Stock price indexes tested 4-year highs in August, but they failed the test. The S&P 500 (SPX: 1,406.58) rose above 2011-2012 highs intraday on 8/21/12 but reversed and could not close at a new high. SPX ended that week with a loss of 0.50%. SPX lost another 0.32% last week.
The number of stocks making new highs in August has been but a fraction of July’s peak numbers, thereby indicating bearish divergence.
The absolute prices of the following sector ETFs broke down below 4-week lows on Thursday 8/30/12:
Energy sector ETF (XLE)
Industrial sector ETF (XLI)
Utilities sector ETF (XLU)
Materials sector ETF (XLB)
Emerging Markets Stocks ETF (EEM) and iShares MSCI BRIC Fund (BKF) Relative Strength Ratios both fell below lows of the previous 3 years on 8/30/12, reconfirming bearish major trends.
The Dow-Jones Industrial, Transportation, Utility, and Composite Averages all broke down below 4-week lows on Thursday, 8/30/12. The Transports fell below 50- and 200-day SMAs on 8/27/12, thereby turning systematically bearish again.
Investors Intelligence Sentiment shows that stock market newsletter advisors are too bullish. As of 8/29/12, there were 48.9% Bulls and 24.5% Bears. This 48.9% Bulls is the largest percentage of Bulls since 4/4/12, just 2 days after the SPX high close for the year and the beginning of an 11% decline for the S&P 500 index stretching over 60 days.
The technical condition of the stock market does not support the optimism of the bullish majority of stock investors and traders.
The S&P 500 (SPX: 1,406.58) rose 7.10 points or 0.51% on Friday. SPX fell 0.32% for the week. SPX broke below 3-week lows on Thursday, 8/30/12.
NYSE volume rose 16% on Friday but still was 23% below its 200-day SMA. Volume has been falling to its lowest levels in 13 years, reflecting diminishing enthusiasm for stocks. The chart* above clearly shows that the NYSE Volume 50-day SMA (green line) and 200-day SMA (red line) are the lowest in 13 years, and both are trending down.
MACD and other price momentum indicators have rolled over and given sell signals, as shown in the chart* above.
On-Balance Volume for the SPX remains in a downtrend with bearish divergence, as shown in the chart* above.
NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price: it recovered only a little more than 61.8% of its March-June loss while the S&P 500 recovered 100%. Clearly, 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.
While the S&P 500 Composite Price Index recovered nearly all of its April-June loss, both the percentage of these same 500 stocks that were above their 200-day SMAs and the percentage in bullish Point-and-Figure Chart uptrends recovered much less of their losses. Both indicators failed to confirm the strength in the S&P 500. Both are diverging bearishly. The percentage of these 500 stocks that are above their 50-day SMAs and the percentage above their 200-day SMAs both broke below 4-week lows on Thursday, 8/30/12.
With the stock price indexes far above their 4-year lows and still 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.
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) rose above its 50-day SMA on 8/31/12 turning systematically bullish again.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) rose above its 50-day SMA on 8/31/12 turning systematically bullish again.
Silver, iShares Silver Trust ETF (SLV) price rose above its 200-day SMA on Friday, 8/31/12.
*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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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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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
1426.68, high of 8/21/2012
1422.38, high of 4/2/2012
1418.71, high of 8/17/2012
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
1376.52, 50-day SMA
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
1338.02, 200-day SMA
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
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
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) remains systematically neutral: below its 50-day SMA, below its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 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, above 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 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) 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 200-day SMA on 8/22/12 but remains systematically neutral. GLD remains above its 50-day SMA, but its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. Support: 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 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, thereby turning systematically neutral. 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 rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. SLV price rose above its 200-day SMA on 8/31/12. The price 50-day SMA has remained below its 200-day SMA every day since 10/27/11. Support 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 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) rose above its 200-day SMA on 8/31/12 but remains systematically neutral. SLV/GLD remains above its 50-day SMA, but its 50-day SMA has stayed below its 200-day SMA every day since 8/30/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price whipsawed back above its 50-day SMA on 8/21/12, thereby turning systematically neutral again for the short term. Longer term, 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.
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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
5.30% , SIL , Silver Miners Global X, SIL
2.52% , TUR , Turkey MSCI iS, TUR
0.62% , RPV , Value S&P 500, RPV
2.80% , EWI , Italy Index, EWI
4.59% , SLV , Silver Trust iS, SLV
3.78% , EWP , Spain Index, EWP
4.39% , NEM , NEWMONT MINING
1.13% , IXC , Energy Global, IXC
2.31% , GLD , Gold Shares S.T., GLD
2.46% , SNV , SYNOVUS
1.05% , DBC , Commodity Tracking, DBC
2.13% , NIHD , NII Holdings, Inc.
0.56% , IYG , Financial Services DJ, IYG
1.27% , EWK , Belgium Index, EWK
1.23% , SCZ , Small Cap EAFE MSCI iS, SCZ
2.23% , IAU , Gold COMEX iS, IAU
3.57% , GT , GOODYEAR TIRE
1.18% , EWQ , France Index, EWQ
0.71% , TLH , Bond 10-20 Year US Treas, TLH
0.93% , IWF , Growth 1000 Russell, IWF
3.18% , GLW , CORNING
2.53% , TXT , TEXTRON
1.61% , EZU , EMU Europe Index, EZU
1.34% , EWG , Germany Index, EWG
0.51% , KCE , Capital Markets KWB ST, KCE
1.60% , AIG , AMER INTL GROUP
1.21% , COP , CONOCOPHILLIPS
0.50% , IYY , LargeCap Blend Total Market DJ, IYY
2.05% , EWO , Austria Index, EWO
1.92% , PMCS , PMC SIERRA
1.31% , IXG , Financials Global LargeCap Value, IXG
1.41% , TLT , Bond, 20+ Years Treasury, TLT
0.68% , JKH , MidCap Growth iS M, JKH
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.81% , ISI , LargeCap Blend S&P 1500 iS, ISI
-2.74% , TBT , 200% Short US T Bond, TBT
-1.41% , DXD , Short 200% Dow 30 PS, DXD
-1.38% , PM , Philip Morris, PM
-0.31% , DTE , DTE ENERGY
-0.94% , CMA , COMERICA
-0.85% , AEE , AMEREN
-0.96% , SDS , Short 200% S&P 500 PS, SDS
-1.40% , QID , Short 200% QQQ PS, QID
-1.26% , NFLX , Netflix, NFLX
-0.68% , PSQ , Short 100% QQQ, PSQ
-0.60% , ADBE , ADOBE SYS
-0.78% , FMCN , Focus Media, FMCN
-1.30% , QLGC , QLOGIC
-0.79% , LO , Lorillard, Inc. LO
-1.00% , CCL , CARNIVAL STK A
-1.22% , PST , 200% Short Bond 7-10 Yr T, PST
-1.39% , MO , ALTRIA, MO
-0.30% , AIV , APT INV MNGMT
-0.63% , CNP , CENTERPNT ENERGY
-1.00% , RF , REGIONS FINAN
-0.16% , MRK , MERCK & CO
-0.36% , EQR , EQUITY RESIDENT BEN INT
-0.53% , LM , LEGG MASON
-1.25% , CECO , CAREER EDUCATION CORP
-0.22% , AN , AUTONATION
-0.30% , PIC , Insurance, PIC
-1.13% , MZZ , Short 200% MidCap 400 PS, MZZ
-0.11% , XLU , Utilities SPDR, XLU
-0.55% , BSX , BOSTON SCIENT
-0.20% , DOW , DOW CHEMICAL
-0.41% , HOLX , Hologic, Inc., HOLX
-0.18% , PDCO , Patterson Dental Company
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.59% Silver Trust iS, SLV
3.78% Spain Index, EWP
2.80% Italy Index, EWI
2.52% Turkey MSCI iS, TUR
2.31% Gold Shares S.T., GLD
2.05% Austria Index, EWO
1.87% Thailand MSCI iS, THD
1.79% Oil, Crude, U.S. Oil Fund, USO
1.75% Indonesia MV, IDX
1.70% Singapore Index, EWS
1.64% Oil Fund PowerShares, DBO
1.61% EMU Europe Index, EZU
1.59% Metals & Mining SPDR, XME
1.49% Sweden Index, EWD
1.47% Energy & Nat Res iS GS, IGE
1.45% Pacific ex-Japan, EPP
1.45% Netherlands Index, EWN
1.44% Taiwan Index, EWT
1.41% Bond, 20+ Years Treasury, TLT
1.38% Dividend ex-U.S. DJ iS, IDV
1.34% Germany Index, EWG
1.27% Belgium Index, EWK
1.25% Australia Index, EWA
1.24% Homebuilders SPDR, XHB
1.23% SmallCap Blend EAFE MSCI iS, SCZ
1.21% Basic Materials DJ US, IYM
1.20% Semiconductor iS IGW, SOXX
1.19% European VIPERs, VGK
1.19% South Africa Index, EZA
1.18% France Index, EWQ
1.15% Value EAFE MSCI, EFV
1.13% Hong Kong Index, EWH
1.13% Energy Global, IXC
1.09% Semiconductor SPDR, XSD
1.05% Commodity Tracking, DBC
1.00% Energy SPDR, XLE
0.97% WilderHill Clean Energy PS, PBW
0.96% Materials SPDR, XLB
0.95% Emerging Markets MSCI iS, EEM
0.94% Europe 350 S&P Index, IEV
0.93% LargeCap Growth Russell 1000 iS, IWF
0.92% Canada Index, EWC
0.91% Energy DJ, IYE
0.90% Global ex U.S. LargeCap Blend, ACWX
0.90% Energy VIPERs, VDE
0.89% Switzerland Index, EWL
0.88% Foreign LargeCap EAFE MSCI iS, EFA
0.82% Emerging VIPERs, VWO
0.82% South Korea Index, EWY
0.79% Technology SPDR, XLK
0.77% Growth EAFE MSCI, EFG
0.75% Info Tech VIPERs, VGT
0.75% Global 100, IOO
0.75% Brazil Index, EWZ
0.74% DIAMONDS (DJIA), DIA
0.73% Financial SPDR, XLF
0.72% China LargeCap Growth G D H USX PS, PGJ
0.71% Growth MidCap Russell, IWP
0.69% Bond, Long-Term Corp iBoxx iS, LQD
0.69% Chile MSCI iS, ECH
0.69% Global LargeCap Blend MSCI iS, ACWI
0.66% QQQ Nasdaq 100 Trust, QQQ
0.65% Technology DJ US, IYW
0.65% Bond, 10 Year Treasury, IEF
0.64% Emerging 50 BLDRS, ADRE
0.63% MidCap S&P 400 SPDRs, MDY
0.62% MidCap Growth S&P 400 iS, IJK
0.61% Industrial SPDR, XLI
0.61% Dividend International, PID
0.60% Pacific VIPERs, VPL
0.60% Blend Total Market VIPERs, VTI
0.57% LargeCap Blend S&P 500 iS, IVV
0.57% Financial DJ US, IYF
0.56% Financial Services DJ, IYG
0.56% SmallCap Value Russell 2000 iS, IWN
0.56% Russia MV, RSX
0.56% Latin Am 40, ILF
0.55% Malaysia Index, EWM
0.55% Dividend Appreciation Vipers, VIG
0.55% Value MidCap Russell, IWS
0.54% Growth VIPERs, VUG
0.54% MidCap Russell, IWR
0.52% Bond Ex-US Treas, BWX
0.52% LargeCap VIPERs, VV
0.51% Capital Markets KWB ST, KCE
0.51% MidCap Blend S&P 400 iS, IJH
0.50% MidCap Value S&P 400 iS, IJJ
0.49% Growth SmallCap VIPERs, VBK
0.49% LargeCap Growth S&P 500 iS, IVW
0.49% LargeCap Value S&P 500 iS, IVE
0.48% S&P 500 SPDRs LargeCap Blend, SPY
0.47% Value VIPERs, VTV
0.47% Value LargeCap Dynamic PS, PWV
0.47% Frontier Markets Guggenheim , FRN
0.46% Bond, TIPS U.S. Treasury iS, TIP
0.46% LargeCap Blend S&P 100, OEF
0.45% LargeCap Blend S&P=Weight R, RSP
0.44% LargeCap Value Russell 1000 iS, IWD
0.44% Financials VIPERs, VFH
0.44% Microcap Russell, IWC
0.42% Consumer Discretionary SPDR, XLY
0.41% United Kingdom Index, EWU
0.41% SmallCap Blend Russell 2000 iS, IWM
0.40% LargeCap Blend Russell 1000 iS, IWB
0.40% SmallCap Blend S&P 600 iS, IJR
0.40% Real Estate US DJ iS, IYR
0.37% LargeCap Blend Russell 3000 iS, IWV
0.37% Small Cap VIPERs, VB
0.37% Value SmallCap VIPERS, VBR
0.36% China 25 iS, FXI
0.33% Biotech SPDR, XBI
0.33% Financial Preferred, PGF
0.32% REIT VIPERs, VNQ
0.31% Bond, Intermediate US Aggregate iS, AGG
0.31% Health Care SPDR, XLV
0.30% SmallCap Growth S&P 600 iS, IJT
0.30% SmallCap Growth Russell 2000 iS, IWO
0.30% Dividend SPDR, SDY
0.29% Realty Cohen & Steers, ICF
0.29% SmallCap Value S&P 600 iS, IJS
0.27% Bond, High-Yield Junk, JNK
0.27% Water Resources, PHO
0.26% Bond, High Yield Corp iBoxx iS, HYG
0.26% Transportation Av DJ, IYT
0.25% Telecom DJ US, IYZ
0.24% REIT Wilshire, RWR
0.18% India Earnings WTree, EPI
0.15% Mexico Index, EWW
0.11% Japan Index, EWJ
0.11% Bond, Emerg Mkt JPM iS, EMB
0.10% Preferred Stock iS, PFF
0.06% Bond, 1-3 Year Treasury, SHY
0.04% Networking, IGN
0.04% Bond, Muni S&P ATM-Free iS, MUB
0.03% Agriculture DB PS, DBA
0.03% Consumer Staples SPDR, XLP
0.01% Bond Treasury Short-Term iS, SHV
0.00% Dividend U.S. DJ iS, DVY
0.00% Dividend High Yield Equity PS, PEY
-0.11% Utilities SPDR, XLU
-0.18% Utilities VIPERs, VPU
