NASDAQ Composite/S&P 500 Relative Strength Ratio broke down below the lows of the previous 63-months on 12/21/11 and has been trending lower since peaking on 9/23/11.
Technology stock sector Relative Strength Ratio (XLK/SPY) fell below the lows of the previous 3 months.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below the lows of the previous 6 years.
Utilities, Consumer Staples, and Health Care stock sectors are relatively strong. Such Defensive Sectors, which are relatively insensitive to economic and stock market cycles, have been rising in my long-term relative strength rankings, while cyclicals have been falling.
VIX Fear Index broke down below the lows of the previous 5-months on 12/21/11, hitting 21.12 intraday. That is down from recent peaks of 30.91 on 12/8/11, 37.83 on 11/1/11, 46.88 on 10/4/11, and 48.00 on 8/8/11. This drop indicates a shift away from fear and toward confidence, which, according to Humphrey Bancroft Neill’s Art of Contrary Thinking, may be bearish.
The S&P 500 Composite (SPX: 1,243.72) finished little changed on Wednesday, following a big bounce on Tuesday. SPX price crossed above its 50-day SMA on 12/20/11 but remains below its 200-day SMA. The 50-day SMA has remained bearishly below the 200-day SMA every day since 8/12/11, suggesting a persistent Bear trend for the longer term.
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Stock Market Indicators
The Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both Dow-Jones Industrial and Transportation Averages closed below their closing price lows of the previous 11 months. This Bear Market was confirmed on 10/3/11 by lower closing price lows for both Averages. Following a Secondary Reaction bounce in October, a short-term downtrend was confirmed on 11/25/11 when both Averages closed below their closing price lows of the previous 7-weeks.
A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated. The median Dow Theory Primary Tide Bear Market in history lasts 16 months and takes stock prices down 34%. In a Dow Theory Primary Tide Bear Market, the big surprises usually come to the downside. Typically, there is no safe place to hide in a Dow Theory Primary Tide Bear Market. Even those stocks that have held up relatively well through most of the Bear Market eventually succumb to the relentless tide of selling.
NASDAQ Composite/S&P 500 Relative Strength Ratio broke down below the lows of the previous 63-months on 12/21/11 and has been trending lower since peaking on 9/23/11. Absolute price of the NASDAQ Composite remains below its 50-day and 200-day SMAs, and the 50-day SMA has been bearishly below the 200-day SMA every day since 8/12/11.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below the lows of the previous 2 years on 12/14/11. BKF/SPY remains below its falling 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below the lows of the previous 2 years on 12/19/11. EEM/SPY remains below its falling 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/3/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below the lows of the previous 6 years on 12/21/11. EFA/SPY remains below its falling 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 1/14/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above the highs of the previous 11 weeks on 12/19/11 and has been in a rising trend since 11/4/11. Longer term, the 50-day SMA has remained bullishly above the 200-day SMA every day since 8/25/11. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size. 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) recovered modestly from 10/3/11 to 10/27/11 but has stalled out in more recent weeks. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA consistently every day since 8/11/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below the lows of the previous 7 weeks on 12/14/11 and has been in a downtrend since 4/5/11. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/24/11.
Advisory Service Sentiment: There were 69.5% Bulls plus Neutrals versus 30.5% Bears as of 12/21/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The 20-year median of Bulls plus Neutrals is 69.40 and the mean is 68.32.
VIX Fear Index broke down below the lows of the previous 5-months on 12/21/11, hitting 21.12 intraday. That is down from recent peaks of 30.91 on 12/8/11, 37.83 on 11/1/11, 46.88 on 10/4/11, and 48.00 on 8/8/11. This drop indicates a shift away from fear and toward confidence, which, according to Humphrey Bancroft Neill’s Art of Contrary Thinking, may be bearish. 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
1406.32, high of 5/29/2008
1381.50, Fibonacci 78.6% of 2007-2009 range
1370.58, high of 5/2/11
1359.44, high of 5/10/11
1356.48, high of 7/7/11
1347.00, high of 7/21/11
1307.28, Fibonacci 78.6% of 2011 range
1292.66, high of 10/27/11
1277.55, high of 11/8/2011
1267.06, high of 12/7/2011
1259.97 200-day SMA
1257.58, Fibonacci 61.8% of 2011 range
1244.80, low of 12/7/2011
The S&P 500 Composite Potential Support
1239.73, low of 12/1/2011
1238.81, Fibonacci 78.6% of 1,576.09 high
1234.81, low of 11/3/11
1231.04, high of 12/16/11
1226.64, low of 11/9/2011
1222.68, Fibonacci 50% of 2011 range
1224.57, high of 12/19/11
1215.20, low of 12/16/11
1209.47, low of 12/14/2011
1209.43, low of 11/17/2011
1204.49, Fibonacci 23.6% of 2009-11 range
1202.37, low of 12/19/11
1187.77, Fibonacci 38.2% of 2011 range
1158.66, low of 11/25/2011
1144.38, Fibonacci 23.6% of 2011 range
1101.73, Fibonacci 38.2% of 2009-11 range
1074.77, low of 10/4/2011
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1018.69, Fibonacci 50% of 2009-11 range
1008.55, Fibonacci 38.2% of 2009-2010 range
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
943.29, Gann 50.0% of 2009-2010 range
935.64, Fibonacci 61.8% of 2009-11 range
878.04, Fibonacci 61.8% of 2009-2010 range
874.17, Gann 62.5% of 2009-2010 range
869.32, low of 7/8/2009
817.40, Fibonacci 78.6% of 2009-11 range
805.17, Gann 75.0% of 2009-2010 range
785.13, Fibonacci 78.6% of 2009-2010 range
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) pulled back over the past 2 trading days; this after rising above the highs of the previous 11 weeks on 12/19/11. TLT remains in bullish position above its 50-day and 200-day SMAs, and the 50-day SMA has remained bullishly above the 200-day SMA every day since 6/24/11, suggesting a persistent Bull trend. Support 115.80, 115.21, 109.82, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 125.03.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) pulled back over the past 2 trading days; this after rising above the highs of the previous 11 weeks on 12/19/11. IEF remains in bullish position above its 50-day and 200-day SMAs, and the 50-day SMA has remained bullishly above the 200-day SMA every day since 6/21/11, suggesting a persistent Bull trend. Support 103.29, 102.32, 101.36, 101.11, 99.79, and 97.66. Resistance 106.66.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) has been in a downtrend since 2/8/11. The 50-day SMA has remained bearishly below the 200-day SMA every day since 6/20/11. JNK/LQD broke down below the lows of the previous 29-months on 10/3/11. Absolute price of JNK has been weak since 10/27/11 and remains bearish.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) has been in a downtrend since peaking on 4/8/11. TIP/IEF remains below 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 7/15/11.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) stabilized on 12/21/11 after a 4-day pullback. UUP rose above the highs of the previous 10 months on 12/14/11, again confirming its preexisting bullish trend. UUP rose above its 50-day SMA on 11/14/11 and rose above its 200-day SMA on 11/9/11. The 50-day SMA has remained bullishly above the 200-day SMA every day since 10/26/11. Support 21.97, 21.92, 21.58, 21.07, and 20.84. Resistance 22.70, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) bounced moderately within its downtrend. Price fell below the lows of the previous 14 months on 12/16/11, again confirming a major bearish downtrend in all time frames.
Crude Oil, United States Oil ETF (USO) bounced moderately within its downtrend. Price fell below the lows of the previous 6 weeks on 12/16/11. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 7/14/11. Finally, USO broke down below 2-year lows on 10/4/11 to confirm a major bear market. Support 34.54, 32.52, 29.10, 26.28, and 22.74. Resistance 39.74, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) bounced moderately within its downtrend. Price fell below the lows of the previous 5 months on 12/15/11. On 12/12/11, I warned that a break below the low at 165.53 set on 12/6/11 would be bearish. Further weakness appears probable. Support: 151.71, 147.19, 143.97, 143.42, and 142.55. Resistance: 162.07, 165.53, 170.80, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) is bearishly below its falling 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11. GDX/GLD fell below 29-month lows on 8/8/11, reconfirming a bearish major trend for the long term.
Silver, iShares Silver Trust ETF (SLV) absolute price fell below the lows of the previous 2 months on 12/15/11. SLV crossed below its 50-day SMA on 12/8/11 and crossed below its 200-day SMA on 9/22/11. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 10/27/11. SLV price broke down below the lows of the previous 7 months on 9/26/11, which confirmed a bearish major trend for the long term. Support 27.41, 26.03, and 24.44. Resistance: 32.53, 34.44, 34.51, 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) fell below the lows of the previous 13 months on 12/19/11. SLV/GLD remains bearishly below 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/30/11. This SLV/GLD downtrend means investors prefer Gold over Silver.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) bounced moderately within its downtrend. Price fell below the lows of the previous 8 weeks on 12/15/11. JJC remains below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/8/11. Major trend weakness in Copper suggests serious concerns about the 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 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
0.50% , PPA , Aerospace & Defense, PPA
9.30% , CTAS , CINTAS
2.86% , CEG , CONSTELL ENERGY
5.82% , YHOO , YAHOO
1.23% , IJS , Value SmallCap S&P 600 B, IJS
10.06% , RIMM , RESEARCH IN MOTION LTD
4.04% , PSTL , Steel Global PS ETF, PSTL
2.48% , EXC , EXELON CORP
0.84% , JKI , Value MidCap iS M, JKI
0.65% , PUI , Utilities, PUI
1.26% , PPH , Pharmaceutical H, PPH
1.50% , IDU , Utilities DJ, IDU
3.23% , SVU , SUPERVALU
0.67% , RFV , Value MidCap S&P 400, RFV
3.50% , JCP , JC PENNEY
0.98% , OIH , Oil Services H, OIH
3.24% , AMGN , AMGEN
3.10% , MBI , MBIA
2.28% , AEP , AM ELEC POWER
3.81% , HGSI , Human Genome Sciences Inc
2.25% , UNM , UNUMPROVIDENT
1.39% , SNA , SNAP ON
2.91% , NKE , NIKE STK B
1.15% , WPO , Washington Post
1.55% , CL , COLGATE
2.10% , COH , COACH
1.80% , EIX , EDISON INTL
2.09% , KR , KROGER
3.19% , F , FORD MOTOR
0.64% , JKJ , SmallCap Core iS M, JKJ
2.37% , GE , GENERAL ELECTRIC
1.49% , XLU , Utilities SPDR, XLU
1.17% , BSX , BOSTON SCIENT
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.60% , ADRU , Europe 100 BLDRS, ADRU
-1.01% , XSD , Semiconductor SPDR, XSD
-11.66% , ORCL , ORACLE
-5.51% , TDC , Teradata Corporation, TDC
-4.06% , IGV , Software, IGV
-7.76% , CTXS , CITRIX SYSTEMS
-2.28% , SEE , SEALED AIR
-4.52% , CHKP , Check Point Software Technologies Ltd
-5.44% , EMR , EMERSON ELECTRIC
-0.74% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-5.54% , KMX , CarMax
-6.14% , CTSH , Cognizant Technology Solutions
-4.26% , BCR , C R BARD
-6.06% , PMTC.O , PARAMETRIC
-3.75% , ADSK , AUTODESK
-4.48% , AMZN , Amazoncom Inc
-6.72% , KBH , KB HOME
-3.08% , IBM , IBM
-2.41% , SIAL , SIGMA ALDRICH
-3.15% , ROK , ROCKWELL AUTOMAT
-4.06% , EMC , EMC
-3.66% , VPL , Pacific VIPERs, VPL
-1.77% , HHH , Internet H, HHH
-3.92% , ININ , Interactive Intelligence ININ
-4.57% , SWH , Software H, SWH
-4.04% , BMC.O , BMC SOFTWARE
-3.66% , FLEX , Flextronics International Ltd
-4.32% , MU.O , MICRON TECH
-1.47% , IXN , Technology Global, IXN
-2.74% , VGT , Info Tech VIPERs, VGT
-0.58% , PWO , OTC Dynamic PS, PWO
-1.37% , TEVA , Teva Pharmaceutical Industries Limited
-1.65% , ADBE , ADOBE SYS
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.48% Taiwan Index, EWT
1.49% Utilities SPDR, XLU
1.48% Oil, Crude, U.S. Oil Fund, USO
1.43% Homebuilders SPDR, XHB
1.43% Oil Fund PowerShares, DBO
1.23% Value SmallCap S&P 600 B, IJS
1.12% South Korea Index, EWY
1.11% Energy SPDR, XLE
1.10% Energy Global, IXC
1.10% Energy DJ, IYE
1.06% Consumer Staples SPDR, XLP
1.02% Dividend DJ Select, DVY
0.96% Energy & Nat Res iS GS, IGE
0.94% Canada Index, EWC
0.88% Dividend High Yield Equity PS, PEY
0.81% Value VIPERs, VTV
0.79% Value LargeCap Dynamic PS, PWV
0.79% India PS, PIN
0.78% Value SmallCap Russell 2000, IWN
0.76% India Earnings WTree, EPI
0.76% Value SmallCap VIPERS, VBR
0.74% Singapore Index, EWS
0.72% Value 1000 Russell, IWD
0.71% Commodity Tracking, DBC
0.68% Mexico Index, EWW
0.65% Health Care SPDR, XLV
0.64% Financial DJ US, IYF
0.61% Value MidCap Russell, IWS
0.60% Transportation Av DJ, IYT
0.59% Financials VIPERs, VFH
0.58% Microcap Russell, IWC
0.56% Financial Services DJ, IYG
0.56% SmallCap S&P 600, IJR
0.55% Financial SPDR, XLF
0.55% Dividend SPDR, SDY
0.54% Value S&P 500 B, IVE
0.51% Value MidCap S&P 400 B, IJJ
0.48% Water Resources, PHO
0.42% Biotech SPDR, XBI
0.41% SmallCap Russell 2000, IWM
0.40% Utilities VIPERs, VPU
0.38% Financial Preferred, PGF
0.37% LargeCap Blend S&P=Weight R, RSP
0.36% Bond, High-Yield Junk, JNK
0.35% Agriculture DB PS, DBA
0.34% Consumer Discretionary SPDR, XLY
0.30% Emerging Markets, EEM
0.29% Capital Markets KWB ST, KCE
0.29% Small Cap VIPERs, VB
0.28% Bond, High-Yield Corporate, HYG
0.26% Basic Materials DJ US, IYM
0.25% LargeCap 1000 R, IWB
0.25% MidCap Russell, IWR
0.23% LargeCap Blend Russell 3000, IWV
0.23% LargeCap VIPERs, VV
0.20% Preferred Stock iS, PFF
0.19% LargeCap Blend S&P 100, OEF
0.19% S&P 500 SPDRs LargeCap Blend, SPY
0.19% Latin Am 40, ILF
0.18% MidCap S&P 400 SPDRs, MDY
0.17% Indonesia MV, IDX
0.16% Metals & Mining SPDR, XME
0.16% S&P 500 iS LargeCap Blend, IVV
0.16% WilderHill Clean Energy PS, PBW
0.16% Global 100, IOO
0.15% Materials SPDR, XLB
0.14% Telecom DJ US, IYZ
0.14% Real Estate US DJ, IYR
0.14% Bond Muni ATM-Free S&P iS, MUB
0.13% MidCap S&P 400 iS, IJH
0.11% Gold Shares S.T., GLD
0.11% DIAMONDS (DJIA), DIA
0.09% Bond EmrgMkt JPM iS, EMB
0.08% Growth SmallCap VIPERs, VBK
0.08% Malaysia Index, EWM
0.07% Austria Index, EWO
0.07% Dividend International, PID
0.05% Australia Index, EWA
0.04% Industrial SPDR, XLI
0.03% Growth BARRA Small Cap 600, IJT
0.00% Realty Cohen & Steers, ICF
0.00% Bond Treasury Short-Term iS, SHV
-0.03% REIT VIPERs, VNQ
-0.04% Bond, 1-3 Year Treasury, SHY
-0.06% REIT Wilshire, RWR
-0.07% Bond Ex-US Treas, BWX
-0.08% Emerging 50 BLDRS, ADRE
-0.10% Growth S&P 500/BARRA, IVW
-0.11% Frontier Markets Guggenheim , FRN
-0.11% Growth SmallCap R 2000, IWO
-0.12% Small Cap EAFE MSCI iS, SCZ
-0.13% Growth MidCap 400 B, IJK
-0.14% Chile MSCI iS, ECH
-0.15% Russia MV, RSX
-0.18% Pacific ex-Japan, EPP
-0.19% Global ex US ACWI iS, ACWX
-0.22% Bear, Short S&P 500, SH
-0.24% Sweden Index, EWD
-0.25% Bond, Aggregate, AGG
-0.28% Brazil Index, EWZ
-0.31% Growth MidCap Russell, IWP
-0.31% Switzerland Index, EWL
-0.31% United Kingdom Index, EWU
-0.32% Bond, 10 Year Treasury, IEF
-0.32% Growth VIPERs, VUG
-0.33% Turkey MSCI iS, TUR
-0.36% Growth 1000 Russell, IWF
-0.38% Blend Total Market VIPERs, VTI
-0.39% Dividend Appreciation Vipers, VIG
-0.39% Bond, TIPS, TIP
-0.41% Energy VIPERs, VDE
-0.42% Bond, Corp, LQD
-0.47% Growth EAFE MSCI, EFG
-0.50% Belgium Index, EWK
-0.50% Value EAFE MSCI, EFV
-0.52% EAFE Index, EFA
-0.53% Netherlands Index, EWN
-0.54% Europe 350 S&P Index, IEV
-0.55% Thailand MSCI iS, THD
-0.59% Hong Kong Index, EWH
-0.59% Silver Trust iS, SLV
-0.75% Italy Index, EWI
-0.78% South Africa Index, EZA
-0.78% France Index, EWQ
-0.81% China 25 iS, FXI
-0.83% Germany Index, EWG
-0.83% EMU Europe Index, EZU
-1.00% Japan Index, EWJ
-1.01% Semiconductor iS IGW, SOXX
-1.01% Semiconductor SPDR, XSD
-1.01% China LargeCap Growth G D H USX PS, PGJ
-1.22% Networking, IGN
-1.39% Bond, 20+ Years Treasury, TLT
-1.39% Spain Index, EWP
-1.43% QQQ Nasdaq 100 Trust, QQQ
-1.63% Technology SPDR, XLK
-1.83% Emerging VIPERs, VWO
-2.09% Technology DJ US, IYW
-2.74% Info Tech VIPERs, VGT
-3.66% Pacific VIPERs, VPL
-5.07% European VIPERs, VGK
