The S&P 500 (SPX: 1402.43) fell 15.67 points or 1.10% on Friday on continuing very low NYSE volume, which is normal between year-end holidays. SPX fell 1.94% for the week as a whole.
SPX appears to be reacting to conflicting news stories about the “fiscal cliff”. These stories change frequently and without notice, resulting in random market whipsaws.
Technically, SPX closed below its closing price levels of the previous 4 weeks and its 50-day SMA, thereby confirming a short-term downtrend, which also has been confirmed repeatedly by various short-term momentum oscillators.
The Dow-Jones Industrial Average also closed below its closing price levels of the previous 4 weeks and below both its 50-day SMA and its 200-day SMA, thereby confirming a short-term downtrend.
Investor sentiment data indicated alarming degrees of optimism and bullish complacency this month, matching extremes in September, 2012, when the stock price indexes topped out. Elevated levels of optimism are bearish because when the majority is extremely bullish, investors are already fully invested in the market. Once everyone who is going to buy has already bought, stocks are vulnerable to a downside shakeout. The pendulum of emotion tends to swing too far in one direction, but market mood always reverts to the mean.
The Art of Contrary Thinking calls for questioning popular optimism. I have been skeptical that SPX would be able to overcome technical resistance around its September-October highs. The technical condition of the stock market has not supported the excessive optimism that the bullish majority of stock investors and traders clearly exhibit now and over the past several months. Low volume (most days) has revealed a lack of buying power. Long-term momentum has been showing bearish divergence and has weakened considerably since the S&P 500 price peak on 9/14/12. And the bull phase of the 4-year cycle is long in tooth. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
Our clients’ separately managed accounts made gains every quarter for the past 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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The S&P 500 Composite Potential Resistance
1576.09, high of 10/11/2007
1552.76, high of 10/31/2007
1523.57, high of 12/11/2007
1498.85, high of 12/26/2007
1474.51, high of 9/14/2012
1464.02, high of 10/18/2012
1448.00, high of 12/19/2012
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1438.59, high of 12/12/2012
1434.27, high of 11/2/2012
1432.82, low of 12/20/2012
1430.53, low of 9/26/2012
1426.76, low of 12/12/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept ’12 range
1424.41, Fibonacci 61.8% of Sept-Nov ’12 range
1423.73, high of 12/3/2012
1422.58, low of 12/21/2012
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1420.34, high of 12/7/2012
1419.70, high of 11/29/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
1412.07, 50-day SMA
1409.16, high of 11/23/2012
1403.28, low of 10/26/12
The S&P 500 Composite Potential Support
1401.58, low of 12/28/12
1398.23, low of 12/5/2012
1397.68, low of 11/26/2012
1396.56, low of 9/4/2012
1395.14, Fibonacci 38.2% of June-Sept 2012 range
1391.04, low of 8/6/2012
1390.22, 200-day SMA
1388.71, low of 5/3/2012
1385.43, low of 11/28/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.62, Fibonacci 50.0% of June-Sept 2012 range
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1346.11, Fibonacci 61.8% of June-Sept 2012 range
1343.35, low of 11/16/2012
1340.03, low of 3/6/2012
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1325.41, low of 7/12/2012
1311.20, Fibonacci 78.6% of June-Sept 2012 range
1306.62, low of 6/12/2012
1291.98, low of 5/18/2012
1266.74, low of 6/4/2012
1265.26, low of 1/5/2012
1262.30, low of 12/27/2011
1257.58, Fibonacci 61.8% of 2011 range
1244.80, low of 12/7/2011
1239.73, low of 12/1/2011
1238.81, Fibonacci 78.6% of 1,576.09 high
1234.81, low of 11/3/2011
1231.04, high of 12/16/2011
1228.74, Fibonacci 61.8% of 2007-2009 range
1226.64, low of 11/9/2011
1224.57, high of 12/19/2011
1215.20, low of 12/16/2011
1202.37, low of 12/19/2011
1158.66, low of 11/25/2011
1121.44, Fibonacci 50% of 2007-2009 range
1074.77, low of 10/4/2011
1014.14, Fibonacci 38.2% of 2007-2009 range
1010.91, low of 7/1/2010
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
881.38, Fibonacci 23.6% of 2007-2009 range
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. TLT whipsawed back above its 200-day SMA on 12/28/12. Longer term, TLT’s 50-day SMA has remained above the 200-day SMA every day since 6/24/11. Support 119.90, 119.87, 118.05, 117.44, 115.69, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 123.71, 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. IEF whipsawed back above its 200-day SMA on 12/19/12. IEF’s 50-day SMA has remained above the 200-day SMA every day since 6/21/11. Support 107.00, 106.59, 106.42, 105.84, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 108.15, 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its 200-day SMA on 12/28/12, remains above its 200-day SMA, and remains systematically neutral. JNK/LQD 50-day SMA has remained consistently below the 200-day SMA every day since 6/1/12.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) turned systematically neutral again on 12/28/12 when it fell below its 50-day SMA. TIP/IEF rose above its 200-day SMA on 9/27/12, and the 50-day SMA rose above the 200-day SMA on 10/10/12.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) turned systematically bearish again on 12/11/12 when it fell below its 50-day SMA. UUP fell below its 200-day SMA on 8/31/12, and the 50-day SMA fell below the 200-day SMA on 10/2/12. Support 21.57, 21.07, and 20.84. Resistance 22.05, 22.30, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below its lows of the previous 5 months on 12/20/12. DBA turned systematically neutral on 11/30/12 when price crossed back down below its 50-day SMA. The 50-day SMA remains above the 200-day SMA, although the 50-200 spread has been narrowing gradually.
Crude Oil, United States Oil ETF (USO) turned systematically neutral again on 12/26/12, when price rose back above its 50-day SMA. This may well be just another whipsaw. USO price fell below its 200-day SMA on 9/17/12, and the 50-day SMA has remained below its 200-day SMA consistently every day since 6/7/12. Support 31.00, 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) price fell below its lows of the previous 4 months on 12/20/12. GLD turned systematically neutral on 11/27/12, when price fell below its 50-day SMA. Support: 157.40, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 166.94, 170.01, 174.07, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically bearish on 12/27/12 when the 50-day SMA crossed below the 200-day SMA.
Silver, iShares Silver Trust ETF (SLV) price fell below its lows of the previous 4 months on 12/20/12. SLV turned systematically neutral on 12/13/12 when it fell below its 50-day SMA. Support 28.65, 27.97, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 30.03, 32.72, 33.31, 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 lows of the previous 4 months on 12/20/12. SLV/GLD turned systematically neutral on 12/14/12 when it fell below its 50-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) turned systematically bearish on 12/20/12, when it fell well below both its 50-day SMA and 200-day SMA. Long term, JJC has been consolidating losses in Triangle chart pattern trading range between 38.99 and 51.41 for more than a year since October 2011. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
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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
0.39% , TLH , Bond 10-20 Year US Treas, TLH
1.28% , PIN , India PS, PIN
0.73% , JWN , NORDSTROM
1.08% , SH , Short 100% S&P 500, SH
0.15% , AGG , Bond, Aggregate, AGG
0.25% , PFF , Preferred Stock iS, PFF
0.11% , THD , Thailand MSCI iS, THD
0.41% , RSX , Russia MV, RSX
0.23% , EZA , South Africa Index, EZA
0.02% , NTRS , NORTHERN TRUST
0.97% , EWY , South Korea Index, EWY
0.16% , PMTC.O , PARAMETRIC
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.65% , EWP , Spain Index, EWP
-1.20% , PXJ , Oil & Gas, PXJ
-1.26% , FRN , Frontier Markets Guggenheim , FRN
-1.38% , PWV , Value LargeCap Dynamic PS, PWV
-0.82% , EWL , Switzerland Index, EWL
-0.67% , IJK , Growth MidCap 400 B, IJK
-0.87% , FDL , Dividend Leaders, FDL
-1.42% , EWG , Germany Index, EWG
-2.00% , FEZ , Euro STOXX 50, FEZ
-1.21% , WYNN , Wynn Resorts L
-0.81% , XLY , Consumer Discretionary SPDR, XLY
-1.06% , XLP , Consumer Staples SPDR, XLP
-1.27% , IYM , Basic Materials DJ US, IYM
-1.39% , XLG , LargeCap Rydex Rus Top 50, XLG
-0.96% , VO , MidCap VIPERs, VO
-1.72% , TROW , T ROWE PRICE GP
-1.00% , PNW , PINNACLE WEST
-1.77% , IYE , Energy DJ, IYE
-4.09% , RSH , RADIOSHACK
-1.18% , RPV , Value S&P 500, RPV
-0.59% , IYF , Financial DJ US, IYF
-1.01% , PWB , Lg Cap Growth PSD, PWB
-1.12% , DTE , DTE ENERGY
-1.06% , IWF , Growth 1000 Russell, IWF
-0.71% , VB , Small Cap VIPERs, VB
-0.74% , PBW , WilderHill Clean Energy PS, PBW
-0.79% , VFH , Financials VIPERs, VFH
-0.88% , AEE , AMEREN
-1.09% , IWD , Value 1000 Russell, IWD
-0.53% , RAI , Reynolds American
-1.16% , IYW , Technology DJ US, IYW
-1.32% , VGK , European VIPERs, VGK
-0.90% , EWU , United Kingdom Index, EWU
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.28% India PS, PIN
1.08% Bear, Short S&P 500, SH
0.97% South Korea Index, EWY
0.79% India Earnings WTree, EPI
0.61% Indonesia MV, IDX
0.60% Taiwan Index, EWT
0.57% Bond, 20+ Years Treasury, TLT
0.41% Russia MV, RSX
0.36% Emerging Markets MSCI iS, EEM
0.34% Malaysia Index, EWM
0.33% Financial Preferred, PGF
0.30% Emerging VIPERs, VWO
0.25% Preferred Stock iS, PFF
0.23% Bond, 10 Year Treasury, IEF
0.23% South Africa Index, EZA
0.22% Bond, Long-Term Corp iBoxx iS, LQD
0.15% Bond, Intermediate US Aggregate iS, AGG
0.13% Bond Ex-US Treas, BWX
0.11% Thailand MSCI iS, THD
0.10% Mexico Index, EWW
0.09% Bond, Emerg Mkt JPM iS, EMB
0.05% China LargeCap Growth G D H USX PS, PGJ
0.03% China 25 iS, FXI
0.00% Singapore Index, EWS
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.03% Emerging 50 BLDRS, ADRE
-0.03% Chile MSCI iS, ECH
-0.03% Bond, TIPS U.S. Treasury iS, TIP
-0.11% Agriculture DB PS, DBA
-0.21% Hong Kong Index, EWH
-0.21% Latin Am 40, ILF
-0.24% Capital Markets KWB ST, KCE
-0.27% Bond, High Yield Corp iBoxx iS, HYG
-0.27% Bond, High-Yield Junk, JNK
-0.28% Pacific ex-Japan, EPP
-0.29% Commodity Tracking, DBC
-0.32% Brazil Index, EWZ
-0.35% Bond, Muni S&P ATM-Free iS, MUB
-0.36% Australia Index, EWA
-0.38% Gold Shares S.T., GLD
-0.45% Oil, Crude, U.S. Oil Fund, USO
-0.46% Oil Fund PowerShares, DBO
-0.48% Silver Trust iS, SLV
-0.50% Homebuilders SPDR, XHB
-0.51% Turkey MSCI iS, TUR
-0.52% Microcap Russell, IWC
-0.55% Pacific VIPERs, VPL
-0.56% SmallCap Growth S&P 600 iS, IJT
-0.59% Financial DJ US, IYF
-0.60% Real Estate US DJ iS, IYR
-0.61% SmallCap Blend EAFE MSCI iS, SCZ
-0.61% MidCap S&P 400 SPDRs, MDY
-0.62% Global ex U.S. LargeCap Blend, ACWX
-0.63% SmallCap Growth Russell 2000 iS, IWO
-0.64% Growth SmallCap VIPERs, VBK
-0.64% Semiconductor iS IGW, SOXX
-0.66% REIT VIPERs, VNQ
-0.67% MidCap Growth S&P 400 iS, IJK
-0.67% SmallCap Blend S&P 600 iS, IJR
-0.70% MidCap Blend S&P 400 iS, IJH
-0.71% Canada Index, EWC
-0.71% SmallCap Blend Russell 2000 iS, IWM
-0.71% Small Cap VIPERs, VB
-0.72% REIT Wilshire, RWR
-0.72% Japan Index, EWJ
-0.74% Value SmallCap VIPERS, VBR
-0.74% WilderHill Clean Energy PS, PBW
-0.74% Realty Cohen & Steers, ICF
-0.75% Global LargeCap Blend MSCI iS, ACWI
-0.76% Dividend International, PID
-0.76% SmallCap Value Russell 2000 iS, IWN
-0.79% Growth EAFE MSCI, EFG
-0.79% Financials VIPERs, VFH
-0.80% Financial SPDR, XLF
-0.81% Consumer Discretionary SPDR, XLY
-0.81% SmallCap Value S&P 600 iS, IJS
-0.82% Switzerland Index, EWL
-0.83% MidCap Value S&P 400 iS, IJJ
-0.85% Semiconductor SPDR, XSD
-0.86% Dividend High Yield Equity PS, PEY
-0.86% Financial Services DJ, IYG
-0.90% United Kingdom Index, EWU
-0.90% Value MidCap Russell, IWS
-0.91% Transportation Av DJ, IYT
-0.92% Growth MidCap Russell, IWP
-0.92% MidCap Russell, IWR
-0.92% Utilities VIPERs, VPU
-0.93% Value EAFE MSCI, EFV
-0.95% Dividend U.S. DJ iS, DVY
-0.96% QQQ Nasdaq 100 Trust, QQQ
-0.97% Global 100, IOO
-0.97% Water Resources, PHO
-0.98% Health Care SPDR, XLV
-1.01% Utilities SPDR, XLU
-1.02% Dividend SPDR, SDY
-1.02% LargeCap Blend S&P=Weight R, RSP
-1.03% Sweden Index, EWD
-1.04% Networking, IGN
-1.04% Telecom DJ US, IYZ
-1.06% LargeCap Blend Russell 3000 iS, IWV
-1.06% Foreign LargeCap EAFE MSCI iS, EFA
-1.06% LargeCap Growth Russell 1000 iS, IWF
-1.06% Growth VIPERs, VUG
-1.06% Consumer Staples SPDR, XLP
-1.08% Info Tech VIPERs, VGT
-1.08% S&P 500 SPDRs LargeCap Blend, SPY
-1.09% Blend Total Market VIPERs, VTI
-1.09% Industrial SPDR, XLI
-1.09% Belgium Index, EWK
-1.09% LargeCap Value Russell 1000 iS, IWD
-1.10% LargeCap VIPERs, VV
-1.11% Austria Index, EWO
-1.12% Technology SPDR, XLK
-1.12% LargeCap Blend Russell 1000 iS, IWB
-1.13% Value VIPERs, VTV
-1.13% LargeCap Growth S&P 500 iS, IVW
-1.13% LargeCap Blend S&P 500 iS, IVV
-1.14% LargeCap Value S&P 500 iS, IVE
-1.15% LargeCap Blend S&P 100, OEF
-1.16% Technology DJ US, IYW
-1.16% Dividend Appreciation Vipers, VIG
-1.17% Dividend ex-U.S. DJ iS, IDV
-1.17% DIAMONDS (DJIA), DIA
-1.23% Netherlands Index, EWN
-1.23% Energy Global, IXC
-1.26% Frontier Markets Guggenheim , FRN
-1.26% Materials SPDR, XLB
-1.27% Basic Materials DJ US, IYM
-1.32% European VIPERs, VGK
-1.33% Biotech SPDR, XBI
-1.35% Energy & Nat Res iS GS, IGE
-1.38% Value LargeCap Dynamic PS, PWV
-1.42% Germany Index, EWG
-1.43% Europe 350 S&P Index, IEV
-1.49% Metals & Mining SPDR, XME
-1.58% Energy VIPERs, VDE
-1.71% France Index, EWQ
-1.74% EMU Europe Index, EZU
-1.74% Energy SPDR, XLE
-1.77% Energy DJ, IYE
-1.79% Italy Index, EWI
-2.65% Spain Index, EWP
