VIX Fear Index fell to 15.69 intraday, its lowest level since 4/3/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a rapid shift from worried concern to bullish complacency.
Financial stock sector Relative Strength Ratio (XLF/SPY) whipsawed back below its 50-day SMA and its 200-day SMA. Its 50-day SMA is now only very slightly above the 200-day SMA.
The S&P 500 (SPX: 1,372.78) rose 9.11 points or 0.67% on Wednesday. SPX rose above the highs of the previous 2 months, since 5/4/12. A large variety of indicators failed to confirm this higher high for the SPX.
NYSE volume rose 2% but remains at a below average level, suggesting low demand for stocks.
Last week, the S&P 500 bounced off its 50-day SMA, where it often tries to make a stand, if only temporarily. Nevertheless, downside risk still may exceed upside potential for the stock market looking out weeks ahead.
For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.
Meanwhile, one money manager made gains for 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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NASDAQ Composite/S&P 500 Relative Strength Ratio fell below its 200-day SMA on 7/12/12 and remains systematically neutral. The ratio remains below its 50-day SMA. The 50-day SMA has been above its 200-day SMA since 2/3/12, but the 50-200 spread is narrowing.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 3 years on 6/25/12, reconfirming its bearish trend. Systematically, BKF/SPY remains bearish below its 50-day SMA, below its 200-day SMA, and with the 50-day SMA below the 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below its lows of the previous 3 years on 5/25/12, reconfirming its bearish trend. EEM/SPY remains below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained below the 200-day SMA every day since 2/3/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) reconfirmed a bearish major trend when it fell below its lows of the previous 9 years on 6/25/12. Systematically, EFA/SPY remains bearish below its 50-day and 200-day SMAs, and the 50-day SMA has remained below the 200-day SMA consistently every day since 1/14/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 2 years on 7/16/12, reconfirming its preexisting major bullish trend. OEX/SPX remains systematically bullish above its 50-day SMA, above its 200-day SMA, and the 50-day SMA has been above the 200-day SMA consistently every day since 8/24/11. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size. On the other side of the coin, Large Caps tend to underperform Mid Caps and Small Caps in bullish general market trends as investors prefer riskier and more volatile stocks.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) whipsawed back down below its 200-day SMA on 7/16/12. IWM/SPY remains systematically neutral with its 50-day SMA below its 200-day SMA since 4/20/12. Longer term, IWM/SPY has been relatively weak for more than a year, since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below its 200-day SMA on 7/6/12, thereby turning systematically bearish again. MDY/SPY remains below its 200-day SMA, and its 50-day SMA has been below its 200-day SMA since 6/6/12.
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Sentiment for Contrary Thinking
Investor sentiment data indicated alarming degrees of optimism and bullish complacency at the February to May 2012 market highs. That was bearish because when the majority of investors has been bullish for some time, 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 market mood always reverts to the mean, as it did during the April-June downside stock market correction. In recent weeks investors have been growing more confident again, as they usually do when stock prices bounce back.
AAII Sentiment has moderated to a fairly even balance. According to the AAII weekly survey of individual investors reported on 7/12/12, there were 30.23% Bulls, up from a low of 23.58 on 5/17/12. There were 34.73% Bears, down from 42.06 on 5/10/12. Individual investors have grown less pessimistic in recent weeks as stock prices recovered.
Investors Intelligence Sentiment has shifted toward bullish confidence since May. According to the Investors Intelligence weekly survey of stock market newsletter advisors reported on 7/11/12, there were 44.7% Bulls, which was the largest proportion in 3 months, since 4/11/12. There were 24.5% Bears, which was the lowest since 5/30/12.
Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped 24 percentage points (in just one week) to 47.0% as stocks ran up to their highs of 7/3/12. That was greater bullish exposure than at the May high and “is a worrisome sign”, according to Mark Hulbert.
Corporate Insiders Are Bearish. Insiders sold 5.5 shares for each share bought as of 7/6/12–up from 1.6-to-1 in May and up from a long-term average of 2.25-to-1. The data is was reported by Vickers Weekly Insider Report, published by Argus Research, and Mark Hulbert.
NYSE Short Interest fell by more than 0.5 billion shares, the largest drop since January. This source of short-covering, potential demand for stocks has diminished.
The ICI reported $62.6 billion has been withdrawn from domestic equity mutual funds so far in 2012. This is another confirmation that supply is greater than demand for stocks.
VIX Fear Index fell to 15.69 intraday on 7/18/12, its lowest level since 4/3/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a rapid shift from worried concern to 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
1523.57, high of 12/11/2007
1498.85, high of 12/26/2007
1440.24, high of 5/19/2008
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1389.07, Fibonacci 78.6% of April-June 2012 range
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1374.81, high of 7/3/2012
The S&P 500 Composite Potential Support
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1344.56, Fibonacci 50% of April-June 2012 range
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1332.83, 50-day SMA
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1310.75, 200-day SMA
1306.62, low of 6/12/2012
1303.47, Fibonacci 23.6% of April-June 2012 range
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
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
1248.58, Fibonacci 50.0% of 2011-12 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
1207.56, Fibonacci 61.8% of 2011-12 range
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
1149.16, Fibonacci 78.6% R of 2011-12 range
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) price rose above its highs of the past 18 months on 7/12/12, thereby confirming its preexisting uptrend. UUP remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.07, 23.52, 25.84, 27.19, 28.97.
CRB Commodity Price Index whipsawed back above its 50-day SMA on 7/2/12, thereby turning systematically neutral again. CRB remains below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/18/11.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) rose above its 200-day SMA on 7/3/12 and remains neutral: above its 50-day SMA, above its 200-day SMAs, but the 50-day SMA has been consistently below the 200-day SMA every day since 8/8/11.
Crude Oil, United States Oil ETF (USO) turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains far below its 200-day SMA, and its 50-day remains far below its 200-day SMAs. Support 29.02, 26.28, and 22.74. Resistance 33.08, 33.66, 34.76, 35.19, 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) whipsawed back down below its 50-day SMA again on 7/6/12, thereby turning systematically bearish again. GLD remains below its 200-day SMA, and its 50-day SMA remains below its 200-day SMA. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) whipsawed back down below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.
Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 19 months on 6/28/12, thereby confirming its preexisting major bearish trend. SLV remains systematically bearish: below its 50-day and 200-day SMAs, and with the 50-day SMA below the 200-day SMA every day since 10/27/11. Support 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 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 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD remains systematically bearish: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) remains below its 200-day SMA, and its 50-day SMA remains below its 200-day SMA. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since JJC peaked at 51.41 on 2/9/12. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this weakness may be suggesting rising doubts about prospects going forward.
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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 revealed to be deal stocks, sooner or later, 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
3.43% , XSD , Semiconductor SPDR, XSD
3.37% , PSI , Semiconductors, PSI
1.66% , PSJ , Software, PSJ
11.43% , GWW , WW GRAINGER
10.73% , MTG , MGIC INVESTMENT
4.78% , HSP , HOSPIRA
1.60% , PPA , Aerospace & Defense, PPA
0.73% , RFV , Value MidCap S&P 400, RFV
2.59% , IGV , Software, IGV
6.67% , HON , HONEYWELL INTL
6.86% , CHKP , Check Point Software Technologies Ltd
6.03% , NTAP , NETWK APPLIANCE
6.41% , CTXS , CITRIX SYSTEMS
5.59% , LVLT.K , LEVEL 3 COMMUNICATIONS
5.09% , MOLX , MOLEX
3.28% , MTK , Technology MS sT, MTK
2.41% , EL , Estee Lauder
3.53% , PH , PARKER HANNIFIN
5.79% , JBL , JABIL CIRCUIT
3.41% , SOXX , Semiconductor iS IGW, SOXX
3.58% , FAST , Fastenal Company
3.79% , ITT , ITT INDS
2.52% , DHR , DANAHER
4.31% , EMR , EMERSON ELECTRIC
0.71% , JKI , Value MidCap iS M, JKI
4.09% , ERIC.O , LM Ericsson Telephone Company
1.75% , CSC , COMPUTER SCIENCE
3.48% , FLEX , Flextronics International Ltd
1.05% , JKK , Growth SmallCap iS M, JKK
4.43% , RHT , Red Hat Inc.
3.91% , IGN , Networking, IGN
2.10% , IGM , Technology GS, IGM
4.44% , ITW , ILLINOIS TOOL
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.80% , STJ , ST JUDE MEDICAL
-2.70% , AGN , ALLERGAN
-4.92% , BAC , BANK OF AMERICA
-2.87% , FDO , FAMILY DLR STRS
-1.24% , BSX , BOSTON SCIENT
-2.71% , QID , Short 200% QQQ PS, QID
-1.10% , WYNN , Wynn Resorts L
-3.40% , GNW , GENWORTH FINANCIAL
-0.79% , MYY , Short 100% MidCap 400, MYY
-1.68% , COF , CAPITAL ONE FNCL
-2.42% , CTL , CENTURYTEL
-2.15% , AM , AMER GREETINGS STK A
-1.69% , LBTYA , Liberty Global Inc. (LBTYA)
-1.42% , PSQ , Short 100% QQQ, PSQ
-3.31% , PHM , PULTE HOMES
-0.70% , CSX , CSX
-0.94% , PNC , PNC FINL SVC
-0.27% , THD , Thailand MSCI iS, THD
-0.69% , XRX , XEROX
-0.19% , EWI , Italy Index, EWI
-0.92% , DOG , Short 100% Dow 30, DOG
-2.47% , LEN , Lennar Corp. (LEN)
-0.62% , BLK , BlackRock Inc.
-0.83% , BC , BRUNSWICK
-0.83% , SHW , SHERWIN WILLIAMS
-0.80% , SBUX , STARBUCKS
-0.32% , FII , FED INVESTORS STK B
-0.85% , BBT , BB&T
-1.13% , LPX , LOUISIANA PAC
-1.28% , CBS , CBS CORP.
-1.29% , SDS , Short 200% S&P 500 PS, SDS
-1.00% , PCL , PLUM CREEK TIMB
-0.77% , DLTR , Dollar Tree Stores Inc
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.91% Networking, IGN
3.43% Semiconductor SPDR, XSD
3.41% Semiconductor iS IGW, SOXX
2.06% Technology DJ US, IYW
1.95% Info Tech VIPERs, VGT
1.87% Industrial SPDR, XLI
1.73% Technology SPDR, XLK
1.35% QQQ Nasdaq 100 Trust, QQQ
1.26% Water Resources, PHO
1.11% Agriculture DB PS, DBA
1.10% France Index, EWQ
1.06% Germany Index, EWG
1.05% Sweden Index, EWD
0.93% Growth 1000 Russell, IWF
0.93% Oil, Crude, U.S. Oil Fund, USO
0.91% Dividend Appreciation Vipers, VIG
0.89% DIAMONDS (DJIA), DIA
0.89% Netherlands Index, EWN
0.89% Commodity Tracking, DBC
0.88% Growth MidCap Russell, IWP
0.87% LargeCap Blend S&P=Weight R, RSP
0.87% Growth BARRA Small Cap 600, IJT
0.87% Energy DJ, IYE
0.87% Energy SPDR, XLE
0.85% Dividend SPDR, SDY
0.84% Growth SmallCap VIPERs, VBK
0.84% Global 100, IOO
0.84% Growth VIPERs, VUG
0.83% EMU Europe Index, EZU
0.81% S&P 500 iS LargeCap Blend, IVV
0.80% Growth S&P 500/BARRA, IVW
0.79% Belgium Index, EWK
0.79% EAFE Index, EFA
0.78% Growth SmallCap R 2000, IWO
0.78% Growth MidCap 400 B, IJK
0.77% MidCap Russell, IWR
0.77% Energy VIPERs, VDE
0.76% Malaysia Index, EWM
0.74% Switzerland Index, EWL
0.74% S&P 500 SPDRs LargeCap Blend, SPY
0.73% MidCap S&P 400 iS, IJH
0.73% LargeCap 1000 R, IWB
0.73% European VIPERs, VGK
0.73% Energy & Nat Res iS GS, IGE
0.72% Value MidCap S&P 400 B, IJJ
0.72% Blend Total Market VIPERs, VTI
0.71% LargeCap VIPERs, VV
0.70% LargeCap Blend S&P 100, OEF
0.69% Europe 350 S&P Index, IEV
0.68% Brazil Index, EWZ
0.68% MidCap S&P 400 SPDRs, MDY
0.65% Homebuilders SPDR, XHB
0.65% Value MidCap Russell, IWS
0.63% Australia Index, EWA
0.63% Value LargeCap Dynamic PS, PWV
0.61% SmallCap Russell 2000, IWM
0.61% Basic Materials DJ US, IYM
0.61% LargeCap Blend Russell 3000, IWV
0.61% Chile MSCI iS, ECH
0.61% United Kingdom Index, EWU
0.60% Value SmallCap S&P 600 B, IJS
0.60% Energy Global, IXC
0.60% Materials SPDR, XLB
0.60% Value S&P 500 B, IVE
0.58% Pacific ex-Japan, EPP
0.57% SmallCap S&P 600, IJR
0.56% Dividend DJ Select, DVY
0.55% Bond, Corp, LQD
0.55% Value EAFE MSCI, EFV
0.55% Financial Preferred, PGF
0.55% Growth EAFE MSCI, EFG
0.54% Dividend International, PID
0.54% Small Cap VIPERs, VB
0.53% Consumer Discretionary SPDR, XLY
0.52% Value VIPERs, VTV
0.51% Pacific VIPERs, VPL
0.51% Bond, High-Yield Junk, JNK
0.48% WilderHill Clean Energy PS, PBW
0.47% Transportation Av DJ, IYT
0.47% Value 1000 Russell, IWD
0.45% Value SmallCap Russell 2000, IWN
0.44% Value SmallCap VIPERS, VBR
0.43% Oil Fund PowerShares, DBO
0.42% Bond, High-Yield Corporate, HYG
0.41% Global ex US ACWI iS, ACWX
0.38% Utilities VIPERs, VPU
0.38% Emerging 50 BLDRS, ADRE
0.33% Microcap Russell, IWC
0.33% Japan Index, EWJ
0.32% Bond Muni ATM-Free S&P iS, MUB
0.32% Utilities SPDR, XLU
0.32% Dividend High Yield Equity PS, PEY
0.31% Singapore Index, EWS
0.31% Canada Index, EWC
0.24% Bond Ex-US Treas, BWX
0.21% Biotech SPDR, XBI
0.20% Bond, Aggregate, AGG
0.19% Latin Am 40, ILF
0.18% India PS, PIN
0.16% Health Care SPDR, XLV
0.13% Preferred Stock iS, PFF
0.10% Frontier Markets Guggenheim , FRN
0.10% Bond, 10 Year Treasury, IEF
0.09% Austria Index, EWO
0.08% South Africa Index, EZA
0.06% Small Cap EAFE MSCI iS, SCZ
0.05% Bond, 20+ Years Treasury, TLT
0.03% Consumer Staples SPDR, XLP
0.02% Bond, TIPS, TIP
0.02% Bond, 1-3 Year Treasury, SHY
0.01% Bond Treasury Short-Term iS, SHV
0.00% Bond EmrgMkt JPM iS, EMB
-0.04% Spain Index, EWP
-0.06% India Earnings WTree, EPI
-0.06% Capital Markets KWB ST, KCE
-0.07% Indonesia MV, IDX
-0.19% Silver Trust iS, SLV
-0.19% Italy Index, EWI
-0.22% Telecom DJ US, IYZ
-0.24% Hong Kong Index, EWH
-0.26% Emerging Markets, EEM
-0.27% Thailand MSCI iS, THD
-0.27% Gold Shares S.T., GLD
-0.30% Metals & Mining SPDR, XME
-0.35% Emerging VIPERs, VWO
-0.41% Financials VIPERs, VFH
-0.45% Russia MV, RSX
-0.47% Financial DJ US, IYF
-0.47% Financial SPDR, XLF
-0.48% Financial Services DJ, IYG
-0.59% REIT VIPERs, VNQ
-0.60% Realty Cohen & Steers, ICF
-0.64% China LargeCap Growth G D H USX PS, PGJ
-0.65% REIT Wilshire, RWR
-0.66% Bear, Short S&P 500, SH
-0.66% China 25 iS, FXI
-0.67% Taiwan Index, EWT
-0.70% Turkey MSCI iS, TUR
-0.77% Real Estate US DJ, IYR
-0.96% Mexico Index, EWW
-0.99% South Korea Index, EWY
