Yogi Berra said, “It’s deja vu all over again.” The stock market action on Thursday was eerily similar to the action on both Tuesday and Wednesday. U.S. stocks gapped higher on the open and prices closed about where they opened, forming indecisive Spinning Top Candlesticks three days in a row. In other words, every day was another standoff of opposing forces, with neither the bulls nor the bears gaining ground during the regular trading session between the open and close. All of the bounce occurred at night while the U.S. slept. As Yogi might say, three days in a row doesn’t happen every day.
The S&P 500 Composite Index (SPX: 1,613.20) finished higher by 0.62%, after testing but failing to overcome resistance at its 50-day SMA, now at 1620.42. The Nasdaq Composite rose 0.76% and now stands at its 50-day SMA.
The Cumulative Daily Advance-Decline Line on the NYSE recovered partially this week but remains below its 50-day SMA.
NYSE Volume fell 5% from Wednesday’s level, after also falling on Tuesday and Wednesday. As old hands always say, “Volume goes with the trend.” The Cumulative Up-Down Volume Line on the NYSE recovered partially this week but remains below its 50-day SMA.
As of the close on Thursday, 6/27/13, the S&P 500 recovered more than a Fibonacci Ratio 38.2% but less than 50% of its recent decline from 5/22/13 to 6/24/13, based on intraday extreme prices. That would be a normal retracement for a weakish counter trend bounce on declining volume.
On Monday, 6/24/13, the S&P 500 fell to its lowest closing price in 8 weeks, since 4/22/13. It fell 5.76% from 5/21/13 to 6/24/13, based on closing prices–the largest down wave since last September-November. It also was the longest in time, lasting 24 trading days. The magnitude and duration of the price decline is probably telling us that this time is different from all previous minor price corrections since last November.
The bullish majority had been taking encouragement from the SPX and other major stock price indexes holding support at or near their widely-followed 50-day SMAs. Now that support has been violated, SPX could fall further to test its 200-day SMA, now at 1509.56 and rising a fraction of a point every day.
A wide variety of technical oscillators previously had given early warning after losing upside momentum and showing persistent bearish divergences over periods of weeks and months. Now, it seems quite apparent that there has been considerable technical damage to the previously bullish stock market trend. This damage probably signals a significant downside correction, or possibly worse. In any case, caution seems warranted.
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Stock Market Indicators
The Dow Theory confirmed a Secondary Reaction on 6/20-6/21/13, when the Dow-Jones Transportation Average and the Dow-Jones Industrial Average both closed below their price lows of the previous 7 weeks. Previously, on 5/28/13, the Dow Theory warned of a non-confirmation bearish divergence when the Industrial Average rose to a higher high without confirmation by the Transportation Average, which made a lower high. A Secondary Reaction is often significant in extent and duration, possibly retracing a substantial fraction of the previous move over a period lasting several months.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) whipsawed back down below its 50-day SMA on 6/21/13, thereby turning systematically bearish again (from neutral). Longer term, QQQ has underperformed SPY since 4/10/12, and so I previously warned “that Relative Strength downtrend will probably resume.”
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below the lows of the previous 4 years on 6/20/13, again reconfirming its major downtrend. BKF/SPY turned systematically bearish on 3/27/13, when the 50-day SMA crossed below the 200-day SMA. BKF/SPY fell below its 50-day SMA on 2/4/13 and fell below its 200-day SMA on 2/19/13. Price peaked at 42.29 on 2/1/13 and fell to a 20-month low on 6/24/13.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below the lows of the previous 4 years on 6/20/13, reconfirming its preexisting major downtrend. EEM/SPY turned systematically bearish on 3/20/13, when the 50-day SMA fell below the 200-day SMA. Price peaked at 45.34 on 1/2/13 and fell to a 19-month low on 6/24/13, confirming its bearish major trend.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below the lows of the previous 10 months on 6/27/13. The EFA/SPY 50-day SMA fell below the 200-day SMA on 5/24/13, thereby turning systematically bearish (from neutral).
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) whipsawed back down below its 50-day SMA on 6/26/13, thereby turning systematically bearish again (from neutral). Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative stability and safety of large size. On the other hand, Large Caps tend to underperform Mid Caps and Small Caps in bullish general market trends as investors seek greater potential returns in more volatile, smaller stocks.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) whipsawed back up above its 50-day SMA on 5/28/13, thereby turning systematically bullish again (from neutral). Absolute price has stalled out since peaking on 5/22/13 and fell below its 50-day SMA on 6/20/13, thereby turning systematically neutral (from bullish).
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) remains systematically neutral. MDY/SPY fell below its lows of the previous 6 months on 6/21/13–an obvious sign of weakness. MDY/SPY has been trending lower since peaking on 3/20/13. Absolute price has stalled out since peaking on 5/22/13 and fell below its 50-day SMA on 6/20/13, thereby turning systematically neutral (from bullish).
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price whipsawed back above its 50-day SMA on 6/26/13, thereby turning systematically bullish (from neutral). Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 21.82, 21.53, 21.07, and 20.84. Resistance 22.96, 22.69, 23.14, 23.52, 25.84, 27.19, and 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price remains systematically bearish. Price has been trending down since peaking on 3/4/11.
Crude Oil, United States Oil ETF (USO) price has been consolidating losses in a choppy, sideways trend for 4 years, whipsawing around both the 50-day SMA and 200-day SMA. Support 32.53, 32.12, 30.79, 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 trend remains systematically bearish. Price fell below its lows of the previous 2 years on 6/27/13, thereby reconfirming its preexisting major bearish trend. GLD has been down trending since peaking at 185.85 on 9/6/11. Support: 113.08 and 102.28. Resistance: 137.62, 143.43, 149.44, 153.85, 156.80, 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) has stayed systematically bearish most of the time since 12/27/12, when the 50-day SMA crossed below the 200-day SMA. Longer term, GDX/GLD has remained mostly bearish for more than 6 years, since 9/5/06.
Silver, iShares Silver Trust ETF (SLV) price trend remains systematically bearish. Price fell below its lows of the previous 2 years on 6/27/13, again reconfirming its preexisting major bearish trend. The trend has been bearish since price peaked at 48.35 on 4/28/11. Support 16.73, 14.37, 12.27, 11.64, and 8.45. Resistance: 22.65, 23.70, 25.34, 27.14, 27.35, 28.50, 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 its lows of the previous 2 years on 6/26/13, again reconfirming its major downtrend. SLV/GLD remains systematically bearish. SLV has underperformed GLD since SLV price peaked at 48.35 on 4/28/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 2 years on 6/24/13, again reconfirming its major downtrend. The JJC price trend has been bearish since price peaked 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, so price weakness in Copper implies a weak economic outlook.
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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
3.21% , FLEX , Flextronics International Ltd
5.20% , JCP , JC PENNEY
3.08% , DISH , EchoStar Communications
5.07% , CAG , CONAGRA FOODS
0.90% , IXN , Technology Global, IXN
5.30% , NIHD , NII Holdings, Inc.
0.46% , IEV , Europe 350 S&P Index, IEV
1.51% , VXF , Extended Mkt VIPERs, VXF
4.49% , MTG , MGIC INVESTMENT
3.21% , PIN , India PS, PIN
3.59% , RHT , Red Hat Inc.
4.27% , TUP , TUPPERWARE
1.17% , VO , MidCap VIPERs, VO
0.35% , SOXX , Semiconductor iS IGW, SOXX
3.42% , MCO , MOODYS CORP
1.61% , IWN , Value SmallCap Russell 2000, IWN
2.06% , EWJ , Japan Index, EWJ
1.60% , AEE , AMEREN
2.36% , TMO , THERMO ELECTRON
0.95% , RSP , LargeCap Blend S&P=Weight R, RSP
2.80% , CROX , CROCS Inc., CROX
2.03% , RWR , REIT Wilshire, RWR
1.49% , IWO , Growth SmallCap R 2000, IWO
1.68% , IGV , Software, IGV
1.13% , IWS , Value MidCap Russell, IWS
1.90% , PCAR , PACCAR
0.62% , IGM , Technology GS, IGM
1.61% , CHD , Church & Dwight
2.27% , HOG , HARLEY DAVIDSON
1.56% , VBR , Value SmallCap VIPERS, VBR
2.50% , HSP , HOSPIRA
3.44% , X , US STEEL CORP
1.50% , LMT , LOCKHEED MARTIN
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Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.66% , PAYX , PAYCHEX
-3.48% , APD , AIR PRODS & CHEM
-2.00% , MKC , MCCORMICK
-2.88% , BBRY , BlackBerry (BBRY)
-1.79% , SHLD , SEARS HOLDINGS
-0.74% , DOG , Short 100% Dow 30, DOG
-0.96% , KBH , KB HOME
-1.19% , DVN , DEVON ENERGY
-1.09% , LTD , LIMITED BRANDS
-1.08% , PST , 200% Short Bond 7-10 Yr T, PST
-0.32% , PWER , POWER ONE
-0.88% , KSS , KOHLS
-1.98% , GLD , Gold Shares S.T., GLD
-1.17% , CTSH , Cognizant Technology Solutions
-0.92% , NVDA , NVIDIA
-0.64% , EOG , EOG RESOURCES
-0.22% , CS , Credit Suisse Group, CS
-0.56% , PXE , Energy Exploration & Prod, PXE
-1.34% , EMC , EMC
-1.93% , TBT , 200% Short US T Bond, TBT
-0.48% , TGT , TARGET
-0.24% , SCZ , Small Cap EAFE MSCI iS, SCZ
-1.90% , HOLX , Hologic, Inc., HOLX
-0.33% , ETR , ENTERGY
-0.10% , SCHW.K , CHARLES SCHWAB, SCHW.O
-0.24% , CHKP , Check Point Software Technologies Ltd
-0.18% , PETM , PETsMART Inc
-0.18% , KSU , Kansas City Southern, KSU
-0.34% , EWN , Netherlands Index, EWN
-0.61% , UNP , UNION PACIFIC
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.53% , South Korea Index, EWY
3.21% , India PS, PIN
3.09% , Mexico Index, EWW
2.75% , Indonesia MV, IDX
2.68% , WilderHill Clean Energy PS, PBW
2.56% , India Earnings WTree, EPI
2.48% , Homebuilders SPDR, XHB
2.10% , Pacific VIPERs, VPL
2.10% , Telecom DJ US, IYZ
2.09% , Emerging 50 BLDRS, ADRE
2.06% , Japan Index, EWJ
2.03% , REIT Wilshire, RWR
2.03% , Latin Am 40, ILF
2.01% , REIT VIPERs, VNQ
1.99% , Bond, Emerging Mkt JPM iS, EMB
1.92% , Frontier Markets Guggenheim , FRN
1.88% , Capital Markets KWB ST, KCE
1.81% , SmallCap Value S&P 600 iS, IJS
1.80% , China LargeCap Growth G D H USX PS, PGJ
1.78% , Real Estate US DJ iS, IYR
1.77% , SmallCap Growth S&P 600 iS, IJT
1.72% , SmallCap Blend S&P 600 iS, IJR
1.63% , Microcap Russell, IWC
1.61% , SmallCap Value Russell 2000 iS, IWN
1.57% , Oil, Crude, U.S. Oil Fund, USO
1.56% , Value SmallCap VIPERS, VBR
1.55% , SmallCap Blend Russell 2000 iS, IWM
1.55% , Growth SmallCap VIPERs, VBK
1.53% , Emerging VIPERs, VWO
1.52% , Small Cap VIPERs, VB
1.52% , Water Resources, PHO
1.49% , SmallCap Growth Russell 2000 iS, IWO
1.47% , Financials VIPERs, VFH
1.44% , MidCap S&P 400 SPDRs, MDY
1.43% , MidCap Blend S&P 400 iS, IJH
1.41% , MidCap Value S&P 400 iS, IJJ
1.38% , MidCap Growth S&P 400 iS, IJK
1.38% , Networking, IGN
1.37% , Financial DJ US, IYF
1.34% , Metals & Mining SPDR, XME
1.32% , Oil Fund PowerShares, DBO
1.29% , Financial Services DJ, IYG
1.29% , Financial SPDR, XLF
1.21% , Turkey MSCI iS, TUR
1.20% , Realty Cohen & Steers, ICF
1.13% , Dividend High Yield Equity PS, PEY
1.13% , Value MidCap Russell, IWS
1.11% , MidCap Russell, IWR
1.11% , Growth MidCap Russell, IWP
1.10% , South Africa Index, EZA
1.02% , Bond, 20+ Years Treasury, TLT
0.99% , Industrial SPDR, XLI
0.98% , Dividend ex-U.S. DJ iS, IDV
0.95% , LargeCap Blend S&P=Weight R, RSP
0.92% , LargeCap Value Russell 1000 iS, IWD
0.92% , Biotech SPDR, XBI
0.91% , Bond, Long-Term Corp iBoxx iS, LQD
0.90% , Transportation Av DJ, IYT
0.88% , Bond, Muni S&P ATM-Free iS, MUB
0.87% , Dividend U.S. DJ iS, DVY
0.86% , Dividend International, PID
0.86% , Consumer Discretionary SPDR, XLY
0.83% , Bond, TIPS U.S. Treasury iS, TIP
0.80% , Value LargeCap Dynamic PS, PWV
0.80% , Semiconductor SPDR, XSD
0.75% , Value VIPERs, VTV
0.75% , LargeCap Value S&P 500 iS, IVE
0.75% , DIAMONDS (DJIA), DIA
0.74% , Blend Total Market VIPERs, VTI
0.74% , Dividend SPDR, SDY
0.73% , Financial Preferred, PGF
0.73% , LargeCap Blend Russell 3000 iS, IWV
0.71% , China 25 iS, FXI
0.71% , European VIPERs, VGK
0.69% , Taiwan Index, EWT
0.68% , Emerging Markets MSCI iS, EEM
0.68% , Global 100, IOO
0.67% , Preferred Stock iS, PFF
0.66% , LargeCap VIPERs, VV
0.64% , LargeCap Blend Russell 1000 iS, IWB
0.61% , Bond, High-Yield Junk, JNK
0.59% , S&P 500 SPDRs LargeCap Blend, SPY
0.58% , LargeCap Blend S&P 500 iS, IVV
0.58% , Growth VIPERs, VUG
0.56% , Info Tech VIPERs, VGT
0.54% , Bond, 10 Year Treasury, IEF
0.54% , LargeCap Growth Russell 1000 iS, IWF
0.50% , LargeCap Blend S&P 100, OEF
0.49% , Technology SPDR, XLK
0.48% , Bond, High Yield Corp iBoxx iS, HYG
0.48% , Bond Ex-US Treas, BWX
0.46% , Europe 350 S&P Index, IEV
0.45% , Consumer Staples SPDR, XLP
0.45% , Dividend Appreciation Vipers, VIG
0.45% , LargeCap Growth S&P 500 iS, IVW
0.44% , Russia MV, RSX
0.44% , Technology DJ US, IYW
0.42% , QQQ Nasdaq 100 Trust, QQQ
0.42% , Bond, Intermediate US Aggregate iS, AGG
0.40% , Chile MSCI iS, ECH
0.37% , Energy & Nat Res iS GS, IGE
0.36% , Energy Global, IXC
0.36% , Health Care SPDR, XLV
0.35% , Semiconductor iS IGW, SOXX
0.27% , Utilities VIPERs, VPU
0.21% , Utilities SPDR, XLU
0.20% , Energy VIPERs, VDE
0.19% , Energy SPDR, XLE
0.16% , Energy DJ, IYE
0.07% , Basic Materials DJ US, IYM
0.06% , Bond, 1-3 Year Treasury, SHY
0.01% , Silver Trust iS, SLV
0.00% , Bond Treasury Short-Term iS, SHV
-0.03% , Thailand MSCI iS, THD
-0.04% , Commodity Tracking, DBC
-0.05% , Materials SPDR, XLB
-0.07% , Growth EAFE MSCI, EFG
-0.19% , Malaysia Index, EWM
-0.24% , Agriculture DB PS, DBA
-0.24% , SmallCap Blend EAFE MSCI iS, SCZ
-0.32% , Global LargeCap Blend MSCI iS, ACWI
-0.34% , Netherlands Index, EWN
-0.51% , Global ex U.S. LargeCap Blend, ACWX
-0.61% , Bear, Short S&P 500, SH
-0.65% , Brazil Index, EWZ
-0.76% , Canada Index, EWC
-0.85% , Austria Index, EWO
-0.86% , Singapore Index, EWS
-0.95% , Australia Index, EWA
-0.99% , Foreign LargeCap EAFE MSCI iS, EFA
-1.04% , Pacific ex-Japan, EPP
-1.11% , Germany Index, EWG
-1.17% , Switzerland Index, EWL
-1.28% , United Kingdom Index, EWU
-1.36% , Value EAFE MSCI, EFV
-1.43% , France Index, EWQ
-1.65% , Spain Index, EWP
-1.68% , EMU Europe Index, EZU
-1.82% , Hong Kong Index, EWH
-1.97% , Italy Index, EWI
-1.98% , Gold Shares S.T., GLD
-2.01% , Belgium Index, EWK
-2.22% , Sweden Index, EWD
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The S&P 500 Composite Potential Resistance
1687.18, high of 5/22/2013
1674.21, high of 5/28/2013
1654.19, high of 6/18/2013
1620.42, 50-day SMA
The S&P 500 Composite Potential Support
1606.04, Fib 23.6% of Nov-May 2013
1556.24, Equal Waves Projection
1555.84, Fib 38.2% of Nov-May 2013
1536.03, low of 4/18/2013
1530.94, high of 2/19/2013
1515.27, Fib 50% of Nov-May 2013
1509.56, 200-day SMA
1485.01, low of 2/26/2013
1474.69, Fib 61.8% of Nov-May 2013
1474.51, high of 9/14/2012
1468.82, Fib 78.6% of 2009-13 range
1451.64, low on 1/8/2013
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
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
1416.93, Fib 79.6% of Nov-May 2013
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
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
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
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
1306.62, low of 6/12/2012
1297.39, Fib 61.8% of 2009-13 range
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
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
1176.99, Fib 50% of 2009-13 range
1158.66, low of 11/25/2011
1121.44, Fibonacci 50% of 2007-2009 range
1056.58, Fib 38.2% of 2009-13 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
907.60, Fib 23.6% of 2009-13 range
881.38, Fibonacci 23.6% of 2007-2009 range
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
