Although minor counter-trend reversals are common within any kind of trend, such reversals are typically short lived.
CRB, Crude Oil, Silver, and Gold recovered most of their previous day’s losses, but that does not change the short-term downtrends.
U.S. Treasury Bond nearest futures contract price broke down below 2-week lows, suggesting a short-term downtrend. Intermediate-term, the Bond rose above the highs of the previous 6 months on 6/1/11, reconfirming a significant uptrend.
S&P 500 Composite (SPX, 1,287.87) rose 16.04 points or 1.26%, thereby recovering most of Friday’s steeper loss. Volume fell 4% on the NYSE, however, denying confirmation of the gain for SPX.
Technology SPDR stock sector ETF Relative Strength Ratio (XLK/SPY) fell further below 16-month 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.
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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
17.47% , JCP , JC PENNEY
1.92% , PEJ , Leisure & Entertainment, PEJ
11.83% , LO , Lorillard, Inc. LO
1.80% , ITF , Japan LargeCap Blend TOPIX 150, ITF
1.49% , PST , 200% Short Bond 7-10 Yr T, PST
12.61% , ODP , OFFICE DEPOT
1.03% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
4.55% , BBY , BEST BUY
2.49% , FEZ , Euro STOXX 50, FEZ
2.14% , EWD , Sweden Index, EWD
3.81% , AET , AETNA
2.69% , QLGC , QLOGIC
5.44% , GNTX , Gentex Corporation
3.38% , BIIB , BIOGEN IDEC
7.47% , BC , BRUNSWICK
0.96% , PSTL , Steel Global PS ETF, PSTL
1.33% , KCE , Capital Markets KWB ST, KCE
1.62% , VO , MidCap VIPERs, VO
4.41% , KBH , KB HOME
1.64% , PMR , Retail, PMR
3.50% , TLAB , TELLABS
1.18% , JKI , Value MidCap iS M, JKI
2.45% , XHB , Homebuilders SPDR, XHB
6.60% , BHH , Internet B2B H, BHH
2.01% , DHR , DANAHER
4.35% , EK , EASTMAN KODAK
2.12% , PXQ , Networking, PXQ
5.24% , LPX , LOUISIANA PAC
1.43% , IGV , Software, IGV
3.30% , SNV , SYNOVUS
4.46% , MRO , MARATHON OIL
1.61% , JKG , MidCap Blend Core iS M, JKG
2.07% , FPX , IPOs, First Tr IPOX-100, FPX
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.26% , COF , CAPITAL ONE FNCL
-0.81% , K , KELLOGG
-1.35% , PSQ , Short 100% QQQ, PSQ
-0.62% , PWER , POWER ONE
-1.59% , TUR , Turkey MSCI iS, TUR
-0.79% , IEF , Bond, 10 Year Treasury, IEF
-1.51% , TLT , Bond, 20+ Years Treasury, TLT
-0.81% , KR , KROGER
-0.57% , AES , AES
-1.22% , RIMM , RESEARCH IN MOTION LTD
-1.00% , DOG , Short 100% Dow 30, DOG
-0.24% , CTSH , Cognizant Technology Solutions
-0.29% , MHS , MEDCO HEALTH
-2.64% , SDS , Short 200% S&P 500 PS, SDS
-0.27% , AGG , Bond, Aggregate, AGG
-2.40% , MS , MORGAN STANLEY
-0.18% , BWX , Bond Ex-US Treas, BWX
-0.08% , SHY , Bond, 1-3 Year Treasury, SHY
-0.31% , GS , GOLDMAN SACHS
-1.24% , SH , Short 100% S&P 500, SH
-0.14% , VZ , VERIZON COMMS
-0.05% , EMB , Bond EmrgMkt JPM iS, EMB
-0.21% , ABT , ABBOTT LABS
-0.27% , TIP , Bond, TIPS, TIP
-0.19% , AXP , AMERICAN EXPRESS
-0.15% , ECH , Chile MSCI iS, ECH
-0.02% , NEE , NextEra Energy Resources LLC
-0.16% , JPM , J P MORGAN CHASE
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) has been trading with a bearish bias since peaking on 10/14/10. 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) remains neutral, with the 50-day SMA below the 200-day SMA.
NASDAQ Composite/S&P 500 Relative Strength Ratio entered a downside correction since peaking on 1/18/11 and fell below 12-week lows on 6/13/11. Absolute price fell below 12-week lows on 6/13/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell further below 28-year lows on 5/26/11, again reconfirming its preexisting bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down further below 4-month lows on 6/13/11 and has been in a downside correction since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below 13-week lows on 6/13/11. The Ratio set an all-time high on 4/5/11. Price also fell below 13-week lows.
Crude Oil nearest futures contract price recovered most of the previous day’s loss on 6/14/11, but that does not change the short-term downtrend. Oil broke down below 3-week lows on 6/13/11, suggesting a short-term downtrend. Recent data from the Commodity Futures Trading Commission showed hedge-fund and other money managers increased net long positions in Oil–which could prove to be bearish when this hot money rushes for the exits. 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 103.39, 104.60, 105.16, 114.83, 115.27, 120.42, 130.0, and 147.27.
Gold nearest futures contract price recovered most of the previous day’s loss on 6/14/11, but that does not change the short-term downtrend. Gold broke down below 2-week lows on 6/13/11, confirming a short-term downtrend. On 6/9/11, when Gold was 1542.7, I noted that the Gold “price appears to have stalled out since 6/6/11. Gold’s 5-week countertrend bounce might be weakening. Reward/Risk does not appear attractive. It seems possible that Gold has finally topped out at 1577.4 after rising 132% from 681 in October, 2008.” 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: 1577.4.
Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) fell further below 27-month lows on 6/13/11. The Ratio has been falling steeply since 4/8/11 and remains bearish.
Silver nearest futures contract price recovered about half of the previous day’s loss on 6/14/11, but that does not change the short-term downtrend. Silver broke down below 3-week lows on 6/13/11, reconfirming a downside correction. Silver fell 35% from 49.82 on 4/25/11 to 32.3 on 5/12/11, breaking down below 10-week lows. 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: 38.845, 39.38, 39.47, 49.82, 49.845 and 50.35.
Silver/Gold Ratio entered a steep downtrend since the peak on 4/28/11. Although the Ratio has stabilized somewhat since making a low on 5/16/11, it probably remains bearish.
Copper nearest futures contract price rose above 5-day highs on 6/14/11, suggesting a possible short-term bounce attempt. But there is reason for skepticism: Copper broke down below 2-week lows on 6/13/11, reconfirming a short-term downside correction. Longer term, Copper broke down below previous 5-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. Support 3.9505, 3.8535, 3.846, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.2125, 4.402, 4.533, 4.554, 4.6495, 4.6535, and 4.6575.
U.S. Treasury Bond nearest futures contract price broke down below 2-week lows on 6/14/11, suggesting a short-term downtrend. Intermediate-term, the Bond rose above the highs of the previous 6 months on 6/1/11, reconfirming a significant uptrend. 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 123.18, 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 126.10, 127.19, 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 further below 6-month lows on 6/13/11. Absolute price of JNK broke down below 8-month lows on 6/13/11. Both confirm a bearish trend for JNK.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 6 months on 6/10/11, again reconfirming a significant downtrend. TIP/IEF entered a downtrend after peaking on 4/8/11. This downtrend means that fixed-income investors prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Inflation expectations are still waning.
The U.S. dollar nearest futures contract price eased moderately lower over the past 2 trading days, but the larger trend of the USD has been firming somewhat since the low at 73.325 set on 5/2/11. That could be either consolidation or base building. Support 73.88, 73.515, 73.325, 72.86, and 70.80. Resistance 76.54, 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 40.9% Bulls versus 22.6% Bears as of 6/8/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. This is near normal, since the Ratio’s 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.64. Note that Advisory Service Sentiment as of 4/6/11 rose to 3.65, its highest level in the 8 years since the 20-year high of 3.74 set on 6/18/03. The market has been working off that excess by correcting to the downside.
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.
As of the close on June 6, 2011, the Dow Theory confirmed a Secondary Reaction (a significant downside correction) for the general stock market, as the Dow Industrials and Transports both closed below 10-week lows. Previously, as of June 1, 2011, the Dow Theory gave a warning of a significant downside correction for the general stock market, as the Dow Industrials and Transports both closed below 5-week lows.
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 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.
S&P 500 Composite (SPX, 1,287.87) rose 16.04 points or 1.26%, thereby recovering most of Friday’s steeper loss.
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, high of 5/10/11
1346.82, high of 5/19/11
1294.70, low of 4/18/11
S&P 500 Cash Index Potential Support
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
3.04% Silver Miners Global X, SIL
2.75% Metals & Mining SPDR, XME
2.60% Australia Index, EWA
2.52% South Korea Index, EWY
2.47% Thailand MSCI iS, THD
2.45% Homebuilders SPDR, XHB
2.41% Austria Index, EWO
2.40% China LargeCap Growth G D H USX PS, PGJ
2.36% Silver Trust iS, SLV
2.33% Italy Index, EWI
2.33% WilderHill Clean Energy PS, PBW
2.28% Growth SmallCap VIPERs, VBK
2.25% Growth SmallCap R 2000, IWO
2.21% SmallCap S&P 600, IJR
2.20% Oil, Crude, U.S. Oil Fund, USO
2.19% EMU Europe Index, EZU
2.17% Germany Index, EWG
2.15% SmallCap Russell 2000, IWM
2.14% Sweden Index, EWD
2.14% France Index, EWQ
2.14% Energy & Nat Res iS GS, IGE
2.13% Energy SPDR, XLE
2.12% Growth BARRA Small Cap 600, IJT
2.11% Basic Materials DJ US, IYM
2.11% Small Cap VIPERs, VB
2.11% Value SmallCap S&P 600 B, IJS
2.08% Pacific ex-Japan, EPP
2.05% Spain Index, EWP
2.05% Energy Global, IXC
2.03% Energy VIPERs, VDE
2.01% Value EAFE MSCI, EFV
2.00% Value SmallCap Russell 2000, IWN
2.00% Japan Index, EWJ
1.99% Energy DJ, IYE
1.98% Value SmallCap VIPERS, VBR
1.96% Pacific VIPERs, VPL
1.93% Materials SPDR, XLB
1.92% Semiconductor SPDR, XSD
1.91% Netherlands Index, EWN
1.90% Industrial SPDR, XLI
1.90% Water Resources, PHO
1.89% Networking, IGN
1.88% Microcap Russell, IWC
1.83% MidCap S&P 400 SPDRs, MDY
1.82% Canada Index, EWC
1.80% Transportation Av DJ, IYT
1.80% MidCap S&P 400 iS, IJH
1.77% EAFE Index, EFA
1.77% Consumer Discretionary SPDR, XLY
1.77% Growth MidCap 400 B, IJK
1.76% Semiconductor iS IGW, SOXX
1.74% Growth MidCap Russell, IWP
1.74% Value MidCap S&P 400 B, IJJ
1.72% Taiwan Index, EWT
1.72% Mexico Index, EWW
1.70% Value MidCap Russell, IWS
1.64% European VIPERs, VGK
1.62% Belgium Index, EWK
1.62% MidCap Russell, IWR
1.61% LargeCap Blend S&P=Weight R, RSP
1.59% Russia MV, RSX
1.57% Real Estate US DJ, IYR
1.55% India Earnings WTree, EPI
1.55% Oil Fund PowerShares, DBO
1.53% Growth 1000 Russell, IWF
1.52% Growth VIPERs, VUG
1.51% Emerging Markets, EEM
1.49% Global ex US ACWI iS, ACWX
1.49% REIT VIPERs, VNQ
1.47% Dividend DJ Select, DVY
1.46% India PS, PIN
1.46% Technology DJ US, IYW
1.45% Growth EAFE MSCI, EFG
1.43% Realty Cohen & Steers, ICF
1.42% Info Tech VIPERs, VGT
1.42% Emerging VIPERs, VWO
1.41% Europe 350 S&P Index, IEV
1.41% Growth S&P 500/BARRA, IVW
1.40% Small Cap EAFE MSCI iS, SCZ
1.38% Blend Total Market VIPERs, VTI
1.35% LargeCap Blend Russell 3000, IWV
1.33% Capital Markets KWB ST, KCE
1.33% REIT Wilshire, RWR
1.31% LargeCap 1000 R, IWB
1.30% LargeCap VIPERs, VV
1.28% QQQ Nasdaq 100 Trust, QQQ
1.27% S&P 500 SPDRs LargeCap Blend, SPY
1.26% Latin Am 40, ILF
1.26% Dividend Appreciation Vipers, VIG
1.26% S&P 500 iS LargeCap Blend, IVV
1.25% Technology SPDR, XLK
1.23% Dividend SPDR, SDY
1.20% Emerging 50 BLDRS, ADRE
1.20% China 25 iS, FXI
1.16% Global 100, IOO
1.13% Value S&P 500 B, IVE
1.12% United Kingdom Index, EWU
1.10% Value VIPERs, VTV
1.08% Value LargeCap Dynamic PS, PWV
1.07% Value 1000 Russell, IWD
1.07% Brazil Index, EWZ
1.07% LargeCap Blend S&P 100, OEF
1.06% Consumer Staples SPDR, XLP
1.06% Dividend High Yield Equity PS, PEY
1.05% Indonesia MV, IDX
1.04% DIAMONDS (DJIA), DIA
1.00% Dividend International, PID
0.99% South Africa Index, EZA
0.95% Telecom DJ US, IYZ
0.92% Hong Kong Index, EWH
0.86% Health Care SPDR, XLV
0.81% Bond, High-Yield Junk, JNK
0.75% Biotech SPDR, XBI
0.75% Frontier Markets Guggenheim , FRN
0.74% Malaysia Index, EWM
0.74% Singapore Index, EWS
0.71% Financial DJ US, IYF
0.70% Commodity Tracking, DBC
0.64% Financials VIPERs, VFH
0.63% Bond, High-Yield Corporate, HYG
0.61% Gold Shares S.T., GLD
0.59% Switzerland Index, EWL
0.50% Financial SPDR, XLF
0.39% Utilities SPDR, XLU
0.38% Financial Services DJ, IYG
0.28% Preferred Stock iS, PFF
0.25% Utilities VIPERs, VPU
0.23% Financial Preferred, PGF
0.12% Bond Muni ATM-Free S&P iS, MUB
0.01% Bond Treasury Short-Term iS, SHV
-0.05% Bond EmrgMkt JPM iS, EMB
-0.08% Bond, 1-3 Year Treasury, SHY
-0.15% Chile MSCI iS, ECH
-0.18% Bond Ex-US Treas, BWX
-0.27% Bond, Aggregate, AGG
-0.27% Bond, TIPS, TIP
-0.27% Agriculture DB PS, DBA
-0.30% Bond, Corp, LQD
-0.79% Bond, 10 Year Treasury, IEF
-1.51% Bond, 20+ Years Treasury, TLT
-1.59% Turkey MSCI iS, TUR
