Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price jumped up above its 50-day SMA on 2/25/13, thereby turning systematically neutral. TLT formed a technical base after hitting an “oversold” low at 115.51 on 2/1/13 and successfully testing that low on 2/13/13 and again on 2/20/13. Various technical oscillators showed losses of downside momentum and bullish divergences.
Friday’s stock price indexes gapped higher on the open, then added modestly to early gains in the opening 35 minutes. After peaking at 10:05 a.m. ET, stock prices suddenly reversed and fell the rest of the day, closing below the closing price lows of the previous 5 weeks. Volume on the NYSE rose 22% to confirm the bearish trend change.
The S&P 500 (SPX: 1,487.85) finished down 1.83%, the Nasdaq Composite Index fell 1.44%, the Dow Jones Industrial Average lost 1.55%, and the Dow Jones Transportation Average declined 2.16%. Declines outnumbered Advances by more than 3 to 1.
Under the surface, many daily price momentum oscillators have been diverging bearishly while the price indexes rose to higher highs earlier in February. Momentum oscillators have remained below their 2011-2012 highs and below their highs of late January. For example, RSI(14) fell to 44.60 on Monday, the lowest level of the year 2013 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 6 weeks on Monday 2/25/13. 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 still indicates high degrees of optimism and bullish complacency, 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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VIX Fear Index jumped to 19.28 on 2/25/13, its highest level of the year 2013, suggesting moderate caution.. Just 1 week earlier, VIX collapsed to 12.08 on 2/19/13, its lowest level in more than 5 years, since 4/20/2007, suggesting extreme bullish complacency. VIX is a market estimate of expected constant 30-day volatility, calculated by weighting S&P 500 Index CBOE option bid/ask quotes spanning a wide range of strike prices for the two nearest expiration dates.
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
1497.29, low of 2/21/2013
1495.02, low of 2/4/2013
1489.46, low of 1/24/2013
The S&P 500 Composite Potential Support
1476.72, 50-day SMA
1474.51, high of 9/14/2012
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
1409.21, 200-day SMA
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
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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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price jumped up above its 50-day SMA on 2/25/13, thereby turning systematically neutral. TLT formed a technical base after hitting an “oversold” low at 115.51 on 2/1/13 and successfully testing that low on 2/13/13 and again on 2/20/13. Various technical oscillators showed losses of downside momentum and bullish divergences. Support 117.85, 115.51, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 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 jumped up above its 50-day SMA on 2/25/13, thereby turning systematically neutral. IEF formed a technical base after hitting an “oversold” low at 105.56 on 2/1/13 and successfully testing that low 3 times. Various technical oscillators show losses of downside momentum and bullish divergences. Support 106.50, 105.56, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 107.35, 108.07, 108.15, 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its 50-day SMA on 2/25/13, thereby turning systematically neutral. Price peaked on 1/25/13 and fell below the lows of the previous 5 weeks 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.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) rose above 5-months’ highs on 2/25/13, after closing above its 200-day SMA on 2/21/13. UUP turned systematically neutral on 2/7/13, when it rose above its 50-day SMA. Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 22.15, 21.53, 21.07, and 20.84. Resistance 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 2/25/13. 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 7 weeks on 2/25/13, again 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 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 is heading for 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. Support 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 28.61, 29.73, 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) fell below 6-weeks’ lows on 2/21/13. 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 12 weeks on 2/22/13. JJC remains systematically neutral, below the 50-day SMA and 200-day SMA. 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
2.52% , CTB , COOPER TIRE
0.77% , IEF , Bond, 10 Year Treasury, IEF
3.10% , DXD , Short 200% Dow 30 PS, DXD
3.14% , AMGN , AMGEN
1.97% , TLT , Bond, 20+ Years Treasury, TLT
3.63% , SDS , Short 200% S&P 500 PS, SDS
2.57% , QID , Short 200% QQQ PS, QID
1.47% , DOG , Short 100% Dow 30, DOG
1.93% , MYY , Short 100% MidCap 400, MYY
0.93% , MCD , MCDONALDS
1.89% , SH , Short 100% S&P 500, SH
1.34% , PSQ , Short 100% QQQ, PSQ
0.59% , LQD , Bond, Corp, LQD
0.29% , SEE , SEALED AIR
0.15% , FLEX , Flextronics International Ltd
0.70% , VZ , VERIZON COMMS
0.02% , PFF , Preferred Stock iS, PFF
0.15% , BAX , BAXTER INTL
0.06% , WMT , WAL MART STORES
0.04% , CL , COLGATE
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-9.42% , DDS , DILLARD STK A
-5.72% , EWI , Italy Index, EWI
-5.52% , EWP , Spain Index, EWP
-2.30% , SCZ , Small Cap EAFE MSCI iS, SCZ
-2.02% , JKL , Value SmallCap iS M, JKL
-4.61% , MJN , Mead Johnson Nutrition
-3.19% , PKB , Building & Construction, PKB
-3.71% , XBI , Biotech SPDR, XBI
-2.12% , IJT , Growth BARRA Small Cap 600, IJT
-3.85% , TBT , 200% Short US T Bond, TBT
-4.52% , RDC , ROWAN COMPANIES
-2.48% , IXC , Energy Global, IXC
-4.04% , APOL , APOLLO GROUP
-4.80% , LOW , LOWES
-2.12% , EFG , Growth EAFE MSCI, EFG
-5.84% , CECO , CAREER EDUCATION CORP
-3.40% , ADSK , AUTODESK
-3.01% , EWN , Netherlands Index, EWN
-3.10% , DDM , Ultra Dow30 Double, DDM
-1.60% , PWB , Lg Cap Growth PSD, PWB
-6.57% , MS , MORGAN STANLEY
-2.88% , PFG , PRINCIPAL FINL
-1.75% , KMX , CarMax
-1.78% , PWV , Value LargeCap Dynamic PS, PWV
-4.52% , MVV , Ultra MidCap400 Double, MVV
-2.84% , KEY , KEYCORP
-3.68% , SSO , Ultra S&P500 Double, SSO
-2.50% , QLD , Ultra QQQ Double, QLD
-3.99% , EWQ , France Index, EWQ
-1.28% , PIN , India PS, PIN
-3.47% , XHB , Homebuilders SPDR, XHB
-4.66% , PHM , PULTE HOMES
-3.91% , FEZ , Euro STOXX 50, FEZ
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.97% Bond, 20+ Years Treasury, TLT
1.89% Bear, Short S&P 500, SH
0.90% Gold Shares S.T., GLD
0.86% Silver Trust iS, SLV
0.77% Bond, 10 Year Treasury, IEF
0.59% Bond, Long-Term Corp iBoxx iS, LQD
0.50% Bond, TIPS U.S. Treasury iS, TIP
0.38% Bond, Intermediate US Aggregate iS, AGG
0.12% Bond, Emerg Mkt JPM iS, EMB
0.02% Preferred Stock iS, PFF
0.02% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.03% Indonesia MV, IDX
-0.04% Bond, Muni S&P ATM-Free iS, MUB
-0.05% Financial Preferred, PGF
-0.10% Bond Ex-US Treas, BWX
-0.15% Hong Kong Index, EWH
-0.20% Bond, High-Yield Junk, JNK
-0.31% Bond, High Yield Corp iBoxx iS, HYG
-0.42% Malaysia Index, EWM
-0.47% Commodity Tracking, DBC
-0.62% South Africa Index, EZA
-0.76% Agriculture DB PS, DBA
-0.88% Turkey MSCI iS, TUR
-0.89% Utilities SPDR, XLU
-0.95% Frontier Markets Guggenheim , FRN
-1.06% Pacific VIPERs, VPL
-1.08% Australia Index, EWA
-1.09% China LargeCap Growth G D H USX PS, PGJ
-1.11% Health Care SPDR, XLV
-1.13% Utilities VIPERs, VPU
-1.13% Brazil Index, EWZ
-1.15% Pacific ex-Japan, EPP
-1.16% Oil, Crude, U.S. Oil Fund, USO
-1.17% Canada Index, EWC
-1.18% Oil Fund PowerShares, DBO
-1.23% QQQ Nasdaq 100 Trust, QQQ
-1.24% Chile MSCI iS, ECH
-1.28% India PS, PIN
-1.30% China 25 iS, FXI
-1.34% Emerging Markets MSCI iS, EEM
-1.35% Telecom DJ US, IYZ
-1.35% Thailand MSCI iS, THD
-1.36% Consumer Staples SPDR, XLP
-1.38% Japan Index, EWJ
-1.41% Technology SPDR, XLK
-1.47% Dividend High Yield Equity PS, PEY
-1.47% India Earnings WTree, EPI
-1.47% Info Tech VIPERs, VGT
-1.49% Emerging VIPERs, VWO
-1.50% Technology DJ US, IYW
-1.51% Dividend U.S. DJ iS, DVY
-1.54% DIAMONDS (DJIA), DIA
-1.54% LargeCap Growth Russell 1000 iS, IWF
-1.55% Consumer Discretionary SPDR, XLY
-1.58% Dividend Appreciation Vipers, VIG
-1.67% Growth VIPERs, VUG
-1.67% LargeCap Growth S&P 500 iS, IVW
-1.68% Dividend SPDR, SDY
-1.69% Real Estate US DJ iS, IYR
-1.69% Latin Am 40, ILF
-1.70% Switzerland Index, EWL
-1.70% Dividend International, PID
-1.70% Mexico Index, EWW
-1.73% Growth MidCap Russell, IWP
-1.74% Emerging 50 BLDRS, ADRE
-1.78% LargeCap Blend S&P 100, OEF
-1.78% Value LargeCap Dynamic PS, PWV
-1.80% LargeCap Blend Russell 3000 iS, IWV
-1.81% Singapore Index, EWS
-1.81% LargeCap Blend Russell 1000 iS, IWB
-1.82% MidCap Growth S&P 400 iS, IJK
-1.84% Blend Total Market VIPERs, VTI
-1.84% REIT Wilshire, RWR
-1.84% LargeCap VIPERs, VV
-1.86% Germany Index, EWG
-1.86% Global LargeCap Blend MSCI iS, ACWI
-1.87% LargeCap Blend S&P 500 iS, IVV
-1.90% REIT VIPERs, VNQ
-1.90% S&P 500 SPDRs LargeCap Blend, SPY
-1.90% Semiconductor iS IGW, SOXX
-1.91% Taiwan Index, EWT
-1.95% MidCap Russell, IWR
-1.96% Global 100, IOO
-1.97% Value VIPERs, VTV
-1.97% Realty Cohen & Steers, ICF
-1.99% LargeCap Blend S&P=Weight R, RSP
-2.00% MidCap Value S&P 400 iS, IJJ
-2.01% Microcap Russell, IWC
-2.02% MidCap Blend S&P 400 iS, IJH
-2.02% LargeCap Value S&P 500 iS, IVE
-2.04% Russia MV, RSX
-2.06% Industrial SPDR, XLI
-2.06% Value MidCap Russell, IWS
-2.06% Small Cap VIPERs, VB
-2.08% SmallCap Value S&P 600 iS, IJS
-2.08% Global ex U.S. LargeCap Blend, ACWX
-2.09% Value SmallCap VIPERS, VBR
-2.10% LargeCap Value Russell 1000 iS, IWD
-2.12% Growth EAFE MSCI, EFG
-2.12% SmallCap Growth S&P 600 iS, IJT
-2.13% SmallCap Value Russell 2000 iS, IWN
-2.14% Growth SmallCap VIPERs, VBK
-2.18% Networking, IGN
-2.19% SmallCap Blend S&P 600 iS, IJR
-2.20% Transportation Av DJ, IYT
-2.21% SmallCap Growth Russell 2000 iS, IWO
-2.21% SmallCap Blend Russell 2000 iS, IWM
-2.22% Capital Markets KWB ST, KCE
-2.23% Value EAFE MSCI, EFV
-2.26% Energy & Nat Res iS GS, IGE
-2.28% MidCap S&P 400 SPDRs, MDY
-2.30% SmallCap Blend EAFE MSCI iS, SCZ
-2.30% Materials SPDR, XLB
-2.37% South Korea Index, EWY
-2.38% United Kingdom Index, EWU
-2.39% Foreign LargeCap EAFE MSCI iS, EFA
-2.40% Basic Materials DJ US, IYM
-2.40% Semiconductor SPDR, XSD
-2.44% Financial DJ US, IYF
-2.46% Financials VIPERs, VFH
-2.48% Energy Global, IXC
-2.51% Metals & Mining SPDR, XME
-2.59% Energy VIPERs, VDE
-2.60% Water Resources, PHO
-2.62% Energy SPDR, XLE
-2.66% Energy DJ, IYE
-2.66% Financial Services DJ, IYG
-2.67% Dividend ex-U.S. DJ iS, IDV
-2.71% Financial SPDR, XLF
-3.01% Netherlands Index, EWN
-3.09% Europe 350 S&P Index, IEV
-3.17% European VIPERs, VGK
-3.28% WilderHill Clean Energy PS, PBW
-3.47% Homebuilders SPDR, XHB
-3.55% EMU Europe Index, EZU
-3.71% Biotech SPDR, XBI
-3.87% Austria Index, EWO
-3.88% Belgium Index, EWK
-3.99% France Index, EWQ
-4.26% Sweden Index, EWD
-5.52% Spain Index, EWP
-5.72% Italy Index, EWI
