By Robert W. Colby, Senior Analyst TraderPlanet.com

Price, Volume, and Breadth Momentum are lagging.

Despite new highs in some price indices, many technical divergences suggest that not all parts of the market are pulling together.

Seasonal tendencies are still a concern in days ahead.

The Materials, Technology, and Industrial stock sectors made new price highs.

The NASDAQ Composite and Growth stock price indices both made new 6-year highs.

Foreign stock indices made new closing price highs and outperformed.


On Tuesday, major stock price indices rallied following the release of the FOMC Minutes from the September 18th meeting, which indicated concern about risks that the credit market turmoil and the housing market downturn could lead to “significant broader weakness in output and employment.”. Stocks closed near their highs of the day.

Breadth was Bullish, with 2.3 Advancing stocks for every Declining stock on the NYSE. Still, the Cumulative Daily Advance-Decline line for the NYSE is far from its July high, lagging the price indices. The A-D Line lag is much more pronounced (I could say “dramatic”) for the NASDAQ.

Up Volume commanded more than a 3 to 1 lead over Down Volume. Total volume rose on both the NYSE and the NASDAQ, compared to the slow, partial holiday pace on Monday, Columbus Day.

New Highs/New Lows ratios were more than 3 to 1 Bullish.

Short-term momentum indicators turned upward but are lagging relative to the price indices.

The market does not move in a straight line, and temporary minor sinking spells are to be expected in any uptrend. The stock market has absorbed 1- to 4-day bouts of normal profit taking with minimal damage and with resilience since the low on 8/16/07. That indicates underlying demand and a Bullish intermediate-term trend for stocks. Finally, the long-term Primary Tide Trend remains Bullish, according to the Dow Theory.

Seasonal tendencies are a concern in days ahead. October has been a losing month on average, based on 101 years of month-end closing prices for the Dow-Jones Industrial Average, from 1900 through 2000. See my book, pages 403-410. October has suffered some very notable downside shakeouts. So, we definitely do not want to get complacent. Be alert and flexible.

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

3.91% , EXPD , Expeditors International WA
10.47% , TAP , ADOLPH COORS STK B, TAP
0.96% , PIV , Value Line Timeliness MidCap Gr, PIV
6.87% , XMSR , XM Satellite R
1.28% , UTH , Utilities H, UTH
5.39% , GS , GOLDMAN SACHS
6.72% , JNS , JANUS CAPITAL
6.25% , BEN , FRANKLIN RSC
0.69% , EWP , Spain Index, EWP
3.93% , RHT , Red Hat Inc.
1.30% , EWD , Sweden Index, EWD
2.16% , DTE , DTE ENERGY
3.77% , SIRI , Sirius Satellite
2.49% , PGR , PROGRESSIVE OHIO
2.93% , NKE , NIKE STK B
1.90% , PXE , Energy Exploration & Prod, PXE
2.76% , AES , AES
3.24% , BSX , BOSTON SCIENT
3.43% , APA , APACHE
3.57% , HOG , HARLEY DAVIDSON
4.36% , MWV , MEADWESTVACO
3.02% , AXP , AMERICAN EXPRESS
1.06% , FPX , IPOs, First Tr IPOX-100, FPX
1.83% , SNV , SYNOVUS
1.50% , EWI , Italy Index, EWI
1.46% , BHH , Internet B2B H, BHH
2.74% , NI , NISOURCE
4.72% , ETFC.O , E*TRADE FINANCIAL
1.08% , HHH , Internet H, HHH
3.71% , AA , ALCOA
4.01% , ESRX , EXPRESS SCRIPTS
1.83% , JNPR , Juniper Networks Inc
2.24% , PXN , Nanotech Lux, PXN
4.07% , ATI , ALLEGHENY TECH
3.32% , HSY , HERSHEY FOODS
2.30% , AGN , ALLERGAN
1.96% , PMTC.O , PARAMETRIC
1.14% , EWT , Taiwan Index, EWT
2.40% , PX , PRAXAIR
1.97% , ETR , ENTERGY
1.87% , XLB , Materials SPDR, XLB
3.02% , EMC , EMC
1.96% , XTO , XTO ENERGY INC
0.53% , GTW , GATEWAY
2.97% , UIS , UNISYS
1.98% , PEG , PUBL SVC ENTER
3.54% , SNPS , Synopsys Inc
2.98% , SSCC , Smurfit-Stone Container Corporation
1.61% , EWK , Belgium Index, EWK
2.20% , LMT , LOCKHEED MARTIN

Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name

-12.67% , MCHP , Microchip Technology Incorporated
-3.32% , COH , COACH
-3.61% , SVU , SUPERVALU
-0.90% , XSD , Semiconductor SPDR, XSD
-4.18% , CFC , COUNTRYWIDE FNCL
-2.25% , LLTC , LINEAR TECH
-2.09% , LSI , LSI LOGIC
-3.50% , LTD , LIMITED BRANDS
-3.27% , SNDK , SanDisk Corporation
-2.59% , KLAC , KLA TENCOR
-3.41% , LIZ , LIZ CLAIRBORNE
-1.13% , WPI , WATSON PHARM
-3.39% , SHLD , SEARS HOLDINGS
-1.64% , GCI , GANNETT
-0.95% , PEP , PEPSICO
-1.23% , LRCX , LAM RESEARCH CORP
-1.48% , MAR , MARRIOTT INTL STK A
-1.05% , ISIL , INTERSIL CORP
-1.78% , DXD , Short 200% Dow 30 PS, DXD
-1.44% , SLM , SLM CORP
-1.19% , S , SPRINT NEXTEL
-1.75% , SDS , Short 200% S&P 500 PS, SDS
-1.33% , HOT , STARWOOD HOTELS
-1.76% , NVDA , NVIDIA
-0.88% , PMCS , PMC SIERRA
-1.16% , LEG , LEGGETT & PLATT
-1.05% , CZN , CITIZENS COMMS STK B
-0.55% , VFC , VF
-0.96% , PCAR , PACCAR
-0.22% , SHY , Bond, 1-3 Year Treasury, SHY
-1.45% , QID , Short 200% QQQ PS, QID
-0.62% , JCI , JOHNSON CONTROLS
-0.89% , JCP , JC PENNEY
-1.19% , NSM , NATL SEMICONDUCT
-1.20% , MRVL , MARVELL TECHNOLOGY
-0.51% , CEPH , Cephalon Inc
-1.88% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.20% , AMAT , APPLIED MATERIAL
-1.19% , VMC , VULCAN MATERIALS
-1.07% , OMX , OFFICEMAX INC., OMX
-1.93% , BIG , BIG LOTS
-1.26% , TYC , TYCO INTL
-1.40% , WEN , WENDYS INTL
-0.74% , Q , QWEST COMMUNICAT
-0.77% , TNB , THOMAS & BETTS
-1.02% , MU , MICRON TECH
-0.57% , MI , MARSHAL & ILSLEY
-0.88% , BUD , ANHEUSER BUSCH
-2.04% , DLX , DELUXE
-1.10% , NVLS , NOVELLUS SYS

Sectors: among the 9 major U.S. sectors, 1 rose and 8 fell.
Major Sectors Ranked for the Day
% Price Change, Sector

2.02% Energy
1.87% Materials
1.10% Utilities
0.94% Industrial
0.85% Financial
0.83% Health Care
0.73% Technology
0.58% Consumer Staples
0.16% Consumer Discretionary

Looking beyond the daily fluctuation to the major trends (listed in order of relative strength):

Energy (XLE) Bullish, Overweight. XLE made an all-time closing price high on 10/1/07. Relative strength made a new all-time high on 9/21/07. XLE has been strong compared to the S&P since 3/12/03.

Materials (XLB) Bullish, Overweight. Price made a new high on 10/9/07. Relative strength made a new 10-week high on 10/1/07. The relative strength trend strongly outperformed since the price shakeout low on 8/16/07, and its long term trend has been Bullish since 9/27/2000.

Technology (XLK) Bullish, Overweight. XLK closed at a new 6-year closing price high on 10/9/07, and relative strength made a new 2-year high on 9/26/07. Long term, XLK has been relatively strong compared to the S&P since its low on 7/24/06.

Industrial (XLI) Bullish, Overweight. Industrial stock sector price set an all-time price high on 10/9/07. Longer term, XLI has been relatively strong compared to the S&P since 8/9/06.

Utilities (XLU) Bearish, Underweight. This defensive sector’s relative strength made a new 8-week low on 9/28/07.

Health Care (XLV) Bearish, Underweight. Relative strength has been trending down since 10/9/02, and it made a new 5-year low on 7/19/07, thereby confirming a major downtrend.

Consumer Staples (XLP) Bearish, Underweight. This defensive sector’s relative strength broke down to a new 11-week low on 10/9/07.

Financial (XLF) Bearish, Underweight. The long-term trend of relative strength has been trending down since 2/20/07.

Consumer Discretionary (XLY) Bearish, Underweight. Price hit a new 10-month low on 8/16/07. Relative strength made another new 6-year low on 9/27/07.

Foreign stock indices made new closing price highs and outperformed. The EFA (the EAFE, international developed country stock markets, ex the U.S. and Canada) 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 are all Foreign.

NASDAQ Composite index price made a new 6-year high on 10/9/07. Relative strength made a new 17-month high on 10/8/07. Longer term, NASDAQ has outperformed for more than a year, since 8/8/06.

Growth stocks made a new 6-year high on 10/9/07 and outperformed Value stocks since 8/8/06. The main trend is Bullish.

Small Caps rose since 9/28/07 but substantially underperformed Large Caps since 4/19/06. The main long-term trend is Bearish.

Crude Oil futures recovered a normal fraction of Monday’s steep loss. Oil appears to be holding previous minor lows in the 78.25-78.35 zone. Note that the U.S. OIL FUND ETF (AMEX: USO) is not a pure play on Crude Oil. The longer-term trends for both remain Bullish.

The Energy stock sector outperformed both the USO and the SPY. Longer term, since 3/12/03, the stocks in the Energy Select Sector SPDR ETF (XLE) have significantly outperformed crude oil as a commodity, as well as the S&P 500. So, the Relative Strength major trend is Bullish for the energy stocks.

Gold rose moderately. Gold made a new 28-year high on 10/1/07, and the Gold Trust ETF (NYSE: GLD) confirmed. These major trends remain Bullish.

Silver’s main trend is relatively Bearish. Compared to Gold, the iShares Silver Trust (AMEX: SLV) has been weak since 12/7/06.

The Gold Miners ETF (GDX) rose to the top of its trading range, where it may find resistance. Before 8/16/07, Gold Mining stocks substantially underperformed both Gold and the S&P 500 for more than 20 years.

Inflation expectations appear choppy and uncertain, especially since 6/22/07. This is based on the behavior of the ratio of two ETFs, TIP/IEF.

U.S. Treasury Bond prices fell again. The short-term trend is Bearish. Long-term, it seems possible that the iShares Lehman 20+ Year U.S. Treasury Bond ETF (AMEX: TLT) ended a normal oversold bounce in a Bearish trend on 9/10/07. 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.

U.S. dollar reversed to the downside. The short-term trend seems uncertain at best. Longer term, the dollar fell 16% over the past 23 months and its main trend remains very Bearish.

Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:

3.77% Hong Kong
2.90% Gold Mining
2.67% Australia
2.40% Brazil
2.38% Singapore
2.18% Commodity Related
2.12% Natural Gas
2.02% Energy
1.89% Oil Services
1.87% Materials
1.80% Oil
1.77% Broker Dealers
1.61% Belgium
1.52% Chemicals
1.50% Italy
1.40% Netherlands
1.38% Paper
1.35% Dow Utilities
1.34% United Kingdom
1.32% France
1.30% Sweden
1.15% Malaysia
1.14% Taiwan
1.12% South Korea
1.10% Utilities
1.05% Dow Transports
1.02% Dow Composite
1.00% Switzerland
0.94% Industrial
0.92% NYSE Composite
0.86% Dow Industrial
0.86% Germany
0.85% Financial
0.84% S&P Mid Caps
0.83% Health Care
0.82% Russell 1000
0.82% REITs
0.81% S&P 500
0.81% Russell 3000
0.81% Wilshire 5000
0.81% Internet
0.79% S&P 100
0.73% Technology
0.72% Network
0.71% Value Line
0.69% Austria
0.69% Spain
0.68% AMEX Composite
0.66% Russell 2000
0.62% DOT
0.60% S&P Small Caps
0.60% Computer Tech
0.60% Health Care
0.59% Nasdaq Composite
0.58% Consumer Staples
0.55% Hardware
0.48% Canada
0.44% Mexico
0.38% Hospitals
0.37% Nasdaq 100
0.37% Drugs
0.36% Banks
0.29% Biotechs
0.28% Health Care Products
0.27% Insurance
0.26% Disk Drives
0.16% Consumer Discretionary
0.15% Airlines
0.00% 30Y T-Bond
-0.04% Australian Dollar
-0.11% Japanese Yen
-0.13% Canadian Dollar
-0.27% Japan
-0.38% US Dollar Index
-0.39% Retailers
-0.39% Euro Index
-0.49% British Pound
-0.64% Swiss Franc
-0.89% Semiconductors