By Robert W. Colby, Senior Analyst TraderPlanet.com
Attempted oversold technical bounce near support?
Utilities, Consumer Staples, and Health Care are strong.
Small Caps, Technology, Industrial, Consumer Discretionary, and Financial are weak.
The stock market may have started an attempted oversold technical bounce. But at the same time, economic and fundamental trends appear hostile to stocks. Relatively weak fundamental reports appear probable for the days and weeks ahead.
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
% Price Change, Symbol, Name
16.22% , APOL , APOLLO GROUP
8.44% , VFC , VF
1.80% , XLG , LargeCap Rydex Rus Top 50, XLG
1.06% , IGE , Natural Resource iS GS, IGE
4.49% , QLGC , QLOGIC
0.81% , PIV , Value Line Timeliness MidCap Gr, PIV
4.75% , DD , DU PONT
4.67% , SHW , SHERWIN WILLIAMS
3.39% , IXN , Technology Global, IXN
4.52% , DDS , DILLARD STK A
2.83% , ADRA , Asia 50 BLDRS, ADRA
3.02% , RKH , Bank Regional H, RKH
1.97% , PGJ , China LargeCap Growth G D H USX PS, PGJ
1.10% , IYC , Consumer Cyclical DJ, IYC
4.40% , APA , APACHE
6.28% , FXI , China 25 iS, FXI
4.95% , XTO , XTO ENERGY INC
0.84% , FDV , Value 40 Large Low P/E FT DB, FDV
1.42% , DGT , Global Titans, DGT
3.37% , CAG , CONAGRA FOODS
1.25% , EWL , Switzerland Index, EWL
1.90% , PIC , Insurance, PIC
0.87% , IWB , LargeCap 1000 R, IWB
3.40% , EWH , Hong Kong Index, EWH
4.36% , MYL , MYLAN LABS
5.54% , FII , FED INVESTORS STK B
3.47% , RAI , RJR TOBACCO HLDS
4.32% , HSP , HOSPIRA
2.61% , LH , LAB CRP OF AMER
1.13% , PWV , Value LargeCap Dynamic PS, PWV
2.67% , KO , COCA COLA
2.59% , NTRS , NORTHERN TRUST
1.18% , PWJ , Growth Mid Cap Dynamic PS, PWJ
3.54% , COST , COSTCO WHOLESAL
1.37% , RTH , Retail H, RTH
2.50% , PWB , Lg Cap Growth PSD, PWB
3.91% , STI , SUNTRUST BANKS
1.56% , PFM , Dividend Achievers PS, PFM
1.06% , PPA , Aerospace & Defense, PPA
3.47% , EWS , Singapore Index, EWS
1.86% , EWM , Malaysia Index, EWM
2.25% , EWY , South Korea Index, EWY
0.63% , EWN , Netherlands Index, EWN
0.25% , RPV , Value S&P 500, RPV
2.66% , EOG , EOG RESOURCES
1.33% , OEF , LargeCap Blend S&P 100, OEF
3.40% , EWT , Taiwan Index, EWT
1.41% , PJP , Pharmaceuticals, PJP
4.72% , HUM , HUMANA
3.71% , AIV , APT INV MNGMT
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-1.56% , IIH , Internet Infrastructure H, IIH
-5.17% , SSCC , Smurfit-Stone Container Corporation
-7.40% , CTL , CENTURYTEL
-25.49% , BHH , Internet B2B H, BHH
-5.25% , GRMN , GARMIN LTD
-3.98% , NCR , NCR
-4.11% , GCI , GANNETT
-5.94% , XMSR , XM Satellite R
-0.24% , PKB , Building & Construction, PKB
-0.34% , XSD , Semiconductor SPDR, XSD
-13.87% , UIS , UNISYS
-4.76% , TLAB , TELLABS
-6.31% , TIN , TEMPLE INLAND
-4.36% , SIRI , Sirius Satellite
-0.31% , EWD , Sweden Index, EWD
-3.32% , CTXS , CITRIX SYSTEMS
-3.34% , HMA , HEALTH MGMT STK A
-1.59% , PTE , Telecommunications & Wireless, PTE
-4.99% , TUP , TUPPERWARE
-2.77% , LAMR , Lamar Advertising Company
-3.14% , WM , WASHINGTON MUT
-3.27% , Q , QWEST COMMUNICAT
-5.20% , LEN , Lennar Corp. (LEN)
-4.15% , MBI , MBIA
-4.76% , CMI , CUMMINS
-7.83% , AMD , ADV MICRO DEV
-2.11% , VIA , VIACOM INC. (New)
-2.21% , VIA.B , VIACOM STK B
-1.36% , SH , Short 100% S&P 500, SH
-0.62% , MV , METAVANTE TECHNOLOGIES, MV
-3.53% , FO , FORTUNE BRANDS
-3.19% , DISH , EchoStar Communications Corporation
-2.00% , MOLX , MOLEX
-2.52% , THC , TENET HEALTHCARE
-3.22% , COH , COACH
-2.57% , JNY , JONES APPAREL
-3.61% , CSC , COMPUTER SCIENCE
-2.35% , LLTC , LINEAR TECH
-3.19% , QID , Short 200% QQQ PS, QID
-2.00% , SYK , STRYKER
-1.75% , PBW , WilderHill Clean Energy PS, PBW
-1.77% , TROW , T ROWE PRICE GP
-2.48% , TMO , THERMO ELECTRON
-3.21% , DRI , DARDEN REST
-2.61% , SYY , SYSCO
-4.96% , CZN , CITIZENS COMMS STK B
-0.49% , HHH , Internet H, HHH
-1.06% , DOG , Short 100% Dow 30, DOG
-6.52% , VC , VISTEON
-1.24% , DIS , WALT DISNEY
Sectors: among the 9 major U.S. sectors, all 9 rose.
Major Sectors Ranked for the Day
% Price Change, Sector
1.79% Health Care
1.35% Consumer Staples
0.72% Consumer Discretionary
Energy (XLE) Bullish, Overweight. On 1/3/08, both XLE Price and Relative Strength made new all-time highs. XLE has been strong compared to the S&P since 3/12/03.
Utilities (XLU) Bullish, Overweight. This defensive sector performs best when investors worry about a recession. Relative Strength made a new all-time high on 1/9/08, and Price made a new all-time high on 12/10/07.
Consumer Staples (XLP) Bullish, Overweight. This defensive sector performs best when investors worry about a recession. Price made a new all-time high on 12/10/07, and Relative Strength made a new 3-year high on 1/9/08.
Health Care (XLV) Bullish, Overweight. XLV price moved up to a new 6-month high on 12/3/07. Relative Strength moved up to a new 15-month high on 1/9/08.
Materials (XLB) Bullish, Overweight. The XLB/SPY Relative Strength Ratio made a new all-time high on 1/3/08. Price made new all-time high on 10/29/07. The long-term Relative Strength trend has strongly outperformed since 9/27/2000.
Technology (XLK) Bearish, Underweight. On 1/8/08, price made a new 4-month low, and Relative Strength made a new 3-month low. XLK/SPY has underperformed since 11/5/07.
Industrial (XLI) Bearish, Underweight. Price made a new 4-month low, and Relative Strength made a new 2-month low. XLI/SPY has underperformed since 8/3/07.
Consumer Discretionary (XLY) Bearish, Underweight. On 1/9/08, the XLY/SPY Relative Strength Ratio fell to its lowest level in 6 years, and XLY price made a new 41-month low. Relative Strength has been trending down since 1/5/05.
Financial (XLF) Bearish, Underweight. On 1/8/08, Relative Strength fell to a new 7-year low, and Price fell to a new 3-year low, thereby confirming a Bearish major trend.
Foreign stock indices have outperformed U.S. stock indices since 12/24/07. The EFA (the EAFE, international developed country stock markets, ex the U.S. and Canada) made a new price high on 10/31/07 and a new relative strength high on 11/27/07. EFA has substantially outperformed long term, since the Bull market started in 2002, and the secular trend is still Bullish. My Top 10 ETF Relative Strength Ranks have been mostly Foreign for many months.
NASDAQ Composite and NASDAQ 100 underperformed the S&P since 12/26/07. Longer term, NASDAQ outperformed from 8/8/06 to 11/7/07, including a new 6-year Relative Strength high on 11/7/07 and a new price high on 10/31/07.
Growth Stock/Value Stock Relative Strength Ratio has been struggling choppy sideways since 11/7/07. Still, the long-term main trend for the Growth/Value ratio (IWF/IWD) has been rising since 8/8/06.
The Small Cap/Large Cap Relative Strength Ratio broke down to a new 2.5-year low. It has been trending down since 4/19/06. Historically, year end and early January often have been good for Small Caps, but it does not seem to be working at all this year. The main long-term trend is Relatively Bearish for Small Caps.
Crude Oil Futures appears to be consolidating in recent days. Oil’s main trend remains Bullish. The U.S. OIL FUND ETF (AMEX: USO) is not a pure play on Crude Oil, although it generally moves in the same direction.
The Energy stock sector underperformed Crude Oil since 12/24/07.
February Gold Futures consolidated a day after running up to a new all-time high. Gold penetrated resistance at the all-time high at 875 set on 1/21/80. Gold’s main trend remains obviously Bullish.
Silver’s main trend is Bearish compared to Gold. The iShares Silver Trust (AMEX: SLV) has been relatively weak since 12/7/06.
The Gold Miners ETF (GDX) made a new 2-month price high on 1/8/08 but still has underperformed Gold since 10/31/07.
Inflation expectations have been weak since the peak on 11/12/07, based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices are in a rising trend. Bonds could challenge their price top set on 11/26/07. Bonds remain reactive to news about the credit crisis: the worse the credit crisis, the higher the Bond prices; the better the credit crisis, the lower the Bond prices.
The U.S. dollar recovered a fraction of its 2-week downtrend. It fell to a new 4-week low last Friday, so that weekly trend is down. Support is at the oversold low at 74.65 on 11/23/07. There could be overhead resistance at the 77.86 high of 12/20/07. The main trend remains Bearish.
The Art of Contrary Thinking: The business and financial news has flipped from Bearish to Bullish and back again. Investors’ moods and stock volatility have jumped up and down abruptly with the latest news. When everything shifts so dramatically from one day to the next, risk control becomes more important than aggressive profit seeking. Stay flexible.
Sentiment/Contrary Opinion: Bullish opinion is below normal. According to the weekly Investors Intelligence newsletter survey as of 1/2/08, there were 48.4% Bulls and 25.8% Bears. The ratio of Bullish advisors to Bearish advisors fell to 1.88 to 1, which near its 4-year simple moving average at 2.14 and its 4-year median at 2.17. The ratio’s 4-year range is 1.00 to 3.46.
VIX “Fear Index”, now at 24.12, remains above its 50-day and 200-day simple moving averages. Longer term, VIX has been in a rising trend since it hit a 13-year low of 9.89 on 1/24/07. The all-time high was 45.74 on 10/8/98. 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.
VXN “Fear Index”, now at 28.18, remains above its 50-day and 200-day simple moving averages. Longer term, VXN has been in a rising trend since it hit its all-time low of 12.61 on 7/29/05. The all-time high was 114.23 on 10/8/98. VXN measures Nasdaq Volatility using a method comparable to that used for VIX.
CBOE Put/Call Ratio rose to 0.97 on 1/8/07, indicating pessimistic sentiment. It is above its 4-year simple moving average and median at 0.62. That means there was more trading activity in put options and less in call options. Its 4-year range is 0.35 to 1.28.
ISEE Call/Put Ratio fell to 0.86 on 1/8/07, indicating pessimistic sentiment. It is below its 4-year simple moving average at 1.50 and its 4-year median at 1.47. That means customers opened fewer long call options and more long put options than normal. Its 4-year range is 0.51 to 3.04.
Fundamentals: The 2003-2007 Bull Market was fed by abundant global liquidly, M&A, leveraged buyouts, corporate stock buybacks, and the net balance of positive earnings surprises. The unfolding fallout from the subprime credit market crisis appears to have derailed that engine. Economic statistics are weakening and at the same time inflation is rising, suggesting Stagflation.
3.40% Hong Kong
2.59% Disk Drives
2.47% Natural Gas
2.40% Computer Tech
2.25% South Korea
2.04% Health Care Products
2.03% Nasdaq 100
1.79% Health Care
1.60% Health Care
1.59% Oil Services
1.55% S&P 100
1.39% Nasdaq Composite
1.39% Broker Dealers
1.36% S&P 500
1.35% Consumer Staples
1.23% Russell 1000
1.22% Russell 3000
1.22% Commodity Related
1.16% Dow Industrial
1.15% Dow Utilities
1.13% Wilshire 5000
1.06% NYSE Composite
1.05% S&P Small Caps
1.03% Russell 2000
0.98% 30Y T-Bond
0.95% Dow Composite
0.82% Gold Mining
0.75% AMEX Composite
0.72% Consumer Discretionary
0.56% Value Line
0.47% S&P Mid Caps
0.42% US Dollar Index
0.39% Dow Transports
0.21% Japanese Yen
0.04% United Kingdom
0.01% Swiss Franc
-0.21% Canadian Dollar
-0.33% Australian Dollar
-0.44% Euro Index
-0.81% British Pound