dividend High Yield Equity PS, PEY
-0.33% Growth SmallCap VIPERs, VBK
-0.33% Small Cap VIPERs, VB
-0.33% Emerging 50 BLDRS, ADRE
-0.34% Consumer Staples SPDR, XLP
-0.34% Global LargeCap Blend MSCI iS, ACWI
-0.35% Brazil Index, EWZ
-0.37% Singapore Index, EWS
-0.38% Value SmallCap VIPERS, VBR
-0.38% SmallCap Value Russell 2000 iS, IWN
-0.39% Canada Index, EWC
-0.39% LargeCap Value Russell 1000 iS, IWD
-0.39% Homebuilders SPDR, XHB
-0.40% Health Care SPDR, XLV
-0.41% Financial Services DJ, IYG
-0.41% SmallCap Blend S&P 600 iS, IJR
-0.45% Australia Index, EWA
-0.45% MidCap Value S&P 400 iS, IJJ
-0.45% Agriculture DB PS, DBA
-0.45% Mexico Index, EWW
-0.45% Global ex U.S. LargeCap Blend, ACWX
-0.48% SmallCap Blend Russell 2000 iS, IWM
-0.50% Financial SPDR, XLF
-0.51% WilderHill Clean Energy PS, PBW
-0.52% SmallCap Growth Russell 2000 iS, IWO
-0.52% Dividend International, PID
-0.55% Japan Index, EWJ
-0.55% Indonesia MV, IDX
-0.55% Pacific VIPERs, VPL
-0.55% SmallCap Value S&P 600 iS, IJS
-0.57% Financials VIPERs, VFH
-0.57% Financial DJ US, IYF
-0.58% Real Estate US DJ iS, IYR
-0.64% Thailand MSCI iS, THD
-0.68% Pacific ex-Japan, EPP
-0.68% Realty Cohen & Steers, ICF
-0.69% Emerging VIPERs, VWO
-0.70% Emerging Markets MSCI iS, EEM
-0.79% REIT Wilshire, RWR
-0.85% China LargeCap Growth G D H USX PS, PGJ
-0.86% South Korea Index, EWY
-0.87% REIT VIPERs, VNQ
-0.97% India Earnings WTree, EPI
-1.02% Taiwan Index, EWT
-1.37% India PS, PIN
-1.37% Russia MV, RSX
-1.43% Hong Kong Index, EWH
-1.60% China 25 iS, FXI
-1.90% Biotech SPDR, XBI
