By Robert W. Colby, Senior Analyst TraderPlanet.com
Short-term momentum indicators fell further, but it is only a Minor Ripple.
2-day price pullback does not appear significant.
U.S. dollar had an oversold bounce.
Foreignstocksfell moderately as the U.S. dollar bounced.
My Top 10 ETF Relative Strength Ranks are all Foreign.
Gold fell for 2-days, after making a new 28-year high on 10/1/07.
Temporary minor sinking spells are to be expected in any uptrend. Thestock markethas 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. The month of October has suffered some notable downside shakeouts in past history. 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
4.64% , DISH , EchoStar Communications Corporation
5.55% , HOG , HARLEY DAVIDSON
5.10% , CC , CIRCUIT CITY STR
2.86% , PMCS , PMC SIERRA
3.99% , TIN , TEMPLE INLAND
3.60% , THC , TENET HEALTHCARE
3.79% , LPX , LOUISIANA PAC
3.48% , GENZ , GENZYME GEN
0.32% , IYH , Healthcare DJ, IYH
1.53% , BEAS , BEA Systems Inc
2.14% , WYE , WYETH
2.02% , BC , BRUNSWICK
1.97% , BUD , ANHEUSER BUSCH
1.16% , PMR , Retail, PMR
3.23% , FRX , FOREST LABS STK A
2.60% , MMC , MARSH & MCLENNAN
3.93% , FISV , FISERV
1.94% , ZION , ZIONS
2.39% , URBN , Urban Outfitters Inc.
2.98% , MHS , MEDCO HEALTH
1.10% , EZA , South Africa Index, EZA
3.03% , RSH , RADIOSHACK
0.93% , CTXS , CITRIX SYSTEMS
2.10% , BBY , BEST BUY
1.70% , SHLD , SEARS HOLDINGS
1.46% , AEP , AM ELEC POWER
1.41% , COF ,CAPITAL ONEFNCL
2.03% , DDS , DILLARD STK A
1.04% , RHI , ROBERT HALF
0.96% , CDWC , CDW Corporation
1.39% , AN , AUTONATION
1.62% , CEPH , Cephalon Inc
5.39% , KBH , KB HOME
1.46% , ERIC.O , LM Ericsson Telephone Company
2.64% , NCC , NATIONAL CITY
3.11% , JCP , JC PENNEY
3.42% , MHP , MCGRAW HILL
1.41% , JWN , NORDSTROM
1.51% , ABK , AMBAC FINL GRP
2.32% , CECO , CAREER EDUCATION CORP
1.89% , AM , AMER GREETINGS STK A
1.43% , UIS , UNISYS
1.75% , RDC , ROWAN COMPANIES
1.22% , ABI , Applera Corp-Applied Biosystems Group (ABI)
1.21% , QID , Short 200% QQQ PS, QID
1.29% , CBE , COOPER INDS STK A
1.19% , ODP , OFFICE DEPOT
0.91% , SPLS , STAPLES
0.56% , XLY , Consumer Discretionary SPDR, XLY
1.06% , TIF , TIFFANY
% Price Change, Symbol, Name
-3.71% , MXIM , MAXIM INTEGRATED
-9.91% , WYNN , Wynn Resorts L
-8.91% , MU , MICRON TECH
-0.77% , SLR , SOLECTRON
-4.43% , CTB , COOPER TIRE
-0.54% , PEJ , Leisure & Entertainment, PEJ
-1.48% , IYT , Transportation Av DJ, IYT
-0.94% , EWI , Italy Index, EWI
-1.73% , IR , INGER RAND
-1.03% , EWN , Netherlands Index, EWN
-2.18% , NSM , NATL SEMICONDUCT
-3.02% , CHRW.O , CH Robinson Worldwide Inc, CHRWD
-4.60% , EWH , Hong Kong Index, EWH
-3.18% , KG , KING PHARM
-3.47% , PH , PARKER HANNIFIN
-4.24% , NVDA , NVIDIA
-2.05% , SMH , SMH
-3.61% , KLAC , KLA TENCOR
-0.64% , PID , Dividend International, PID
-2.88% , ROH , ROHM & HAAS
-3.05% , SNDK , SanDisk Corporation
-1.28% , MOLX , MOLEX
-0.88% , PKB , Building & Construction, PKB
-5.29% , FXI , China 25 iS, FXI
-3.90% , ADRE , Emerging 50 BLDRS, ADRE
-3.15% , LRCX , LAM RESEARCH CORP
-1.42% , IXN , Technology Global, IXN
-2.64% , CCE , COCA COLA ENTER
-0.90% , EWQ , France Index, EWQ
-2.84% , NSC , NORFOLK SOUTHERN
-0.36% , IVW , Growth S&P 500/BARRA, IVW
-1.87% , R , RYDER SYSTEM
-0.89% , PXE , Energy Exploration & Prod, PXE
-2.16% , INTC , INTEL
-2.56% , ITT , ITT INDS
-0.66% , FEZ , Euro STOXX 50, FEZ
-0.68% , XLI , Industrial SPDR, XLI
-1.26% , S , SPRINT NEXTEL
-4.97% , PGJ , China LargeCap Growth G D H USX PS, PGJ
-1.58% , PCAR , PACCAR
-2.04% , UNP , UNION PACIFIC
-0.80% , PWT , Growth SmallCap Dynamic PS, PWT
-1.75% , UNH , UNITEDHEALTH GRP
-1.70% , ADRA , Asia 50 BLDRS, ADRA
-1.65% , AET , AETNA
-2.35% , EWS , Singapore Index, EWS
-1.17% , VGK , European VIPERs, VGK
-0.35% , ELV , Value Large Cap DJ, ELV
-0.58% , NVLS , NOVELLUS SYS
-1.25% , AXP
Sectors: among the 9 major U.S. sectors, 2 rose and 7 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
0.56% Consumer Discretionary
0.39% Health Care
-0.25% Consumer Staples
Looking beyond the daily fluctuation to the major trends (listed in order of relative strength):
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. 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 10/2/07, 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 10/2/07. 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.
Consumer Staples (XLP) Bearish, Underweight. This defensive sector’s relative strength broke down to a new 9-week low on 10/1/07.
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.
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 stocks fell moderately as the U.S. dollar bounced. 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 probably still Bullish. My Top 10 ETF Relative Strength Ranks are all Foreign (see below).
NASDAQ Composite index price eased lower after making a new 6-year high on 10/2/07. Relative strength rose 9 of the past 10 trading days and made a new 17-month high on 10/2/07. Longer term, NASDAQ has outperformed for more than a year, since 8/8/06.
Growth stocks made a new 6-year high on 10/2/07 and substantially outperformed Value stocks since 9/19/07. Also, Growth has outperformed Value since 8/8/06. The main trend is Bullish.
Small Caps fell slightly. They substantially underperformed Large Caps since 4/19/06.The main trend is Bearish.
Crude Oil futures eased slightly lower for the fourth consecutive session—and downside momentum slowed further. Oil held above the 9/26/07 minor low at 78.44. 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 underperformed the USO and the SPY for the second day. 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 fell for 2-days, after making a new 28-year high on 10/1/07. It looks like a normal correction. 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) underperformed Gold since 9/20/07. Before 8/16/07, Gold Mining stocks substantially underperformed both Gold and the S&P 500 for more than 20 years.
Inflation expectations moved down again. They appear choppy and uncertain since 6/22/07.
U.S. Treasury Bond prices appear to be consolidating. Bonds lack momentum and volume and, therefore, are not impressive. 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 had a 3-day bounce from oversold. 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:
0.58% Health Care Products
0.56% Consumer Discretionary
0.39% Health Care
0.26% Broker Dealers
0.13% Health Care
0.00% US Dollar Index
0.00% Japanese Yen
-0.03% Canadian Dollar
-0.06% 30Y T-Bond
-0.11% Dow Utilities
-0.17% Australian Dollar
-0.25% S&P Mid Caps
-0.25% Consumer Staples
-0.31% Euro Index
-0.32% Swiss Franc
-0.33% Oil Services
-0.42% Value Line
-0.42% United Kingdom
-0.43% British Pound
-0.45% Russell 1000
-0.46% S&P 500
-0.47% Russell 3000
-0.50% Wilshire 5000
-0.53% S&P 100
-0.56% Dow Industrial
-0.61% Nasdaq 100
-0.64% Nasdaq Composite
-0.70% Russell 2000
-0.71% S&P Small Caps
-0.74% NYSE Composite
-0.74% AMEX Composite
-0.75% Dow Composite
-0.75% Natural Gas
-1.03% Disk Drives
-1.07% Computer Tech
-1.23% Gold Mining
-1.24% Commodity Related
-1.50% Dow Transports
-1.88% South Korea
-4.60% Hong Kong