AAII Sentiment shows that individual investors are extremely bullish. As of 1/24/13, there were 52.34% bulls, 23.39% neutral, and 24.27% bears. This is the highest percentage of bulls in more than 2 years, since 1/13/11. Investors tend to become more and more bullish after a big move up, and just in time for a downside reversal. It is human nature.
The S&P 500 (SPX: 1,502.96) rose 1.14% last week to its highest level in 5 years. That higher closing price high was confirmed by some but not all stock market indicators.
Most price momentum oscillators did not make new highs, suggesting continuing momentum divergence. For example, popular daily momentum oscillators such as RSI(14) and MACD(12,26,9) remain modestly below their 2011-2012 highs. The momentum divergence is more striking for long-term time frames, as measured by the Coppock Curve.
The Cumulative Daily Advancing-Declining Volume Line rose to challenge its 2011 highs but did not make a new high. This may mark a critical juncture, because volume ought to be making new 5-year highs in order to confirm the higher highs of the price indexes.
The percentage of stocks in the S&P 500 Composite Price Index above their own 200-day SMAs rose again last week but is still below previous highs in 2012 and 2011, indicating diminishing upside momentum for the uptrend that started nearly 4 years ago.
The percentage of S&P 500 stocks that are in Bullish Point-and-Figure Chart uptrends rose above 81%, up from 58% in November, but still down from a peaks at 85% in February, 2012, and 89% in February, 2011. The Bullish Percentage is not confirming higher highs in the S&P 500 Composite Price Index.
Fundamentally, stocks are richly valued by long-term historical standards. The S&P 500 were recently priced at 21 times average earnings for the past 10 years, which is 40% above the median of 15 times average earnings since 1900, according to Yale finance professor Robert Shiller. In addition, the dividend yield on the S&P 500 was only 2.4%, which was 41% below the median of 4.1%.
The Art of Contrary Thinking calls for questioning high and rising optimism. Investor sentiment data indicated high degrees of optimism and bullish complacency in recent weeks, matching or exceeding extremes in September, 2012, when many stock price indexes hit peaks and reversed to the downside. 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 the market mood always reverts to the mean–eventually. Pinpoint accuracy is not guaranteed.
Our clients’ separately managed accounts made gains in 6 of the past 7 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
The S&P 500 Composite Potential Support
1498.85, high of 12/26/2007
1489.46, low of 1/24/13
1474.51, high of 9/14/2012
1463.76, low of 1/15/13
1451.64, low on 1/8/13
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
1431.83, 50-day SMA
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
1409.16, high of 11/23/2012
1403.28, low of 10/26/12
1401.58, low of 12/28/12
1398.11, low of 12/31/2012
1397.68, low of 11/26/2012
1396.56, low of 9/4/2012
1396.41, 200-day SMA
1395.14, Fibonacci 38.2% of June-Sept 2012 range
1391.04, low of 8/6/2012
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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Tangible Assets, Commodities
U.S. dollar ETF (UUP) turned systematically bearish again on 1/10/13 when it whipsawed back down below its 50-day SMA and a 6-months long downtrend line. 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 turned systematically bearish on 1/11/13 when the 50-day SMA crossed down below the 200-day SMA.
Crude Oil, United States Oil ETF (USO) price turned systematically neutral on 12/26/12, when price rose above its 50-day SMA. The 50-day SMA has remained below its 200-day SMA consistently every day since 6/7/12. Support 34.38, 33.57, 31.00, 29.02, 26.28, and 22.74. Resistance 35.09, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price turned systematically neutral on 11/27/12, when it fell below its 50-day SMA. Support: 158.39, 157.40, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 164.40, 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 turned systematically neutral again on 1/24/13, when it whipsawed back down below its 50-day SMA. Support 28.61, 27.97, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 31.41, 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) turned systematically neutral again on 1/25/13, when it whipsawed back down below its 50-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) has been consolidating losses in Triangle Consolidation 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
7.53% , CPWR , COMPUWARE
14.29% , RSH , RADIOSHACK
8.41% , KLAC , KLA TENCOR
9.06% , QLGC , QLOGIC
1.74% , EWN , Netherlands Index, EWN
5.05% , HAL , HALLIBURTON
1.17% , IGN , Networking, IGN
15.46% , NFLX , Netflix, NFLX
4.02% , PG , PROCTER & GAMBLE
7.43% , VRSN , VeriSign Inc
0.84% , IOO , Global 100, IOO
3.70% , ADSK , AUTODESK
1.88% , EZU , EMU Europe Index, EZU
2.30% , EWG , Germany Index, EWG
0.52% , RPV , Value S&P 500, RPV
1.44% , PST , 200% Short Bond 7-10 Yr T, PST
4.27% , TDC , Teradata Corporation, TDC
4.63% , UIS , UNISYS
3.55% , MAS , MASCO
5.87% , LRCX , LAM RESEARCH CORP
3.14% , NKE , NIKE STK B
2.15% , BIG , BIG LOTS
2.04% , EXC , EXELON CORP
2.75% , TBT , 200% Short US T Bond, TBT
0.86% , IXJ , Healthcare Global, IXJ
2.04% , HOG , HARLEY DAVIDSON
3.79% , AMZN , Amazoncom Inc
3.01% , LNC , LINCOLN NATL
2.90% , RHT , Red Hat Inc.
1.92% , PMCS , PMC SIERRA
0.72% , PXE , Energy Exploration & Prod, PXE
0.54% , SO , SOUTHERN
1.83% , AMAT , APPLIED MATERIAL
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-4.17% , FLEX , Flextronics International Ltd
-0.89% , TLH , Bond 10-20 Year US Treas, TLH
-2.65% , YUM , YUM BRANDS
-1.75% , WY , WEYERHAEUSER
-1.64% , SEE , SEALED AIR
-1.37% , TLT , Bond, 20+ Years Treasury, TLT
-5.57% , MTG , MGIC INVESTMENT
-0.69% , EPU , Peru MSCI iS, EPU
-1.98% , EWY , South Korea Index, EWY
-1.44% , PCL , PLUM CREEK TIMB
-1.06% , CAT , CATERPILLAR
-0.77% , LVLT.K , LEVEL 3 COMMUNICATIONS
-0.43% , EMB , Bond EmrgMkt JPM iS, EMB
-1.48% , NEM , NEWMONT MINING
-0.42% , LXK , LEXMARK INTL STK A
-0.20% , CMS , CMS ENERGY
-1.15% , QCOM , QUALCOMM
-1.46% , TUR , Turkey MSCI iS, TUR
-1.44% , SLV , Silver Trust iS, SLV
-0.54% , COL , ROCKWELL COLLINS
-0.95% , COF , CAPITAL ONE FNCL
-0.59% , R , RYDER SYSTEM
-0.38% , CVS , CVS
-0.34% , EEM , Emerging Markets, EEM
-0.37% , KMB , KIMBERLY CLARK
-0.77% , TAP , ADOLPH COORS STK B, TAP
-0.24% , ECH , Chile MSCI iS, ECH
-0.17% , EWW , Mexico Index, EWW
-0.52% , VMC , VULCAN MATERIALS
-0.20% , XME , Metals & Mining SPDR, XME
-0.49% , IAU , Gold COMEX iS, IAU
-0.97% , RHI , ROBERT HALF
-0.03% , LLL , L-3 COMMS HLDGS
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.30% Germany Index, EWG
1.99% France Index, EWQ
1.98% Spain Index, EWP
1.88% EMU Europe Index, EZU
1.88% Sweden Index, EWD
1.74% Netherlands Index, EWN
1.67% Belgium Index, EWK
1.63% Austria Index, EWO
1.54% Russia MV, RSX
1.47% South Africa Index, EZA
1.39% Italy Index, EWI
1.35% European VIPERs, VGK
1.35% India PS, PIN
1.34% Europe 350 S&P Index, IEV
1.29% Biotech SPDR, XBI
1.28% Semiconductor iS IGW, SOXX
1.17% Networking, IGN
1.08% Foreign LargeCap EAFE MSCI iS, EFA
1.07% Dividend ex-U.S. DJ iS, IDV
1.05% India Earnings WTree, EPI
1.05% Consumer Discretionary SPDR, XLY
1.03% MidCap Growth S&P 400 iS, IJK
0.99% Growth MidCap Russell, IWP
0.99% Value EAFE MSCI, EFV
0.99% Semiconductor SPDR, XSD
0.98% Growth SmallCap VIPERs, VBK
0.95% MidCap S&P 400 SPDRs, MDY
0.95% Energy SPDR, XLE
0.94% Homebuilders SPDR, XHB
0.93% United Kingdom Index, EWU
0.93% Growth EAFE MSCI, EFG
0.92% SmallCap Blend EAFE MSCI iS, SCZ
0.91% Energy DJ, IYE
0.91% MidCap Blend S&P 400 iS, IJH
0.91% WilderHill Clean Energy PS, PBW
0.90% Energy VIPERs, VDE
0.84% Global 100, IOO
0.82% MidCap Russell, IWR
0.82% Thailand MSCI iS, THD
0.79% Value MidCap Russell, IWS
0.78% SmallCap Growth Russell 2000 iS, IWO
0.78% Health Care SPDR, XLV
0.77% Global ex U.S. LargeCap Blend, ACWX
0.76% Small Cap VIPERs, VB
0.76% SmallCap Growth S&P 600 iS, IJT
0.75% Capital Markets KWB ST, KCE
0.75% Realty Cohen & Steers, ICF
0.73% SmallCap Blend Russell 2000 iS, IWM
0.73% LargeCap Blend S&P=Weight R, RSP
0.72% Energy Global, IXC
0.71% Japan Index, EWJ
0.69% LargeCap Value Russell 1000 iS, IWD
0.67% MidCap Value S&P 400 iS, IJJ
0.66% REIT Wilshire, RWR
0.63% LargeCap VIPERs, VV
0.62% Global LargeCap Blend MSCI iS, ACWI
0.61% LargeCap Blend Russell 1000 iS, IWB
0.61% Value VIPERs, VTV
0.57% REIT VIPERs, VNQ
0.57% SmallCap Blend S&P 600 iS, IJR
0.56% Switzerland Index, EWL
0.56% S&P 500 SPDRs LargeCap Blend, SPY
0.56% Blend Total Market VIPERs, VTI
0.54% LargeCap Growth Russell 1000 iS, IWF
0.54% Growth VIPERs, VUG
0.51% LargeCap Value S&P 500 iS, IVE
0.51% QQQ Nasdaq 100 Trust, QQQ
0.51% LargeCap Blend Russell 3000 iS, IWV
0.50% Utilities SPDR, XLU
0.50% Pacific VIPERs, VPL
0.49% LargeCap Blend S&P 500 iS, IVV
0.49% Consumer Staples SPDR, XLP
0.48% Value LargeCap Dynamic PS, PWV
0.47% LargeCap Blend S&P 100, OEF
0.47% Financials VIPERs, VFH
0.47% LargeCap Growth S&P 500 iS, IVW
0.46% Financial SPDR, XLF
0.44% Dividend Appreciation Vipers, VIG
0.43% DIAMONDS (DJIA), DIA
0.42% Financial Services DJ, IYG
0.41% Real Estate US DJ iS, IYR
0.41% Utilities VIPERs, VPU
0.41% Water Resources, PHO
0.40% Value SmallCap VIPERS, VBR
0.40% Energy & Nat Res iS GS, IGE
0.40% Basic Materials DJ US, IYM
0.38% SmallCap Value Russell 2000 iS, IWN
0.37% Pacific ex-Japan, EPP
0.37% Dividend U.S. DJ iS, DVY
0.36% Technology DJ US, IYW
0.36% SmallCap Value S&P 600 iS, IJS
0.36% Dividend SPDR, SDY
0.35% Materials SPDR, XLB
0.35% Indonesia MV, IDX
0.35% Australia Index, EWA
0.32% Industrial SPDR, XLI
0.31% Financial DJ US, IYF
0.26% Latin Am 40, ILF
0.24% Info Tech VIPERs, VGT
0.24% Transportation Av DJ, IYT
0.20% Dividend High Yield Equity PS, PEY
0.18% Dividend International, PID
0.15% Preferred Stock iS, PFF
0.12% Brazil Index, EWZ
0.12% Bond Ex-US Treas, BWX
0.11% Financial Preferred, PGF
0.10% Technology SPDR, XLK
0.10% Hong Kong Index, EWH
0.07% Malaysia Index, EWM
0.06% Oil, Crude, U.S. Oil Fund, USO
0.00% Bond, High-Yield Junk, JNK
0.00% Bond Treasury Short-Term iS, SHV
-0.03% Bond, High Yield Corp iBoxx iS, HYG
-0.04% Microcap Russell, IWC
-0.04% Oil Fund PowerShares, DBO
-0.05% Bond, 1-3 Year Treasury, SHY
-0.10% Emerging 50 BLDRS, ADRE
-0.14% Agriculture DB PS, DBA
-0.17% Mexico Index, EWW
-0.20% Frontier Markets Guggenheim , FRN
-0.20% Metals & Mining SPDR, XME
-0.21% Commodity Tracking, DBC
-0.24% Chile MSCI iS, ECH
-0.24% Bond, Intermediate US Aggregate iS, AGG
-0.25% Emerging VIPERs, VWO
-0.28% Telecom DJ US, IYZ
-0.33% Bond, Muni S&P ATM-Free iS, MUB
-0.34% Emerging Markets MSCI iS, EEM
-0.34% Canada Index, EWC
-0.36% Singapore Index, EWS
-0.40% China LargeCap Growth G D H USX PS, PGJ
-0.42% Bond, TIPS U.S. Treasury iS, TIP
-0.43% Bond, Emerg Mkt JPM iS, EMB
-0.46% Bond, Long-Term Corp iBoxx iS, LQD
-0.48% Gold Shares S.T., GLD
-0.53% Taiwan Index, EWT
-0.57% Bear, Short S&P 500, SH
-0.66% Bond, 10 Year Treasury, IEF
-1.04% China 25 iS, FXI
-1.37% Bond, 20+ Years Treasury, TLT
-1.44% Silver Trust iS, SLV
-1.46% Turkey MSCI iS, TUR
-1.98% South Korea Index, EWY
