S&P 500 Composite (SPX, 1,316.28) fell 1.09 points or 0.08% on Tuesday. Morning and afternoon rally attempts fizzled again. Indexes closed below their opens, midpoints, and various intraday averages. SPX closed further below its 50-day simple moving average, below the lows of the previous 4 weeks, and below a 9-month uptrendline. Most other indexes and indicators confirmed the downtrend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below 2-month lows and has been in a downside correction since 4/5/11.
Industrial SPDR stock sector ETF Relative Strength Ratio (XLI/SPY) and absolute price both broke down below 2-month lows.
Technology SPDR stock sector ETF Relative Strength Ratio (XLK/SPY) fell below 4-week lows. The Ratio gave a clear bearish signal on 3/22/11 when the 50-day SMA of the RS Ratio crossed below the 200-day SMA.
Financial SPDR stock sector ETF Relative Strength Ratio (XLF/SPY) fell below 2-year lows and remains bearish. Absolute price fell below 5-month lows.
Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) broke down below 2-month lows on 5/24/11. Absolute price of JNK peaked at 41.32 on 11/4/10.
According to Alistair Barr, reporting for MarketWatch.com, some of the world’s largest hedge-fund firms suffered losses so far in May: Paulson Advantage Fund -3.93%, FX Concepts GCP Fund -4.13%, Bridgewater Associates -2.09%, Armajaro’s Commodities fund -4.32%, Tudor Momentum Fund Limited -5.6%, Lynx Fund -5.77%, Caxton’s Hawk Fund -3.54%, Aspect Diversified -5.6%, and Winton Capital Management Fund -3.34%.
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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
1.57% , TBH , Telebras HOLDRS, TBH
6.53% , EP , EL PASO
5.97% , AZO , AUTOZONE
4.85% , S , SPRINT NEXTEL
3.61% , ODP , OFFICE DEPOT
0.98% , VOX , Telecom Services VIPERs, VOX
1.36% , ITF , Japan LargeCap Blend TOPIX 150, ITF
4.32% , PTEN , Patterson-UTI Energy Inc
3.59% , OXY , OCCIDENTAL
3.93% , CECO , CAREER EDUCATION CORP
1.71% , SNV , SYNOVUS
4.47% , DV , DeVry, Inc.
1.12% , IYZ , Telecom DJ US, IYZ
9.50% , LVLT , LEVEL 3 COMMUNICATIONS
3.98% , SIL , Silver Miners Global X, SIL
3.18% , SIRI , Sirius Satellite
4.38% , SLV , Silver Trust iS, SLV
2.35% , APOL , APOLLO GROUP
2.31% , OMX , OFFICEMAX INC., OMX
1.52% , BSX , BOSTON SCIENT
2.55% , NOV , NATIONAL OILWELL VARC0
1.52% , RDC , ROWAN COMPANIES
1.27% , EWJ , Japan Index, EWJ
2.90% , HAL , HALLIBURTON
0.87% , C , CITIGROUP
1.00% , TDC , Teradata Corporation, TDC
1.85% , NE , NOBLE
1.46% , SLB , SCHLUMBERGER
0.83% , ADRE , Emerging 50 BLDRS, ADRE
0.68% , EFG , Growth EAFE MSCI, EFG
0.50% , ICF , Realty Cohen & Steers, ICF
0.55% , NY , Value LargeCap NYSE 100 iS, NY
1.20% , AEP , AM ELEC POWER
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.11% , QLGC , QLOGIC
-1.02% , PEJ , Leisure & Entertainment, PEJ
-1.23% , PXQ , Networking, PXQ
-1.26% , XSD , Semiconductor SPDR, XSD
-0.38% , KCE , Capital Markets KWB ST, KCE
-0.87% , SOXX , Semiconductor iS IGW, SOXX
-2.56% , NTAP , NETWK APPLIANCE
-2.04% , LO , Lorillard, Inc. LO
-2.79% , CHKP , Check Point Software Technologies Ltd
-0.33% , IGV , Software, IGV
-2.37% , SWK , Stanley Black & Decker
-1.92% , SHW , SHERWIN WILLIAMS
-0.33% , JKK , Growth SmallCap iS M, JKK
-1.14% , PSI , Semiconductors, PSI
-1.39% , SYY , SYSCO
-2.02% , WLP , WELLPOINT HEALTH
-0.28% , PIV , Value Line Timeliness MidCap Gr, PIV
-2.56% , EBAY , EBAY
-3.13% , GT , GOODYEAR TIRE
-2.85% , GPS , GAP
-1.96% , COF , CAPITAL ONE FNCL
-1.71% , DHI , D.R. HORTON, DHI
-2.44% , UNH , UNITEDHEALTH GRP
-0.85% , PWP , Value MidCap Dynamic PS, PWP
-2.38% , RHT , Red Hat Inc.
-1.91% , CCL , CARNIVAL STK A
-0.90% , CHD , Church & Dwight
-0.87% , BLK , BlackRock Inc.
-2.06% , CI , CIGNA
-1.50% , JCI , JOHNSON CONTROLS
-1.31% , CBS , CBS CORP.
-1.56% , COST , COSTCO WHOLESAL
-0.92% , MDT , MEDTRONIC
9 major U.S. stock sectors ranked in order of long-term relative strength:
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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below 11-week lows on 5/23/11 and remains bearish. The Ratio gave a bearish signal on 5/3/11 by crossing below its 50-day SMA. The Ratio remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below 8-week lows on 5/23/11. The Ratio gave a bearish signal on 5/11/11 by crossing below its 50-day SMA. The Ratio remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA.
NASDAQ Composite/S&P 500 Relative Strength Ratio appears to have entered a downside correction since peaking on 1/18/11 and remains neutral. Absolute price appears to have entered a downside correction since peaking on 5/2/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell further below 28-year lows on 5/20/11, again reconfirming its preexisting bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below 2-month lows on 5/24/11 and has been in a downside correction since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) has been correcting and consolidating major gains since 4/5/11 and remains neutral. The Ratio rose above all-time highs on 4/5/11.
Crude Oil nearest futures contract price consolidated with an Inside Day on Tuesday. Oil fell below the lows of the previous 10 weeks on 5/6/11 and remains in a price downtrend. On 5/3/11, when Crude Oil was 111.56, I wrote, “Crude Oil nearest futures contract price fell below the lows of the previous 7 trading days on 5/3/11, suggesting a short-term price pullback.” Support 94.63, 87.09, 83.85, 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 73.52, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 114.83, 120.42, 130.0, and 147.27.
Gold nearest futures contract price rose above 2-week highs on Tuesday, but it might be only a temporary countertrend bounce in a larger downside correction. On 5/2/11, when Gold was 1557.1, I wrote, “Gold rose above all-time highs on 5/2/11, again reconfirming its major uptrend. Gold looks overextended, however, and could be due for a downside correction.” Support: 1462.5, 1445.0, 1411.5, 1380.7, 1419.5, 1351.4, 1309.1, 1307.7, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: 1526.8 and 1577.4.
Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) has been falling steeply since 4/8/11 and remains bearish.
Silver nearest futures contract price rose above 6-day highs on Tuesday, but it might be only a temporary countertrend bounce in a larger downside correction. The problem is that Silver broke support levels and uptrend lines in recent weeks, so the larger trend may be bearish. Silver fell below 11-week lows on 5/12/11. On 5/2/11, when Silver was 46.084, I wrote, “Silver nearest futures contract price broke sharply below the lows of the previous 2 weeks. The short-term price trend has turned down. If this downtrend continues, it could have implications for inflation expectations.” Support 32.3, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 39.38, 39.47, 49.845 and 50.35.
Silver/Gold Ratio entered a steep downtrend since the peak on 4/28/11 and remains bearish.
Copper nearest futures contract price fell below 4-day lows on 5/23/11, possibly signaling resumption if its downtrend. Copper fell below the previous 6-month lows on 5/12/11, confirming an intermediate-term correction, if not a bear market. Weakness in Copper suggests doubts about the economic outlook. On 4/18/11, when Copper was 4.2175, I wrote, “Copper nearest futures contract price fell below the lows of the previous 4 weeks on 4/18/11, confirming a short-term downtrend.” Support 3.8535, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.533, 4.554, 4.6495, and 4.6575.
U.S. Treasury Bond nearest futures contract price reversed early weakness on Tuesday to close higher. The Bond rose above the highs of the previous 5 months on 5/17/11, confirming a significant uptrend. The Bond built a 5-month, intermediate-term bullish base since the low of 12/15/10. In its favor, nearly everyone has been talking bearish on Bonds this year, so the Bond is rising up off an extreme oversold condition. Support 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 128.00 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.
Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) broke down below 2-month lows on 5/24/11. Absolute price of JNK peaked at 41.32 on 11/4/10.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below 13-week lows on 5/23/11, again reconfirming a medium-term downtrend. TIP/IEF entered a downtrend after peaking on 4/8/11. This downtrend means that fixed-income investors now prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Inflation expectations are dying.
The U.S. dollar nearest futures contract price consolidated gains with an Inside Day on Tuesday. USD rose above highs of the previous 7 weeks on 5/23/11, reconfirming an uptrend. On 5/5/11, when USD was 74.375, I wrote, ” The U.S. dollar nearest futures contract price rose above the highs of the previous 5 trading days on 5/5/11, suggesting a possible rally attempt. On 5/6/11, when USD was 75.08, I wrote, “The U.S. dollar nearest futures contract price rose above the highs of the previous 2 weeks on 5/6/11, confirming a long-overdue oversold bounce. Momentum and volume were strong.” Support 74.945, 72.86 and 70.80. Resistance 76.87, 77.675, 78.98, 79.34, 81.635, 81.935, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.
Advisory Service Sentiment: There were 57.3% Bulls versus 15.7% Bears as of 4/6/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio soared to 3.65, up from 2.23 the previous week. The Ratio rose its highest level in the 8 years since the 20-year high of 3.74 set on 6/18/03. Following that 2003 peak, the stock market turned sideways/choppy for 2 months and sentiment reverted toward the mean. The Ratio’s 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.63. According to Humphrey B. Neill, The Art of Contrary Thinking, when everybody thinks alike, everyone is likely to be wrong.
VIX Fear Index fell below its 3-year range on 4/20/11, hitting 14.30 intraday, and again confirming a preexisting trend toward bullish complacency. This follows a brief spike up to an intraday peak of 31.28 on 3/16/11. Fear was short-lived. 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 Dow Theory signaled a Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. Looking ahead, joint closes below the 5/17/11 closing price lows could have serious bearish implications for the multi-month Secondary Trend. Here are the critical closing price levels to watch out for: 12,479.60 for the Dow-Jones Industrials and 5,335.37 for the Dow-Jones Transports.
On 5/2/11, when the S&P 500 Composite (SPX) was 1,358.59, I warned, “The majority of major stock price indexes opened higher on gaps but reversed to close with losses on the day. This may signal exhaustion of the short-term uptrend. Sentiment indicators have been suggesting that the stock market may be over loved and overbought. And in view of the sharp reversals in the metal commodities, the so-called “inflation trade”, when speculators buy stocks and sell fixed-income instruments based on expectations of rising price levels for goods and services, may be on thin ice.”
Based on the daily SPX, momentum indicators have turned down and remained bearish. Momentum indicators gave bearish divergence warnings in April; that is, they never made it back to their February peaks when the price indexes rose to higher highs. These bearish divergence warnings are still in effect.
For all the bullish sentiment and bullish news stories (such as better-than-expected earnings and big deal M&A) over the past 3 months, SPX is lower than it was 3 months ago. Worse, a wide variety of momentum indicators are significantly lower than they were 3 months ago, thereby showing bearish divergence. This suggests exhaustion of the uptrend.
Furthermore, the absolute prices of the major stock price indexes show patterns of lower highs and lower lows since 5/2/11. “Lower highs and lower lows” is the classic definition of a bearish downtrend.
S&P 500 Composite (SPX, 1,316.28) fell 1.09 points or 0.08% on Tuesday.
S&P 500 Cash Index 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
1370.50, high of 5/2/11
1359.44.50, high of 5/10/11
S&P 500 Cash Index Potential Support
1294.70, low of 4/18/11
1249.05, low of 3/16/11
1246.73, high of 12/13/10
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
1173.00, low of 11/16/10
1171.70, low of 10/27/10
1166.74, low of 10/20/10
1159.71, low of 10/19/10
1,151.41, low of 10/7/10
1,131.87, low of 10/4/10
1122.79, low of 9/23/2010
1114.63, low of 9/15/2010
1110.88, low of 9/10/2010
1091.15, low of 9/7/2010
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
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
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
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
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.38% Silver Trust iS, SLV
3.98% Silver Miners Global X, SIL
2.37% Oil Fund PowerShares, DBO
2.11% Oil, Crude, U.S. Oil Fund, USO
1.73% Brazil Index, EWZ
1.72% South Africa Index, EZA
1.57% Energy Global, IXC
1.47% Energy & Nat Res iS GS, IGE
1.47% Turkey MSCI iS, TUR
1.42% Energy SPDR, XLE
1.35% Latin Am 40, ILF
1.35% Commodity Tracking, DBC
1.27% Japan Index, EWJ
1.26% Energy DJ, IYE
1.26% Russia MV, RSX
1.21% Energy VIPERs, VDE
1.12% Telecom DJ US, IYZ
1.04% Canada Index, EWC
1.00% Emerging Markets, EEM
0.89% Metals & Mining SPDR, XME
0.87% Pacific VIPERs, VPL
0.85% Emerging VIPERs, VWO
0.83% Emerging 50 BLDRS, ADRE
0.82% Austria Index, EWO
0.79% China 25 iS, FXI
0.74% Pacific ex-Japan, EPP
0.73% Mexico Index, EWW
0.72% Global ex US ACWI iS, ACWX
0.70% Australia Index, EWA
0.68% Growth EAFE MSCI, EFG
0.66% Small Cap EAFE MSCI iS, SCZ
0.65% Thailand MSCI iS, THD
0.62% Germany Index, EWG
0.58% Basic Materials DJ US, IYM
0.58% EAFE Index, EFA
0.53% South Korea Index, EWY
0.52% Switzerland Index, EWL
0.52% European VIPERs, VGK
0.51% Gold Shares S.T., GLD
0.51% Bond, TIPS, TIP
0.50% Materials SPDR, XLB
0.50% Realty Cohen & Steers, ICF
0.49% Belgium Index, EWK
0.46% India PS, PIN
0.45% United Kingdom Index, EWU
0.42% REIT Wilshire, RWR
0.41% Malaysia Index, EWM
0.40% Taiwan Index, EWT
0.38% Bond, 20+ Years Treasury, TLT
0.37% EMU Europe Index, EZU
0.34% Italy Index, EWI
0.34% France Index, EWQ
0.31% Europe 350 S&P Index, IEV
0.31% Value EAFE MSCI, EFV
0.31% Dividend International, PID
0.30% REIT VIPERs, VNQ
0.30% Real Estate US DJ, IYR
0.23% Bond Ex-US Treas, BWX
0.22% Spain Index, EWP
0.21% Bond Muni ATM-Free S&P iS, MUB
0.18% Netherlands Index, EWN
0.18% India Earnings WTree, EPI
0.16% Indonesia MV, IDX
0.13% Frontier Markets Guggenheim , FRN
0.13% Bond, Corp, LQD
0.10% Bond, 10 Year Treasury, IEF
0.08% Global 100, IOO
0.07% Singapore Index, EWS
0.05% Hong Kong Index, EWH
0.04% Bond, Aggregate, AGG
0.02% LargeCap Blend S&P 100, OEF
0.00% Preferred Stock iS, PFF
0.00% Bond, 1-3 Year Treasury, SHY
-0.01% Value VIPERs, VTV
-0.02% Bond Treasury Short-Term iS, SHV
-0.04% S&P 500 iS LargeCap Blend, IVV
-0.04% China LargeCap Growth G D H USX PS, PGJ
-0.04% LargeCap 1000 R, IWB
-0.05% LargeCap VIPERs, VV
-0.06% Growth S&P 500/BARRA, IVW
-0.06% Agriculture DB PS, DBA
-0.06% Value S&P 500 B, IVE
-0.08% Bond EmrgMkt JPM iS, EMB
-0.08% S&P 500 SPDRs LargeCap Blend, SPY
-0.09% Consumer Staples SPDR, XLP
-0.09% Utilities SPDR, XLU
-0.10% Blend Total Market VIPERs, VTI
-0.12% Growth 1000 Russell, IWF
-0.12% Value 1000 Russell, IWD
-0.12% Financial DJ US, IYF
-0.12% Growth VIPERs, VUG
-0.13% LargeCap Blend Russell 3000, IWV
-0.13% Financial SPDR, XLF
-0.14% Financial Preferred, PGF
-0.14% Dividend Appreciation Vipers, VIG
-0.15% Financial Services DJ, IYG
-0.15% Value MidCap Russell, IWS
-0.15% Financials VIPERs, VFH
-0.16% LargeCap Blend S&P=Weight R, RSP
-0.16% Bond, High-Yield Corporate, HYG
-0.18% DIAMONDS (DJIA), DIA
-0.20% Value LargeCap Dynamic PS, PWV
-0.21% Utilities VIPERs, VPU
-0.21% Sweden Index, EWD
-0.21% MidCap Russell, IWR
-0.22% Growth MidCap 400 B, IJK
-0.22% Dividend SPDR, SDY
-0.23% Dividend High Yield Equity PS, PEY
-0.23% Growth MidCap Russell, IWP
-0.25% Dividend DJ Select, DVY
-0.26% MidCap S&P 400 SPDRs, MDY
-0.28% Health Care SPDR, XLV
-0.30% Growth SmallCap VIPERs, VBK
-0.31% Technology SPDR, XLK
-0.33% MidCap S&P 400 iS, IJH
-0.33% Chile MSCI iS, ECH
-0.34% Small Cap VIPERs, VB
-0.34% Bond, High-Yield Junk, JNK
-0.36% Value MidCap S&P 400 B, IJJ
-0.38% Capital Markets KWB ST, KCE
-0.39% Value SmallCap VIPERS, VBR
-0.44% Homebuilders SPDR, XHB
-0.46% Value SmallCap Russell 2000, IWN
-0.46% Technology DJ US, IYW
-0.48% SmallCap Russell 2000, IWM
-0.50% Consumer Discretionary SPDR, XLY
-0.52% Industrial SPDR, XLI
-0.52% Microcap Russell, IWC
-0.52% Info Tech VIPERs, VGT
-0.54% Value SmallCap S&P 600 B, IJS
-0.54% SmallCap S&P 600, IJR
-0.55% WilderHill Clean Energy PS, PBW
-0.56% Growth BARRA Small Cap 600, IJT
-0.58% Growth SmallCap R 2000, IWO
-0.61% QQQ Nasdaq 100 Trust, QQQ
-0.68% Water Resources, PHO
-0.72% Transportation Av DJ, IYT
-0.87% Semiconductor iS IGW, SOXX
-1.04% Biotech SPDR, XBI
-1.26% Semiconductor SPDR, XSD
-1.44% Networking, IGN
