By Robert W. Colby, Senior Analyst TraderPlanet.com
Seasonal tendencies are still a concern in days ahead.
Foreign stock indices made new highs.
My Top 10 ETF Relative Strength Ranks are all Foreign again this week.
Materials and Industrial stock sectors made new price highs.
Growth stock indices made new 6-year price highs.
Breadth was Bullish, with nearly 3 Advances for each Decline. Up Volume commanded nearly a 5 to 1 lead over Down Volume. Total volume rose on both the NYSE and the NASDAQ, confirming the uptrend. New Highs/New Lows ratios were more than 3 to 1 Bullish. Short-term momentum indicators rose again.
Still, 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
1.69% , XSD , Semiconductor SPDR, XSD
1.42% , RFG , Growth MidCap S&P 400, RFG
4.73% , PLL , PALL
1.13% , BDH , Broadband H, BDH
5.84% , BNI , BURLINGTON NORTH
6.08% , ASH , ASHLAND
4.51% , LAMR , Lamar Advertising Company
3.74% , MVV , Ultra MidCap400 Double, MVV
1.88% , PZJ , SmallCap PS Zacks, PZJ
4.04% , MBI , MBIA
12.76% , RIMM , RESEARCH IN MOTION LTD
1.52% , JKG , MidCap Blend Core iS M, JKG
2.27% , IP , INTL PAPER
4.37% , RFMD , RF Micro Devices Inc
2.51% , VIA , VIACOM INC. (New)
2.88% , EFX , EQUIFAX
4.35% , RYAAY , Ryanair Holdings plc
3.65% , TGT , TARGET
5.32% , JNS , JANUS CAPITAL
3.34% , EEM , Emerging Markets, EEM
1.73% , IYC , Consumer Cyclical DJ, IYC
2.96% , NTRS , NORTHERN TRUST
4.38% , NSC , NORFOLK SOUTHERN
5.73% , RHI , ROBERT HALF
2.20% , EWD , Sweden Index, EWD
1.46% , EWU , United Kingdom Index, EWU
0.87% , EWN , Netherlands Index, EWN
2.70% , OMX , OFFICEMAX INC., OMX
0.63% , IOO , Global 100, IOO
3.42% , BMC , BMC SOFTWARE
1.57% , VBR , Value SmallCap VIPERS, VBR
2.41% , SSO , Ultra S&P500 Double, SSO
4.44% , UNP , UNION PACIFIC
1.11% , PTE , Telecommunications & Wireless, PTE
1.45% , DDM , Ultra Dow30 Double, DDM
3.86% , DLX , DELUXE
1.68% , IGW , Semiconductor iS GS, IGW
1.17% , IYY , LargeCap Blend Total Market DJ, IYY
1.48% , PWO , OTC Dynamic PS, PWO
3.25% , IYT , Transportation Av DJ, IYT
4.29% , DDS , DILLARD STK A
1.81% , VXF , Extended Mkt VIPERs, VXF
1.28% , EWP , Spain Index, EWP
0.82% , ADRD , Developed 100 BLDRS, ADRD
1.37% , PEJ , Leisure & Entertainment, PEJ
4.62% , QLD , Ultra QQQ Double, QLD
4.15% , WFMI , Whole Foods Market Inc
2.72% , VWO , Emerging VIPERs, VWO
2.57% , GWW , WW GRAINGER
1.71% , VB , Small Cap VIPERs, VB
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-3.71% , MXIM , MAXIM INTEGRATED
-4.59% , TLAB , TELLABS
-1.98% , PSQ , Short 100% QQQ, PSQ
-0.88% , IEF , Bond, 10 Year Treasury, IEF
-0.77% , SLR , SOLECTRON
-3.54% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.68% , MYY , Short 100% MidCap 400, MYY
-2.73% , NBR , NABORS
-1.93% , MDT , MEDTRONIC
-2.60% , SDS , Short 200% S&P 500 PS, SDS
-2.15% , BA , BOEING
-1.67% , PCL , PLUM CREEK TIMB
-0.93% , SH , Short 100% S&P 500, SH
-4.14% , QID , Short 200% QQQ PS, QID
-1.37% , PGN , PROGRESS ENERGY
-0.97% , ABT , ABBOTT LABS
-1.25% , STT , STATE STREET
-0.76% , DOG , Short 100% Dow 30, DOG
-1.08% , TLT , Bond, 20+ Years Treasury, TLT
-0.11% , SHY , Bond, 1-3 Year Treasury, SHY
-1.78% , PTEN , Patterson-UTI Energy Inc
-1.24% , RAI , RJR TOBACCO HLDS
-1.46% , DXD , Short 200% Dow 30 PS, DXD
-1.05% , EBAY , EBAY
-0.79% , AGG , Bond, Aggregate, AGG
-1.40% , S , SPRINT NEXTEL
-0.59% , TIP , Bond, TIPS, TIP
-0.65% , RX , IMS HEALTH
-2.05% , SNDK , SanDisk Corporation
-0.28% , AEE , AMEREN
-1.18% , WAG , WALGREEN
-0.59% , UST , UST
-1.30% , CBS , CBS CORP.
-0.23% , INTC , INTEL
-0.29% , EMC , EMC
-1.46% , NE , NOBLE
-0.16% , DD , DU PONT
-0.43% , WEN , WENDYS INTL
-0.51% , SO , SOUTHERN
-0.99% , LNCR , Lincare Holdings Inc
-0.12% , EP , EL PASO
-0.60% , TAP , ADOLPH COORS STK B, TAP
-0.23% , DE , DEERE & CO
-0.82% , BHI , BAKER HUGHES
-0.18% , PEP , PEPSICO
-0.08% , MCHP , Microchip Technology Incorporated
-0.09% , WPI , WATSON PHARM
-0.07% , SRE , SEMPRA ENERGY
-0.65% , COL , ROCKWELL COLLINS
-0.19% , SNPS , Synopsys Inc
Sectors: among the 9 major U.S. sectors, all 9 rose.
Major Sectors Ranked for the Day
% Price Change, Sector
2.22% Consumer Discretionary
1.29% Health Care
0.36% Consumer Staples
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 10/5/07. 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 10/2/07, 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 10/5/07. 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 10-week low on 10/5/07.
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 stock indices made new highs. 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 10/5/07. Relative strength made a new 17-month high on 10/5/07. Longer term, NASDAQ has outperformed for more than a year, since 8/8/06.
Growth stocks made a new 6-year high on 10/5/07 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 eased slightly lower. Last week, oil held above the 9/26/07 minor low at 78.44, which may be a sign that the recent price pullback is only minor consolidation. 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 the USO but underperformed 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 rallied each of the latest 2 consecutive days but did not make a new high. 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) 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 turned upward, since 9/25/07, but they appear choppy and uncertain longer term, since 6/22/07. This is based on the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices plunged steeply. 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 fell each of the latest 2 consecutive days. The short-term trend is Bearish. 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:
4.73% Hong Kong
3.27% Dow Transports
2.22% Consumer Discretionary
2.09% Nasdaq 100
1.90% Russell 2000
1.83% S&P Small Caps
1.71% Nasdaq Composite
1.70% Gold Mining
1.68% Broker Dealers
1.64% Canadian Dollar
1.61% S&P Mid Caps
1.60% Value Line
1.46% United Kingdom
1.42% South Korea
1.38% Dow Composite
1.29% Health Care
1.26% Computer Tech
1.15% Commodity Related
1.10% Wilshire 5000
1.08% Russell 3000
1.07% Australian Dollar
1.04% NYSE Composite
1.01% Russell 1000
0.98% Disk Drives
0.96% S&P 500
0.86% Health Care Products
0.80% Health Care
0.79% AMEX Composite
0.73% S&P 100
0.68% Natural Gas
0.66% Dow Industrial
0.49% Dow Utilities
0.36% Consumer Staples
0.21% British Pound
0.12% Euro Index
-0.12% US Dollar Index
-0.15% Swiss Franc
-0.20% Oil Services
-0.41% Japanese Yen
-1.17% 30Y T-Bond