The S&P 500 (SPX: 1,415.51) rose 9.98 points or 0.71% on Thursday to its highest level since 4/3/12.
SPX has recovered nearly all of its April-June drop and is challenging the highs of the year.
Stock price indexes appear “overbought” or “extended” at 2% to 3% above 20-day EMAs.
Momentum oscillators turned upward, but the shorter, faster ones still failed to rise above their June-July highs to confirm the S&P 500 rise above its June-July highs.
The number of stocks making new highs is a fraction of July’s peak numbers.
NYSE volume rose 18% on Thursday but still is 15% below its 200-day SMA. Volume has been running near the lowest levels of the year since 8/8/12, possibly reflecting diminishing enthusiasm for stocks, as well as summer vacations. On-Balance Volume for the SPX remains in a downtrend with bearish divergence. NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price. Volume has not been confirming the price up move.
It takes volume to push prices up. After the shorts have been forced to cover and the longs have had their fill of buying, in the absence of a fresh source of demand, stocks fall of their own weight.
With the stock price indexes far above their 4-year lows and very close to the top end of their 4-year price range, downside risk may exceed upside potential for the stock market. Choosing safety over risk appears to be the most reasonable approach for conservative traders and investors.
For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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.
AAII Sentiment shows that individual investors are bullish. As of 8/16/12, there were 36.84% Bulls and 28.07% Bears.
Investors Intelligence Sentiment shows that stock market newsletter advisors are bullish. As of 8/15/12, there were 43.6% Bulls and 26.6% Bears.
Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped to 50.0% in August, up from previous peaks at 47.0% in July and 42.0% in May. “Watch out for a correction — or worse. The odds of a stock market correction are now quite elevated,” according to Mark Hulbert, writing for MarketWatch on 8/8/12.
Corporate Insiders Are Bearish. Insiders sold 5.5 shares for each share bought in July–up from 1.6-to-1 in May and up from a long-term average of 2.25-to-1. The data 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 13.67 intraday on 8/13/12, its lowest level since 3/16/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a 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
1417.44, high of 8/16/2012
1415.32, high of 5/1/2012
The S&P 500 Composite Potential Support
1391.04, low of 8/6/2012
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
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
1362.93, Fibonacci 61.8% of April-June 2012 range
1359.17, 50-day SMA
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
1329.24, low of 7/24/2012
1329.20, 200-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
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible Assets, Commodities
U.S. dollar ETF (UUP) fell below its 50-day SMA on 8/3/12, turning systematically neutral. UUP remains above its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.14, 23.52, 25.84, 27.19, 28.97.
CRB Commodity Price Index remains systematically neutral: above its 50-day SMA, below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 8/18/11.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) looks to be consolidating short term, since peaking at 30.44 on 7/30/12. DBA is systematically bullish: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA rose above its 200-day SMA on 8/13/12. High food prices could bring trouble for the general economy because more consumer spending for food means less consumer spending available for other goods and services.
Crude Oil, United States Oil ETF (USO) rose above its highs of the previous 3 months on 8/16/12. USO turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 34.34, 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. GLD remains below its 200-day SMA, and its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. 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) rose above its 50-day SMA on 8/16/12, turning systematically neutral again. GDX/GLD remains below its 200-day SMA, and its 50-day SMA has remained bearishly below its 200-day SMA every day since 2/22/11.
Silver, iShares Silver Trust ETF (SLV) price whipsawed back above its 50-day SMA on 8/3/12, thereby turning systematically neutral again for the short term. SLV remains below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.48, 27.60, 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. Short term, SLV/GLD turned systematically neutral again when it rose above its 50-day SMA on 8/17/12. SLV/GLD remains 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) price fell below its 50-day SMA on 8/13/12, thereby turning systematically bearish again. JJC fell to its lowest level in 8 months on 8/2/12, thereby confirming its major bearish trend. JJC price remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since 12/31/10. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this relative weakness may be suggesting rising doubts about prospects going forward.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
5.29% , EWP , Spain Index, EWP
3.52% , KWT , Solar Energy MV, KWT
9.63% , CSCO , CISCO SYSTEMS
7.38% , MPEL , Melco Crown Entertainment, MPEL
1.65% , PXJ , Oil & Gas, PXJ
1.17% , PSJ , Software, PSJ
1.12% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
4.58% , PETM , PETsMART Inc
3.59% , ITW , ILLINOIS TOOL
4.35% , RIG , TRANSOCEAN
3.77% , BRCM , BROADCOM STK A
1.52% , IYW , Technology DJ US, IYW
4.02% , WYNN , Wynn Resorts L
1.67% , XSD , Semiconductor SPDR, XSD
3.27% , MBI , MBIA
3.21% , SIL , Silver Miners Global X, SIL
6.42% , PHM , PULTE HOMES
3.24% , LO , Lorillard, Inc. LO
1.08% , FPX , IPOs, First Tr IPOX-100, FPX
1.81% , EWO , Austria Index, EWO
5.42% , BBY , BEST BUY
3.13% , BBBY , BED BATH BEYOND
2.74% , BIDU , Baidu, Inc., BIDU
2.67% , HMA , HEALTH MGMT STK A
1.21% , PHO , Water Resources, PHO
2.28% , TYC , TYCO INTL
1.11% , EWK , Belgium Index, EWK
0.48% , PXN , Nanotech Lux, PXN
2.98% , TER , TERADYNE
1.73% , EIS , Israel MSCI iS, EIS
2.42% , BMC.O , BMC SOFTWARE
2.97% , WYN , Wyndham Worldwide
3.22% , XHB , Homebuilders SPDR, XHB
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-8.23% , A , AGILENT TECH
-4.38% , STJ , ST JUDE MEDICAL
-7.35% , NIHD , NII Holdings, Inc.
-3.09% , WMT , WAL MART STORES
-1.19% , PSQ , Short 100% QQQ, PSQ
-2.21% , GILD , Gilead Sciences Inc
-1.78% , DLTR , Dollar Tree Stores Inc
-2.40% , QID , Short 200% QQQ PS, QID
-1.37% , XBI , Biotech SPDR, XBI
-1.40% , ED , CON ED
-2.76% , WAT , WATERS
-2.17% , CVG , CONVERGYS
-1.16% , ABC , AMERISOURCEBERGN
-1.52% , SDS , Short 200% S&P 500 PS, SDS
-0.74% , SH , Short 100% S&P 500, SH
-1.32% , DXD , Short 200% Dow 30 PS, DXD
-0.78% , GPS , GAP
-0.37% , TLH , Bond 10-20 Year US Treas, TLH
-0.72% , DOG , Short 100% Dow 30, DOG
-0.89% , FXI , China 25 iS, FXI
-0.94% , PKI , PERKINELMER
-0.42% , PJP , Pharmaceuticals, PJP
-1.36% , PCG , PG&E
-1.75% , TMO , THERMO ELECTRON
-0.73% , IYZ , Telecom DJ US, IYZ
-0.48% , CMA , COMERICA
-0.52% , HNZ , HJ HEINZ
-0.34% , DHR , DANAHER
-0.36% , BSX , BOSTON SCIENT
-0.75% , MDP , MEREDITH
-0.44% , MRO , MARATHON OIL
-0.31% , IDU , Utilities DJ, IDU
-0.37% , BDX , BECTON DICKINSON
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
5.29% Spain Index, EWP
3.22% Homebuilders SPDR, XHB
2.60% Networking, IGN
2.31% Italy Index, EWI
1.95% Metals & Mining SPDR, XME
1.91% EMU Europe Index, EZU
1.81% France Index, EWQ
1.81% Austria Index, EWO
1.74% Brazil Index, EWZ
1.67% Semiconductor SPDR, XSD
1.66% WilderHill Clean Energy PS, PBW
1.57% Semiconductor iS IGW, SOXX
1.52% Technology DJ US, IYW
1.51% Energy & Nat Res iS GS, IGE
1.51% South Africa Index, EZA
1.49% Info Tech VIPERs, VGT
1.48% Silver Trust iS, SLV
1.48% Materials SPDR, XLB
1.43% Canada Index, EWC
1.41% Australia Index, EWA
1.40% Germany Index, EWG
1.39% Basic Materials DJ US, IYM
1.39% Value EAFE MSCI, EFV
1.36% Technology SPDR, XLK
1.32% Turkey MSCI iS, TUR
1.31% Japan Index, EWJ
1.24% Foreign LargeCap EAFE MSCI iS, EFA
1.24% Latin Am 40, ILF
1.21% Water Resources, PHO
1.19% QQQ Nasdaq 100 Trust, QQQ
1.19% Pacific VIPERs, VPL
1.16% Europe 350 S&P Index, IEV
1.12% European VIPERs, VGK
1.11% Belgium Index, EWK
1.10% SmallCap Blend S&P 600 iS, IJR
1.10% Global LargeCap Blend MSCI iS, ACWI
1.09% Microcap Russell, IWC
1.08% Energy Global, IXC
1.07% SmallCap Value Russell 2000 iS, IWN
1.06% Pacific ex-Japan, EPP
1.05% Oil, Crude, U.S. Oil Fund, USO
1.05% SmallCap Blend Russell 2000 iS, IWM
1.04% Growth SmallCap VIPERs, VBK
1.04% Energy DJ, IYE
1.03% SmallCap Growth Russell 2000 iS, IWO
1.02% Emerging VIPERs, VWO
1.01% Industrial SPDR, XLI
1.01% Energy VIPERs, VDE
1.00% South Korea Index, EWY
1.00% Capital Markets KWB ST, KCE
0.99% SmallCap Value S&P 600 iS, IJS
0.98% Small Cap VIPERs, VB
0.97% MidCap Growth S&P 400 iS, IJK
0.96% Global ex U.S. LargeCap Blend, ACWX
0.96% Growth VIPERs, VUG
0.95% Netherlands Index, EWN
0.95% SmallCap Blend EAFE MSCI iS, SCZ
0.95% SmallCap Growth S&P 600 iS, IJT
0.94% Russia MV, RSX
0.93% Dividend ex-U.S. DJ iS, IDV
0.92% Emerging Markets MSCI iS, EEM
0.92% Global 100, IOO
0.90% MidCap Blend S&P 400 iS, IJH
0.89% Energy SPDR, XLE
0.88% MidCap S&P 400 SPDRs, MDY
0.87% LargeCap Blend Russell 3000 iS, IWV
0.87% Taiwan Index, EWT
0.86% LargeCap Blend S&P=Weight R, RSP
0.84% MidCap Value S&P 400 iS, IJJ
0.84% Growth MidCap Russell, IWP
0.82% Consumer Discretionary SPDR, XLY
0.80% Switzerland Index, EWL
0.80% MidCap Russell, IWR
0.80% Growth EAFE MSCI, EFG
0.79% Value SmallCap VIPERS, VBR
0.79% Frontier Markets Guggenheim , FRN
0.78% LargeCap Value S&P 500 iS, IVE
0.76% Blend Total Market VIPERs, VTI
0.76% REIT VIPERs, VNQ
0.76% LargeCap Growth S&P 500 iS, IVW
0.75% Value LargeCap Dynamic PS, PWV
0.75% LargeCap Growth Russell 1000 iS, IWF
0.75% LargeCap Blend Russell 1000 iS, IWB
0.75% Realty Cohen & Steers, ICF
0.74% S&P 500 SPDRs LargeCap Blend, SPY
0.73% LargeCap VIPERs, VV
0.73% Real Estate US DJ iS, IYR
0.73% REIT Wilshire, RWR
0.71% LargeCap Blend S&P 500 iS, IVV
0.69% Value MidCap Russell, IWS
0.68% LargeCap Blend S&P 100, OEF
0.67% Financial SPDR, XLF
0.66% Dividend Appreciation Vipers, VIG
0.65% LargeCap Value Russell 1000 iS, IWD
0.65% DIAMONDS (DJIA), DIA
0.60% Financial DJ US, IYF
0.60% Gold Shares S.T., GLD
0.60% Dividend International, PID
0.59% Transportation Av DJ, IYT
0.57% Financial Services DJ, IYG
0.56% Indonesia MV, IDX
0.55% Oil Fund PowerShares, DBO
0.54% Value VIPERs, VTV
0.54% Financials VIPERs, VFH
0.52% United Kingdom Index, EWU
0.51% Dividend SPDR, SDY
0.50% Chile MSCI iS, ECH
0.49% Dividend U.S. DJ iS, DVY
0.44% Emerging 50 BLDRS, ADRE
0.42% Dividend High Yield Equity PS, PEY
0.39% Sweden Index, EWD
0.39% Commodity Tracking, DBC
0.38% Singapore Index, EWS
0.37% Bond, High Yield Corp iBoxx iS, HYG
0.35% India PS, PIN
0.25% Consumer Staples SPDR, XLP
0.23% Bond, High-Yield Junk, JNK
0.17% Mexico Index, EWW
0.14% Malaysia Index, EWM
0.06% India Earnings WTree, EPI
0.04% Thailand MSCI iS, THD
0.03% Preferred Stock iS, PFF
0.01% Bond Treasury Short-Term iS, SHV
0.00% China LargeCap Growth G D H USX PS, PGJ
-0.01% Bond, 1-3 Year Treasury, SHY
-0.06% Hong Kong Index, EWH
-0.07% Bond Ex-US Treas, BWX
-0.10% Financial Preferred, PGF
-0.12% Bond, Muni S&P ATM-Free iS, MUB
-0.13% Bond, Intermediate US Aggregate iS, AGG
-0.18% Bond, Emerg Mkt JPM iS, EMB
-0.24% Utilities VIPERs, VPU
-0.24% Utilities SPDR, XLU
-0.24% Bond, 10 Year Treasury, IEF
-0.24% Bond, TIPS U.S. Treasury iS, TIP
-0.26% Health Care SPDR, XLV
-0.30% Bond, Long-Term Corp iBoxx iS, LQD
-0.37% Agriculture DB PS, DBA
-0.73% Telecom DJ US, IYZ
-0.74% Bear, Short S&P 500, SH
-0.85% Bond, 20+ Years Treasury, TLT
