Materials stock sector ETF Relative Strength Ratio (XLB/SPY) fell further below 2-month’s lows.
Consumer Discretionary stock sector ETF Relative Strength Ratio (XLY/SPY) whipsawed back below its 50-day SMA.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) fell below its lows of the previous 13 months.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below 4-month’s lows.
U.S. dollar ETF (UUP) rose above 3-months’ highs.
Crude Oil, United States Oil ETF (USO) price fell to its lowest level in more than 5 weeks, confirming a downside correction for the short term, at least
Gold, SPDR Gold Shares ETF (GLD) price fell below 7-months’ lows, confirming the medium-term downtrend that started on 10/4/12.
Silver, iShares Silver Trust ETF (SLV) price fell below 6-months’ lows.
Silver/Gold ETFs Ratio (SLV/GLD) fell below 6-weeks’ lows.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 7 weeks.
The stock market suffered its largest loss in more than 3 months. Federal Reserve Board minutes from its January meeting seemed to raise questions about the wisdom of massively printing fiat currency backed by nothing.
The S&P 500 (SPX: 1,511.95) finished down 1.24%, the Nasdaq Composite Index fell 1.53%, the Dow Jones Industrial Average lost 0.77%, and the Dow Jones Transportation Average declined 1.65%. Declines outnumbered Advances by more than 3 to 1.
Under the surface, many daily price momentum oscillators have been having a hard time keeping up with the price indexes, suggesting continuing non-confirmation and bearish divergence compared to the S&P 500. Momentum oscillators have remained below their 2011-2012 highs and below their highs of late January. For example, RSI(14) fell to 56.79 on Wednesday, the lowest level in 7 weeks and down from a peak at 74.46 on 1/29/13. MACD(12,26,9) also peaked on 1/29/13, crossed below its signal line on 2/4/13, and fell to its lowest level in more than 5 weeks on Wednesday 2/20/13. Bearishly diverging momentum is a problem because momentum is a leading indicator of price.
The Art of Contrary Thinking has been calling for questioning strong bullish sentiment. Investor sentiment data indicates 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. Sentiment extremes are a leading indicator of price.
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
1530.94, high of 2/19/2013
The S&P 500 Composite Potential Support
1495.02, low of 2/4/2013
1489.46, low of 1/24/2013
1474.51, high of 9/14/2012
1471.89, 50-day SMA
1463.76, low of 1/15/2013
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
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
1407.33, 200-day SMA
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price may be trying to form a base after hitting an “oversold” low at 115.51 on 2/1/13 and successfully testing that low on 2/13/13. Various technical oscillators show losses of downside momentum and bullish divergences. Support 115.51, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 117.85, 120.70, 123.71, 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price may be trying to form a base after hitting an “oversold” low at 105.56 on 2/1/13 and successfully testing that low on 2/13/13. Various technical oscillators show losses of downside momentum and bullish divergences. Support 105.56, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 106.45, 107.35, 108.07, 108.15, 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) 50-day SMA crossed above the 200-day SMA on 1/14/13, thereby turning systematically bullish. Price peaked on 1/25/13 and fell below the lows of the previous 2 months on 2/7/13.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below its 50-day SMA on 2/15/13, thereby turning systematically neutral. Absolute price fell to a lower 5-month low on 2/20/13. TIP has been in a medium-term downtrend since peaking at 123.44 on 12/6/12. TIP price is now systematically neutral–but it appears to be rapidly heading toward a “Dead Cross” bearish 50/200 SMA crossover in days ahead.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) rose above 3-months’ highs on 2/20/13. UUP turned systematically neutral on 2/7/13 when it rose above 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. Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 21.53, 21.07, and 20.84. Resistance 22.30, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below 7- months’ lows on 2/19/13. 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 fell to its lowest level in more than 5 weeks on 2/20/13, confirming a downside correction for the short term, at least. Longer term, USO has been mostly bearish since peaking at 119.17 on 7/11/08. Support 33.57, 31.00, 29.02, 26.28, and 22.74. Resistance 35.53, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price fell below 7-months’ lows on 2/20/13, confirming the medium-term downtrend that started on 10/4/12. GLD price turned systematically neutral on 11/27/12, when it fell below its 50-day SMA. The 50-day SMA appears to be heading toward a bearish “Dead Cross” below the 200-day SMA in days ahead. Longer term, GLD has been mostly bearish since peaking at 185.85 on 9/6/11. Support: 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 fell below 6-months’ lows on 2/20/13. Price turned systematically neutral on 2/7/13 when it fell below its 50-day SMA. The 50-day SMA appears to be heading toward a bearish “Dead Cross” below the 200-day SMA in weeks ahead. Longer term, SLV price has been mostly bearish since peaking at 48.35 on 4/28/11.
Silver/Gold ETFs Ratio (SLV/GLD) fell below 6-weeks’ lows on 2/20/13. SLV/GLD remains below both its falling 50-day SMA and its falling 200-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 7 weeks on 2/20/13. JJC remains systematically neutral. JJC has been consolidating losses between 38.99 and 51.41 since 10/5/11. Longer term, JJC has been mostly bearish since peaking at 61.69 on 2/14/11. “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
2.96% , JCP , JC PENNEY
2.45% , SDS , Short 200% S&P 500 PS, SDS
2.99% , QID , Short 200% QQQ PS, QID
0.94% , VZ , VERIZON COMMS
1.27% , SH , Short 100% S&P 500, SH
1.92% , AON , AON
0.49% , SNPS , Synopsys Inc
1.04% , MRK , MERCK & CO
0.18% , TLH , Bond 10-20 Year US Treas, TLH
0.17% , BA , BOEING
0.22% , IEF , Bond, 10 Year Treasury, IEF
0.20% , THD , Thailand MSCI iS, THD
0.74% , SYY , SYSCO
0.30% , TLT , Bond, 20+ Years Treasury, TLT
0.19% , KSS , KOHLS
0.41% , AIV , APT INV MNGMT
0.06% , AGG , Bond, Aggregate, AGG
0.05% , NEE , NextEra Energy Resources LLC
0.59% , AFL , AFLAC
1.53% , DXD , Short 200% Dow 30 PS, DXD
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-9.43% , GRMN , GARMIN LTD
-7.00% , OMX , OFFICEMAX INC., OMX
-16.73% , ODP , OFFICE DEPOT
-1.97% , IWN , Value SmallCap Russell 2000, IWN
-6.07% , LPX , LOUISIANA PAC
-6.84% , LEN , Lennar Corp. (LEN)
-4.64% , NE , NOBLE
-5.95% , FCX , FREEPRT MCMORAN STK B
-5.84% , DHI , D.R. HORTON, DHI
-4.39% , IP , INTL PAPER
-7.54% , KBH , KB HOME
-4.45% , XHB , Homebuilders SPDR, XHB
-2.00% , RPV , Value S&P 500, RPV
-5.87% , VLO , VALERO ENERGY
-1.37% , EWU , United Kingdom Index, EWU
-2.91% , PXJ , Oil & Gas, PXJ
-3.15% , TMO , THERMO ELECTRON
-5.45% , NEM , NEWMONT MINING
-2.50% , GLD , Gold Shares S.T., GLD
-7.39% , NBR , NABORS
-1.88% , IYE , Energy DJ, IYE
-2.26% , USO , Oil, Crude, U.S. Oil Fund, USO
-3.17% , MON , MONSANTO
-5.83% , RSH , RADIOSHACK
-6.60% , DVN , DEVON ENERGY
-2.60% , IGE , Energy & Nat Res iS GS, IGE
-5.30% , STLD , Steel Dynamics, STLD
-4.37% , EMN , EASTMAN CHEM
-3.08% , QLD , Ultra QQQ Double, QLD
-2.50% , IAU , Gold COMEX iS, IAU
-2.52% , SSO , Ultra S&P500 Double, SSO
-2.16% , FPX , IPOs, First Tr IPOX-100, FPX
-2.81% , XLB , Materials SPDR, XLB
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.27% Bear, Short S&P 500, SH
0.90% South Korea Index, EWY
0.45% Agriculture DB PS, DBA
0.30% Bond, 20+ Years Treasury, TLT
0.30% Japan Index, EWJ
0.22% Bond, 10 Year Treasury, IEF
0.20% Thailand MSCI iS, THD
0.17% Bond, Long-Term Corp iBoxx iS, LQD
0.06% Bond, Intermediate US Aggregate iS, AGG
0.03% Bond, Muni S&P ATM-Free iS, MUB
0.03% Bond, TIPS U.S. Treasury iS, TIP
0.00% Bond Treasury Short-Term iS, SHV
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Financial Preferred, PGF
-0.09% Preferred Stock iS, PFF
-0.10% Bond, High Yield Corp iBoxx iS, HYG
-0.12% Bond, High-Yield Junk, JNK
-0.18% Consumer Staples SPDR, XLP
-0.19% Utilities SPDR, XLU
-0.25% Singapore Index, EWS
-0.26% Turkey MSCI iS, TUR
-0.31% Switzerland Index, EWL
-0.35% Utilities VIPERs, VPU
-0.36% Taiwan Index, EWT
-0.43% Bond, Emerg Mkt JPM iS, EMB
-0.45% Pacific VIPERs, VPL
-0.49% Dividend High Yield Equity PS, PEY
-0.53% Realty Cohen & Steers, ICF
-0.57% REIT Wilshire, RWR
-0.64% REIT VIPERs, VNQ
-0.65% Hong Kong Index, EWH
-0.65% Health Care SPDR, XLV
-0.65% Growth EAFE MSCI, EFG
-0.72% Sweden Index, EWD
-0.78% DIAMONDS (DJIA), DIA
-0.82% China LargeCap Growth G D H USX PS, PGJ
-0.82% Belgium Index, EWK
-0.82% India Earnings WTree, EPI
-0.84% Malaysia Index, EWM
-0.84% Bond Ex-US Treas, BWX
-0.84% Real Estate US DJ iS, IYR
-0.85% Biotech SPDR, XBI
-0.86% Dividend U.S. DJ iS, DVY
-0.88% Austria Index, EWO
-0.88% Value LargeCap Dynamic PS, PWV
-0.90% Emerging Markets MSCI iS, EEM
-0.91% Indonesia MV, IDX
-0.92% Emerging VIPERs, VWO
-0.94% SmallCap Blend EAFE MSCI iS, SCZ
-0.95% India PS, PIN
-0.95% Dividend Appreciation Vipers, VIG
-0.96% Global 100, IOO
-0.97% Dividend SPDR, SDY
-0.98% Foreign LargeCap EAFE MSCI iS, EFA
-1.01% China 25 iS, FXI
-1.03% Telecom DJ US, IYZ
-1.05% Global LargeCap Blend MSCI iS, ACWI
-1.06% Global ex U.S. LargeCap Blend, ACWX
-1.10% LargeCap Blend S&P 100, OEF
-1.13% Commodity Tracking, DBC
-1.14% Dividend International, PID
-1.18% Canada Index, EWC
-1.20% LargeCap Blend Russell 1000 iS, IWB
-1.21% LargeCap Growth Russell 1000 iS, IWF
-1.22% LargeCap Value S&P 500 iS, IVE
-1.23% Value VIPERs, VTV
-1.25% S&P 500 SPDRs LargeCap Blend, SPY
-1.26% LargeCap Blend S&P 500 iS, IVV
-1.27% LargeCap VIPERs, VV
-1.27% Pacific ex-Japan, EPP
-1.29% Growth VIPERs, VUG
-1.30% LargeCap Growth S&P 500 iS, IVW
-1.31% Industrial SPDR, XLI
-1.31% LargeCap Blend Russell 3000 iS, IWV
-1.32% Value EAFE MSCI, EFV
-1.33% Europe 350 S&P Index, IEV
-1.33% Blend Total Market VIPERs, VTI
-1.35% Technology SPDR, XLK
-1.36% LargeCap Value Russell 1000 iS, IWD
-1.36% European VIPERs, VGK
-1.37% United Kingdom Index, EWU
-1.40% Germany Index, EWG
-1.41% Frontier Markets Guggenheim , FRN
-1.42% Mexico Index, EWW
-1.42% Financials VIPERs, VFH
-1.47% Financial DJ US, IYF
-1.51% Financial SPDR, XLF
-1.53% Microcap Russell, IWC
-1.53% Consumer Discretionary SPDR, XLY
-1.53% Info Tech VIPERs, VGT
-1.54% QQQ Nasdaq 100 Trust, QQQ
-1.54% Australia Index, EWA
-1.54% Water Resources, PHO
-1.59% Growth MidCap Russell, IWP
-1.60% LargeCap Blend S&P=Weight R, RSP
-1.60% Energy Global, IXC
-1.60% MidCap Value S&P 400 iS, IJJ
-1.61% EMU Europe Index, EZU
-1.61% Emerging 50 BLDRS, ADRE
-1.62% MidCap Russell, IWR
-1.63% MidCap Blend S&P 400 iS, IJH
-1.66% Financial Services DJ, IYG
-1.67% South Africa Index, EZA
-1.68% SmallCap Growth Russell 2000 iS, IWO
-1.68% SmallCap Value S&P 600 iS, IJS
-1.69% Chile MSCI iS, ECH
-1.71% Value MidCap Russell, IWS
-1.72% Transportation Av DJ, IYT
-1.72% Technology DJ US, IYW
-1.75% Small Cap VIPERs, VB
-1.76% Value SmallCap VIPERS, VBR
-1.77% Growth SmallCap VIPERs, VBK
-1.79% MidCap S&P 400 SPDRs, MDY
-1.79% MidCap Growth S&P 400 iS, IJK
-1.82% Dividend ex-U.S. DJ iS, IDV
-1.84% SmallCap Growth S&P 600 iS, IJT
-1.86% France Index, EWQ
-1.86% SmallCap Blend Russell 2000 iS, IWM
-1.87% SmallCap Blend S&P 600 iS, IJR
-1.88% Energy DJ, IYE
-1.93% Netherlands Index, EWN
-1.97% SmallCap Value Russell 2000 iS, IWN
-1.99% Capital Markets KWB ST, KCE
-2.00% Energy VIPERs, VDE
-2.01% Spain Index, EWP
-2.09% Italy Index, EWI
-2.09% Energy SPDR, XLE
-2.09% Networking, IGN
-2.14% Semiconductor iS IGW, SOXX
-2.14% Latin Am 40, ILF
-2.18% Brazil Index, EWZ
-2.26% Oil, Crude, U.S. Oil Fund, USO
-2.35% Oil Fund PowerShares, DBO
-2.50% Gold Shares S.T., GLD
-2.58% Russia MV, RSX
-2.60% Energy & Nat Res iS GS, IGE
-2.73% Semiconductor SPDR, XSD
-2.81% Materials SPDR, XLB
-2.92% WilderHill Clean Energy PS, PBW
-3.01% Silver Trust iS, SLV
-3.14% Basic Materials DJ US, IYM
-4.45% Homebuilders SPDR, XHB
-4.82% Metals & Mining SPDR, XME
