The S&P 500 (SPX: 1,385.97) rose 25.95 points or 1.91% on Friday following reports that European Central Bank President Mario Draghi is considering bond buys, a rate cut, and a new LTRO program. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” Mr. Draghi said.
Markets appeared willing to believe–despite the fact that all previous official promises have failed to stop the growing European financial crisis.
For the short term, stocks obviously appear to be hypersensitive to the latest news headlines. The fundamental outlooks for the global economy as well as sales and earnings of companies appear mostly bleak, but that means many traders are now speculating on quantitative easing they expect to be announced after the Fed’s FOMC meeting on Wednesday, 8/1/12. To the extent that quantitative easing might be discounted in advance, however, the market reaction could be surprising.
Looking beyond the unpredictable next few days, and weighing a wide variety of trends and indicators, underlying market conditions suggest that downside risk still may exceed upside potential for the stock market projecting out weeks and months ahead. Choosing safety over risk appears to be the most reasonable approach for conservative investors.
For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
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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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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. Currently, as of 7/27/12, the Industrials are above June-July highs but the Transports continue to lag well below June-July highs.
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
The S&P 500 Composite Potential Support
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
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
1334.60 50-day SMA
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1317.91, 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) fell below its 50-day SMA on 7/26/12, thereby 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 10/26/2012. 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) remains systematically neutral: above its 50-day SMA, above its 200-day SMA, but its 50-day SMA has remained below its 200-day SMA every day since 8/8/11. The 50-200 spread has been narrowing for 4 weeks but still may be weeks away from meeting. Rising food prices could bring trouble for the economy because more consumer spending for food means less consumer spending available for other goods and services.
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 SMA. Support 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 34.84, 35.19, 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 7/25/12, thereby turning systematically neutral from bearish: above its 50-day SMA, below its 200-day SMA, and with its 50-day SMA below the 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) 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) price is 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 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.
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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 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
10.65% , TLAB , TELLABS
2.36% , JKG , MidCap Blend Core iS M, JKG
2.21% , EIS , Israel MSCI iS, EIS
2.29% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
7.39% , GILD , Gilead Sciences Inc
1.85% , IXJ , Healthcare Global, IXJ
4.70% , XME , Metals & Mining SPDR, XME
2.48% , IGM , Technology GS, IGM
5.83% , AMGN , AMGEN
2.56% , IXG , Financials Global LargeCap Value, IXG
1.94% , ISI , LargeCap Blend S&P 1500 iS, ISI
1.43% , PST , 200% Short Bond 7-10 Yr T, PST
3.34% , TBT , 200% Short US T Bond, TBT
3.35% , MMC , MARSH & MCLENNAN
7.87% , AMZN , Amazoncom Inc
6.88% , GT , GOODYEAR TIRE
6.29% , GNW , GENWORTH FINANCIAL
5.46% , FMCN , Focus Media, FMCN
6.11% , AON , AON
5.89% , RIMM , RESEARCH IN MOTION LTD
9.55% , THC , TENET HEALTHCARE
3.52% , GOOG , Google
2.33% , XBI , Biotech SPDR, XBI
3.50% , NWSA , News Corporation, NWSA
1.98% , DGT , Global Titans, DGT
6.16% , HP , Helmerich & Payne HP
2.43% , PIC , Insurance, PIC
2.34% , TUR , Turkey MSCI iS, TUR
4.06% , PWO , OTC Dynamic PS, PWO
2.48% , FDV , Value 40 Large Low P/E FT DB, FDV
3.78% , RSX , Russia MV, RSX
1.88% , IYF , Financial DJ US, IYF
5.60% , PCAR , PACCAR
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-11.43% , QLGC , QLOGIC
-9.42% , SBUX , STARBUCKS
-1.08% , TLH , Bond 10-20 Year US Treas, TLH
-3.40% , NEM , NEWMONT MINING
-2.54% , PFG , PRINCIPAL FINL
-5.53% , PWER , POWER ONE
-4.17% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.07% , LM , LEGG MASON
-1.89% , TLT , Bond, 20+ Years Treasury, TLT
-2.12% , MYY , Short 100% MidCap 400, MYY
-3.67% , SDS , Short 200% S&P 500 PS, SDS
-1.40% , AM , AMER GREETINGS STK A
-2.18% , DHI , D.R. HORTON, DHI
-2.97% , DXD , Short 200% Dow 30 PS, DXD
-0.47% , LQD , Bond, Corp, LQD
-1.87% , SH , Short 100% S&P 500, SH
-4.69% , QID , Short 200% QQQ PS, QID
-2.42% , PSQ , Short 100% QQQ, PSQ
-0.72% , IEF , Bond, 10 Year Treasury, IEF
-0.40% , BMC.O , BMC SOFTWARE
-1.43% , DOG , Short 100% Dow 30, DOG
-0.23% , PBI , PITNEY BOWES
-0.30% , AGG , Bond, Aggregate, AGG
-0.29% , TIP , Bond, TIPS, TIP
-0.23% , HBAN , HUNTINGTON
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
6.11% Spain Index, EWP
4.85% Italy Index, EWI
4.70% Metals & Mining SPDR, XME
3.98% South Korea Index, EWY
3.78% Russia MV, RSX
3.70% EMU Europe Index, EZU
3.63% Brazil Index, EWZ
3.45% France Index, EWQ
3.42% South Africa Index, EZA
3.35% Germany Index, EWG
3.05% Taiwan Index, EWT
3.01% Emerging 50 BLDRS, ADRE
2.94% Emerging VIPERs, VWO
2.86% Latin Am 40, ILF
2.80% Emerging Markets, EEM
2.71% Networking, IGN
2.70% Australia Index, EWA
2.65% China 25 iS, FXI
2.60% Growth SmallCap R 2000, IWO
2.58% Water Resources, PHO
2.56% Telecom DJ US, IYZ
2.56% Capital Markets KWB ST, KCE
2.52% Europe 350 S&P Index, IEV
2.51% Growth SmallCap VIPERs, VBK
2.50% Transportation Av DJ, IYT
2.48% Semiconductor SPDR, XSD
2.46% Value SmallCap S&P 600 B, IJS
2.46% European VIPERs, VGK
2.45% SmallCap S&P 600, IJR
2.45% Semiconductor iS IGW, SOXX
2.40% Microcap Russell, IWC
2.40% Health Care SPDR, XLV
2.38% Value SmallCap Russell 2000, IWN
2.37% SmallCap Russell 2000, IWM
2.37% QQQ Nasdaq 100 Trust, QQQ
2.34% Turkey MSCI iS, TUR
2.33% Austria Index, EWO
2.33% Biotech SPDR, XBI
2.32% China LargeCap Growth G D H USX PS, PGJ
2.32% Value EAFE MSCI, EFV
2.30% Small Cap VIPERs, VB
2.30% Info Tech VIPERs, VGT
2.27% Belgium Index, EWK
2.19% Indonesia MV, IDX
2.19% Industrial SPDR, XLI
2.18% Global ex US ACWI iS, ACWX
2.18% Basic Materials DJ US, IYM
2.17% Technology SPDR, XLK
2.13% Technology DJ US, IYW
2.13% Growth MidCap 400 B, IJK
2.13% Global 100, IOO
2.12% Value MidCap Russell, IWS
2.11% EAFE Index, EFA
2.10% Pacific ex-Japan, EPP
2.08% LargeCap Blend S&P=Weight R, RSP
2.08% MidCap S&P 400 SPDRs, MDY
2.07% Financial Services DJ, IYG
2.07% Sweden Index, EWD
2.05% Value LargeCap Dynamic PS, PWV
2.05% Growth VIPERs, VUG
2.04% Mexico Index, EWW
2.04% MidCap Russell, IWR
2.03% MidCap S&P 400 iS, IJH
2.00% Value SmallCap VIPERS, VBR
2.00% LargeCap Blend Russell 3000, IWV
1.98% Consumer Discretionary SPDR, XLY
1.97% Blend Total Market VIPERs, VTI
1.97% Growth S&P 500/BARRA, IVW
1.96% Growth 1000 Russell, IWF
1.96% Growth MidCap Russell, IWP
1.95% Energy Global, IXC
1.95% S&P 500 iS LargeCap Blend, IVV
1.92% Value MidCap S&P 400 B, IJJ
1.92% LargeCap VIPERs, VV
1.91% Growth BARRA Small Cap 600, IJT
1.91% Netherlands Index, EWN
1.91% LargeCap 1000 R, IWB
1.90% Financial SPDR, XLF
1.89% Value S&P 500 B, IVE
1.88% Financial DJ US, IYF
1.88% Switzerland Index, EWL
1.88% Energy & Nat Res iS GS, IGE
1.86% Dividend International, PID
1.85% Value 1000 Russell, IWD
1.84% Energy DJ, IYE
1.84% S&P 500 SPDRs LargeCap Blend, SPY
1.83% Materials SPDR, XLB
1.83% Hong Kong Index, EWH
1.81% Value VIPERs, VTV
1.81% Energy VIPERs, VDE
1.80% LargeCap Blend S&P 100, OEF
1.77% Energy SPDR, XLE
1.77% Dividend Appreciation Vipers, VIG
1.76% Pacific VIPERs, VPL
1.74% Japan Index, EWJ
1.73% Financials VIPERs, VFH
1.69% Growth EAFE MSCI, EFG
1.68% Dividend SPDR, SDY
1.65% Homebuilders SPDR, XHB
1.60% United Kingdom Index, EWU
1.53% Canada Index, EWC
1.52% DIAMONDS (DJIA), DIA
1.50% WilderHill Clean Energy PS, PBW
1.50% Dividend DJ Select, DVY
1.42% Agriculture DB PS, DBA
1.35% Small Cap EAFE MSCI iS, SCZ
1.29% Dividend High Yield Equity PS, PEY
1.19% Utilities VIPERs, VPU
1.18% Chile MSCI iS, ECH
1.17% Utilities SPDR, XLU
1.14% Consumer Staples SPDR, XLP
1.13% Real Estate US DJ, IYR
1.04% India PS, PIN
1.03% Realty Cohen & Steers, ICF
1.03% Commodity Tracking, DBC
1.02% REIT Wilshire, RWR
0.96% REIT VIPERs, VNQ
0.92% Silver Trust iS, SLV
0.86% Frontier Markets Guggenheim , FRN
0.85% India Earnings WTree, EPI
0.82% Thailand MSCI iS, THD
0.78% Oil, Crude, U.S. Oil Fund, USO
0.67% Oil Fund PowerShares, DBO
0.59% Bond, High-Yield Corporate, HYG
0.54% Singapore Index, EWS
0.49% Gold Shares S.T., GLD
0.43% Bond, High-Yield Junk, JNK
0.34% Bond EmrgMkt JPM iS, EMB
0.28% Preferred Stock iS, PFF
0.17% Bond Ex-US Treas, BWX
0.07% Malaysia Index, EWM
0.05% Financial Preferred, PGF
0.01% Bond Treasury Short-Term iS, SHV
-0.07% Bond, 1-3 Year Treasury, SHY
-0.29% Bond, TIPS, TIP
-0.30% Bond, Aggregate, AGG
-0.42% Bond Muni ATM-Free S&P iS, MUB
-0.47% Bond, Corp, LQD
-0.72% Bond, 10 Year Treasury, IEF
-1.87% Bear, Short S&P 500, SH
-1.89% Bond, 20+ Years Treasury, TLT
