The S&P 500 (SPX: 1,374.02) rose 8.51 points or 0.62% on Tuesday, for its third consecutive gain.
VIX Fear Index fell to 16.27 intraday on 7/3/12, its lowest level since 5/1/12. 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.
Mark Hulbert reported a sharp swing to short-term bullish sentiment among advisors he follows.
Pundits said they expect some kind of monetary easing in Europe this week, and the consensus of economists expects an increase in Nonfarm Payrolls to be reported on Friday, July 6 at 8:30 AM ET, rising to 100,000 from 69,000 reported in June.
Following a 7.51% bounce in SPX since 6/1/12, based on closing prices, risk of a price correction probably exceeds any remaining upside potential for the short term.
For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.
Hedge funds lost 5%, according to COO Connect.
Hedge funds suffered their second-worst year on record in 2011, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data. Some of the world’s largest and best-known hedge funds suffered huge losses, down 20% to 50%.
But not all money managers were down in 2011; see:
Robert W. Colby Asset Management, Inc. (click here).
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Stock Market Indicators
The Dow Theory signaled a Primary Tide Bear Market on 5/17/12 when both Industrials and Transports closed below their closing price lows of the previous 4 months, including the critical lows of March and April, 2012. The Averages gave an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Again on 5/1/12, the Industrials rose to a higher closing price high while the Transports failed to rise to a higher closing price high, thereby indicating a non-confirmation and bearish divergence.
NASDAQ Composite/S&P 500 Relative Strength Ratio whipsawed back up above its 50-day SMA again on 7/2/12, thereby turning systematically bullish: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA has been above its 200-day SMA since 2/3/12.With resistance nearby, however, there appears to be risk of further whipsaws ahead.
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 6/27/12, 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 up above its 200-day SMA on 7/2/12. 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 lows of the previous 8 months on 6/14/12, reconfirming its preexisting major bearish trend. MDY/SPY turned systematically bearish on 6/6/12, when its 50-day SMA crossed below its 200-day SMA. MDY/SPY remains below its 50-day SMA and below its 200-day SMA.
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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. Some of the most recent data suggests that investors’ sentiment may be beginning to shift away from bullish complacency. The evidence is mixed, however, and there still is plenty of room for the pendulum of emotion to swing too far in the direction of bearish excess.
AAII Sentiment: There were 51.64% Bulls and 20.19% Bears, according to the AAII weekly survey reported on 2/9/12. This was the highest level of bullish sentiment in more than a year, since 52.34% Bulls on 1/13/11. As of 6/28/12, the AAII survey showed 28.67% Bulls and 44.37% Bears.
Investors Intelligence Sentiment: according to the Investors Intelligence weekly survey of stock market newsletter advisors, there were 38.7% Bulls and 24.7% Bears reported on 6/27/12. This represents a moderation in sentiment from 2012 extremes of 54.8% Bulls reported on 2/15/11 and 20.4% Bears reported on 5/9/12.
VIX Fear Index fell to 16.27 intraday on 7/3/12, its lowest level since 5/1/12. 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
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
1340.09, 50-day SMA
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
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
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
1301.15, 200-day SMA
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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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price has had a normal, minor correction and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/24/11. Support 124.09, 122.06, 120.60, 117.44, 115.69, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance. 127.34 and 130.38.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price has had a normal, minor correction and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/21/11. Support 107.51, 107.43, 105.85, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance 108.55 and 109.37.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) whipsawed back up above its 50-day SMA on 7/3/12, thereby turning systematically neutral again. JNK/LQD remains below its 200-day SMA. The 50-day SMA fell below the 200-day SMA on 6/1/12.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below its lows of the previous 9 months on 7/2/12, reconfirming its major downtrend and suggesting disinflation or deflation. TIP/IEF is systematically bearish: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA crossed below the 200-day SMA on 6/27/12.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price 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 23.02, 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, and 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) bounced sharply higher over 3 trading days but remains in a major downtrend. USO turned systematically bearish on 6/7/12, when the 50-day SMA fell below the 200-day SMA. USO remains below its 50-day and 200-day SMAs. Support 29.02, 26.28, and 22.74. Resistance 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 up above its 50-day SMA on 7/3/12, thereby turning systematically neutral 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 up above its 50-day SMA on 6/29/12, turning systematically neutral 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) whipsawed back up above its 50-day SMA on 7/3/12, thereby turning systematically neutral again. 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
1.08% , EFG , Growth EAFE MSCI, EFG
4.67% , SIL , Silver Miners Global X, SIL
3.30% , RZV , Value SmallCap S&P 600, RZV
1.55% , DYN , DYNEGY
6.18% , NFLX , Netflix, NFLX
6.69% , EOG , EOG RESOURCES
3.61% , XME , Metals & Mining SPDR, XME
1.73% , IXC , Energy Global, IXC
0.51% , PUI , Utilities, PUI
0.94% , EZU , EMU Europe Index, EZU
1.16% , PSJ , Software, PSJ
1.21% , VBR , Value SmallCap VIPERS, VBR
0.94% , IWP , Growth MidCap Russell, IWP
0.63% , PWV , Value LargeCap Dynamic PS, PWV
1.37% , PKB , Building & Construction, PKB
2.49% , EWC , Canada Index, EWC
0.74% , KCE , Capital Markets KWB ST, KCE
4.23% , HES , AMERADA HESS
2.84% , SLV , Silver Trust iS, SLV
5.83% , HP , Helmerich & Payne HP
2.91% , PIN , India PS, PIN
4.72% , RIG , TRANSOCEAN
1.97% , IYM , Basic Materials DJ US, IYM
3.93% , FCX , FREEPRT MCMORAN STK B
1.96% , EWT , Taiwan Index, EWT
2.21% , CHKP , Check Point Software Technologies Ltd
0.70% , RPG , Growth S&P 500, RPG
1.17% , PGJ , China LargeCap Growth G D H USX PS, PGJ
1.61% , ILF , Latin Am 40, ILF
0.84% , PBE , Biotech & Genome, PBE
1.34% , EWH , Hong Kong Index, EWH
1.53% , GLD , Gold Shares S.T., GLD
0.42% , PEY , Dividend High Yield Equity PS, PEY
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.27% , MZZ , Short 200% MidCap 400 PS, MZZ
-3.49% , LOW , LOWES
-2.57% , HD , HOME DEPOT
-0.58% , DOG , Short 100% Dow 30, DOG
-1.19% , YUM , YUM BRANDS
-3.70% , JCP , JC PENNEY
-0.68% , BMC.O , BMC SOFTWARE
-0.06% , HRB , H&R BLOCK
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.80% Oil, Crude, U.S. Oil Fund, USO
3.85% Oil Fund PowerShares, DBO
3.61% Metals & Mining SPDR, XME
3.33% Russia MV, RSX
3.00% Energy & Nat Res iS GS, IGE
2.91% India PS, PIN
2.84% Silver Trust iS, SLV
2.81% Indonesia MV, IDX
2.80% Commodity Tracking, DBC
2.60% India Earnings WTree, EPI
2.49% Canada Index, EWC
2.43% Energy DJ, IYE
2.39% Energy SPDR, XLE
2.30% Energy VIPERs, VDE
2.06% South Korea Index, EWY
2.01% Emerging Markets, EEM
1.99% Frontier Markets Guggenheim , FRN
1.97% Basic Materials DJ US, IYM
1.96% Taiwan Index, EWT
1.83% South Africa Index, EZA
1.83% Emerging VIPERs, VWO
1.80% Emerging 50 BLDRS, ADRE
1.78% Singapore Index, EWS
1.75% Water Resources, PHO
1.73% Energy Global, IXC
1.73% Thailand MSCI iS, THD
1.65% China 25 iS, FXI
1.61% Latin Am 40, ILF
1.56% Brazil Index, EWZ
1.53% Gold Shares S.T., GLD
1.52% Growth SmallCap VIPERs, VBK
1.52% Networking, IGN
1.51% Agriculture DB PS, DBA
1.42% Materials SPDR, XLB
1.39% Growth SmallCap R 2000, IWO
1.35% Dividend International, PID
1.35% Semiconductor SPDR, XSD
1.34% Hong Kong Index, EWH
1.32% Turkey MSCI iS, TUR
1.30% SmallCap Russell 2000, IWM
1.28% Value SmallCap Russell 2000, IWN
1.28% Japan Index, EWJ
1.28% Value SmallCap S&P 600 B, IJS
1.26% SmallCap S&P 600, IJR
1.25% Small Cap VIPERs, VB
1.23% Semiconductor iS IGW, SOXX
1.21% Value SmallCap VIPERS, VBR
1.19% Growth BARRA Small Cap 600, IJT
1.17% China LargeCap Growth G D H USX PS, PGJ
1.17% Chile MSCI iS, ECH
1.17% Value MidCap S&P 400 B, IJJ
1.16% Small Cap EAFE MSCI iS, SCZ
1.15% MidCap S&P 400 SPDRs, MDY
1.12% Microcap Russell, IWC
1.12% MidCap S&P 400 iS, IJH
1.11% WilderHill Clean Energy PS, PBW
1.10% Global ex US ACWI iS, ACWX
1.08% Growth EAFE MSCI, EFG
1.05% Germany Index, EWG
1.05% Industrial SPDR, XLI
1.04% Growth MidCap 400 B, IJK
1.03% Value MidCap Russell, IWS
1.00% Sweden Index, EWD
1.00% Switzerland Index, EWL
0.98% Technology DJ US, IYW
0.98% Pacific ex-Japan, EPP
0.97% Italy Index, EWI
0.96% Pacific VIPERs, VPL
0.96% Info Tech VIPERs, VGT
0.94% Growth MidCap Russell, IWP
0.94% EMU Europe Index, EZU
0.93% Netherlands Index, EWN
0.92% Mexico Index, EWW
0.91% EAFE Index, EFA
0.91% MidCap Russell, IWR
0.91% LargeCap Blend S&P=Weight R, RSP
0.87% Growth VIPERs, VUG
0.86% European VIPERs, VGK
0.85% Malaysia Index, EWM
0.84% Value EAFE MSCI, EFV
0.84% QQQ Nasdaq 100 Trust, QQQ
0.84% Growth 1000 Russell, IWF
0.82% Blend Total Market VIPERs, VTI
0.81% Spain Index, EWP
0.80% Technology SPDR, XLK
0.80% LargeCap 1000 R, IWB
0.79% Dividend Appreciation Vipers, VIG
0.79% Europe 350 S&P Index, IEV
0.78% LargeCap Blend Russell 3000, IWV
0.77% LargeCap VIPERs, VV
0.76% Growth S&P 500/BARRA, IVW
0.75% Value 1000 Russell, IWD
0.74% Capital Markets KWB ST, KCE
0.73% Biotech SPDR, XBI
0.68% Australia Index, EWA
0.68% S&P 500 iS LargeCap Blend, IVV
0.67% Financials VIPERs, VFH
0.66% S&P 500 SPDRs LargeCap Blend, SPY
0.63% Transportation Av DJ, IYT
0.63% Value LargeCap Dynamic PS, PWV
0.62% LargeCap Blend S&P 100, OEF
0.62% DIAMONDS (DJIA), DIA
0.59% Dividend SPDR, SDY
0.59% Value S&P 500 B, IVE
0.59% REIT VIPERs, VNQ
0.58% Financial SPDR, XLF
0.57% Financial DJ US, IYF
0.57% Value VIPERs, VTV
0.56% Real Estate US DJ, IYR
0.54% REIT Wilshire, RWR
0.54% Realty Cohen & Steers, ICF
0.52% Telecom DJ US, IYZ
0.51% Dividend DJ Select, DVY
0.51% France Index, EWQ
0.47% Consumer Staples SPDR, XLP
0.46% Bond, High-Yield Junk, JNK
0.45% Global 100, IOO
0.42% Dividend High Yield Equity PS, PEY
0.40% Financial Services DJ, IYG
0.37% Homebuilders SPDR, XHB
0.36% Bond, High-Yield Corporate, HYG
0.34% Belgium Index, EWK
0.33% Preferred Stock iS, PFF
0.30% United Kingdom Index, EWU
0.27% Austria Index, EWO
0.18% Bond, TIPS, TIP
0.15% Bond EmrgMkt JPM iS, EMB
0.14% Bond Ex-US Treas, BWX
0.08% Bond, Corp, LQD
0.01% Bond Treasury Short-Term iS, SHV
-0.01% Health Care SPDR, XLV
-0.02% Bond, 1-3 Year Treasury, SHY
-0.06% Financial Preferred, PGF
-0.07% Bond Muni ATM-Free S&P iS, MUB
-0.07% Bond, Aggregate, AGG
-0.09% Consumer Discretionary SPDR, XLY
-0.24% Utilities SPDR, XLU
-0.25% Bond, 10 Year Treasury, IEF
-0.25% Utilities VIPERs, VPU
-0.67% Bear, Short S&P 500, SH
-0.77% Bond, 20+ Years Treasury, TLT
