The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below its 50-day SMA on 2/27/13, thereby turning systematically neutral.
Wednesday’s stock price indexes rose again as Fed Chairman Ben Bernanke reassured Congress that all is well. Volume on the NYSE fell 11% on the rebound, however.
The S&P 500 (SPX: 1,515.99) finished up 1.27%, the Nasdaq Composite Index rose 1.04%, the Dow Jones Industrial Average gained 1.26%, and the Dow Jones Transportation Average advanced 2.91%. Advances outnumbered Declines by 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) rose to 55.92 on Wednesday, but that is still 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 Wednesday 2/26/13. 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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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
1485.01, low of 2/26/2013
1480.02, 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
1410.68, 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 2/26/13. 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 turned systematically bearish on 2/22/13, when the 50-day SMA fell below the 200-day SMA. 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 days 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
6.23% , KSU , Kansas City Southern, KSU
10.49% , DLTR , Dollar Tree Stores Inc
6.30% , AES , AES
1.39% , EWM , Malaysia Index, EWM
1.13% , IGN , Networking, IGN
2.18% , ITT , ITT INDS
1.97% , FPX , IPOs, First Tr IPOX-100, FPX
1.88% , JCI , JOHNSON CONTROLS
2.39% , EWQ , France Index, EWQ
4.22% , LAMR , Lamar Advertising Company
2.84% , COH , COACH
4.49% , SHLD , SEARS HOLDINGS
3.40% , F , FORD MOTOR
2.56% , CNP , CENTERPNT ENERGY
3.43% , SYMC , SYMANTEC
2.26% , BA , BOEING
1.80% , IYM , Basic Materials DJ US, IYM
2.62% , ADBE , ADOBE SYS
6.87% , MTG , MGIC INVESTMENT
2.94% , IYT , Transportation Av DJ, IYT
1.59% , IXC , Energy Global, IXC
0.97% , EWT , Taiwan Index, EWT
1.13% , PIN , India PS, PIN
1.38% , XSD , Semiconductor SPDR, XSD
2.43% , EIX , EDISON INTL
2.30% , ZEUS , Olympic Steel, ZEUS
1.10% , IGM , Technology GS, IGM
1.23% , EPI , India Earnings WTree, EPI
2.59% , EWP , Spain Index, EWP
1.65% , SOXX , Semiconductor iS IGW, SOXX
1.91% , NSC , NORFOLK SOUTHERN
3.38% , HBAN , HUNTINGTON
0.99% , IXP , Telecommunications Global, IXP
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.44% , TDC , Teradata Corporation, TDC
-1.92% , TLAB , TELLABS
-1.44% , MYY , Short 100% MidCap 400, MYY
-1.45% , TGT , TARGET
-1.60% , ADSK , AUTODESK
-0.67% , MO , ALTRIA, MO
-0.26% , EZA , South Africa Index, EZA
-2.53% , SDS , Short 200% S&P 500 PS, SDS
-1.30% , DOG , Short 100% Dow 30, DOG
-0.98% , AAPL , APPLE COMPUTER
-0.24% , FMCN , Focus Media, FMCN
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.94% Transportation Av DJ, IYT
2.90% Indonesia MV, IDX
2.59% Spain Index, EWP
2.39% France Index, EWQ
2.16% Homebuilders SPDR, XHB
2.09% EMU Europe Index, EZU
2.07% Belgium Index, EWK
1.95% Italy Index, EWI
1.94% Hong Kong Index, EWH
1.89% Industrial SPDR, XLI
1.87% Austria Index, EWO
1.83% Dividend ex-U.S. DJ iS, IDV
1.80% Basic Materials DJ US, IYM
1.77% Materials SPDR, XLB
1.69% Water Resources, PHO
1.66% Europe 350 S&P Index, IEV
1.65% Semiconductor iS IGW, SOXX
1.64% Financial Services DJ, IYG
1.62% MidCap Growth S&P 400 iS, IJK
1.62% Growth MidCap Russell, IWP
1.59% Energy Global, IXC
1.58% Energy DJ, IYE
1.56% Germany Index, EWG
1.56% Financial SPDR, XLF
1.55% Energy VIPERs, VDE
1.55% Capital Markets KWB ST, KCE
1.53% Energy SPDR, XLE
1.52% Consumer Discretionary SPDR, XLY
1.50% European VIPERs, VGK
1.47% Financial DJ US, IYF
1.47% MidCap Russell, IWR
1.46% Global 100, IOO
1.45% MidCap S&P 400 SPDRs, MDY
1.43% MidCap Blend S&P 400 iS, IJH
1.42% Value MidCap Russell, IWS
1.42% South Korea Index, EWY
1.41% Biotech SPDR, XBI
1.41% United Kingdom Index, EWU
1.41% Value EAFE MSCI, EFV
1.40% LargeCap Value S&P 500 iS, IVE
1.40% Sweden Index, EWD
1.40% LargeCap Blend S&P=Weight R, RSP
1.39% Malaysia Index, EWM
1.39% LargeCap Value Russell 1000 iS, IWD
1.38% Semiconductor SPDR, XSD
1.35% Energy & Nat Res iS GS, IGE
1.33% Global ex U.S. LargeCap Blend, ACWX
1.33% Value LargeCap Dynamic PS, PWV
1.33% Turkey MSCI iS, TUR
1.33% Pacific ex-Japan, EPP
1.32% Value VIPERs, VTV
1.32% Financials VIPERs, VFH
1.31% DIAMONDS (DJIA), DIA
1.31% LargeCap Blend Russell 1000 iS, IWB
1.30% Growth SmallCap VIPERs, VBK
1.30% Netherlands Index, EWN
1.28% Mexico Index, EWW
1.28% LargeCap VIPERs, VV
1.28% Small Cap VIPERs, VB
1.28% LargeCap Blend Russell 3000 iS, IWV
1.27% Foreign LargeCap EAFE MSCI iS, EFA
1.26% MidCap Value S&P 400 iS, IJJ
1.26% S&P 500 SPDRs LargeCap Blend, SPY
1.24% Growth VIPERs, VUG
1.23% India Earnings WTree, EPI
1.23% Blend Total Market VIPERs, VTI
1.22% LargeCap Blend S&P 500 iS, IVV
1.22% Dividend Appreciation Vipers, VIG
1.21% LargeCap Blend S&P 100, OEF
1.20% LargeCap Growth Russell 1000 iS, IWF
1.20% Global LargeCap Blend MSCI iS, ACWI
1.20% SmallCap Blend EAFE MSCI iS, SCZ
1.17% Australia Index, EWA
1.13% India PS, PIN
1.13% Dividend SPDR, SDY
1.13% Networking, IGN
1.13% SmallCap Growth Russell 2000 iS, IWO
1.11% SmallCap Blend S&P 600 iS, IJR
1.11% Dividend International, PID
1.10% Growth EAFE MSCI, EFG
1.10% SmallCap Growth S&P 600 iS, IJT
1.10% Singapore Index, EWS
1.10% LargeCap Growth S&P 500 iS, IVW
1.09% Emerging Markets MSCI iS, EEM
1.09% Health Care SPDR, XLV
1.08% Value SmallCap VIPERS, VBR
1.06% SmallCap Value S&P 600 iS, IJS
1.05% SmallCap Blend Russell 2000 iS, IWM
1.04% Dividend U.S. DJ iS, DVY
1.02% QQQ Nasdaq 100 Trust, QQQ
1.01% Metals & Mining SPDR, XME
0.99% Utilities VIPERs, VPU
0.97% SmallCap Value Russell 2000 iS, IWN
0.97% Taiwan Index, EWT
0.95% Switzerland Index, EWL
0.92% Technology DJ US, IYW
0.92% Utilities SPDR, XLU
0.92% China 25 iS, FXI
0.90% Emerging VIPERs, VWO
0.89% Canada Index, EWC
0.86% Info Tech VIPERs, VGT
0.84% Technology SPDR, XLK
0.77% Real Estate US DJ iS, IYR
0.74% Consumer Staples SPDR, XLP
0.73% REIT VIPERs, VNQ
0.70% Microcap Russell, IWC
0.69% Dividend High Yield Equity PS, PEY
0.68% Brazil Index, EWZ
0.63% Chile MSCI iS, ECH
0.61% REIT Wilshire, RWR
0.61% Realty Cohen & Steers, ICF
0.59% Russia MV, RSX
0.56% Emerging 50 BLDRS, ADRE
0.52% Pacific VIPERs, VPL
0.43% Thailand MSCI iS, THD
0.42% Latin Am 40, ILF
0.41% Frontier Markets Guggenheim , FRN
0.41% Bond Ex-US Treas, BWX
0.25% Telecom DJ US, IYZ
0.21% China LargeCap Growth G D H USX PS, PGJ
0.21% Oil, Crude, U.S. Oil Fund, USO
0.18% Bond, Muni S&P ATM-Free iS, MUB
0.17% Bond, High Yield Corp iBoxx iS, HYG
0.11% Financial Preferred, PGF
0.10% Preferred Stock iS, PFF
0.10% Bond, High-Yield Junk, JNK
0.08% Agriculture DB PS, DBA
0.06% Bond, Emerg Mkt JPM iS, EMB
0.04% Oil Fund PowerShares, DBO
0.03% Bond, Intermediate US Aggregate iS, AGG
0.00% Bond, TIPS U.S. Treasury iS, TIP
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.03% Bond, Long-Term Corp iBoxx iS, LQD
-0.05% Bond, 10 Year Treasury, IEF
-0.10% Japan Index, EWJ
-0.26% South Africa Index, EZA
-0.30% Bond, 20+ Years Treasury, TLT
-0.45% WilderHill Clean Energy PS, PBW
-0.62% Commodity Tracking, DBC
-1.06% Gold Shares S.T., GLD
-1.27% Bear, Short S&P 500, SH
-1.41% Silver Trust iS, SLV
Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
