By Robert W. Colby, Senior Analyst TraderPlanet.com
Temporary sinking spells are to be expected.
Seasonal tendencies are still a concern in days ahead.
The Technology stock sector made a new price high.
The NASDAQ made a new price high.
Oil and Gold fell.
Breadth was moderately Bearish, with nearly 1 Advancing stock for every 2 Declining stocks. The Cumulative Daily Advance-Decline line for the NYSE has significantly lagged the price indices. The lag is much more pronounced (I could say “dramatic”) on the NASDAQ.
Down Volume commanded more than a 2 to 1 lead over Up Volume. Total volume fell on both the NYSE and the NASDAQ, reflecting the partial Columbus Day holiday.
New Highs/New Lows ratios were nearly 3 to 1 Bullish. Short-term momentum indicators sagged lower.
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
5.65% , YUM , YUM BRANDS
5.82% , BRCM , BROADCOM STK A
0.62% , MTK , Technology MS sT, MTK
3.54% , VLO , VALERO ENERGY
2.99% , SYMC , SYMANTEC
1.91% , TEK , TEKTRONIX
2.07% , TJX , TJX
4.58% , GRMN , GARMIN LTD
1.91% , IIH , Internet Infrastructure H, IIH
1.97% , CAH , CARDINAL HEALTH
2.59% , AMZN , Amazoncom Inc
1.48% , AOC , AON
0.36% , TXU , TXU
2.19% , GD , GENERAL DYNAMICS
0.66% , MYY , Short 100% MidCap 400, MYY
2.51% , SUN , SUNOCO
1.68% , LLL , L-3 COMMS HLDGS
1.32% , SEE , SEALED AIR
2.22% , HPQ , HEWLETT PACKARD
0.38% , PSJ , Software, PSJ
0.22% , AM , AMER GREETINGS STK A
1.70% , NOVL , NOVELL
1.17% , IGV , Software, IGV
0.61% , MHP , MCGRAW HILL
1.12% , HCR , MANOR CARE
0.82% , TUP , TUPPERWARE
0.14% , HET , HARRAHS ENTER
0.97% , MON , MONSANTO
0.68% , TIF , TIFFANY
1.04% , GNTX , Gentex Corporation
0.15% , IGW , Semiconductor iS GS, IGW
0.10% , IPG , INTERPUBLIC GRP
0.77% , CNP , CENTERPNT ENERGY
1.09% , DRI , DARDEN REST
1.40% , PH , PARKER HANNIFIN
0.15% , COP , CONOCOPHILLIPS
0.29% , PPA , Aerospace & Defense, PPA
0.35% , LQD , Bond, Corp, LQD
1.58% , IAH , Internet Architecture H, IAH
1.29% , HON , HONEYWELL INTL
1.55% , NTRS , NORTHERN TRUST
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-6.76% , R , RYDER SYSTEM
-0.92% , IYE , Energy DJ, IYE
-0.17% , RFV , Value MidCap S&P 400, RFV
-3.04% , HMA , HEALTH MGMT STK A
-0.42% , RFG , Growth MidCap S&P 400, RFG
-0.60% , JKJ , SmallCap Core iS M, JKJ
-3.22% , CAG , CONAGRA FOODS
-0.68% , JKL , Value SmallCap iS M, JKL
-0.91% , EFV , Value EAFE MSCI, EFV
-0.96% , ADRU , Europe 100 BLDRS, ADRU
-4.05% , NIHD , NII Holdings, Inc.
-1.61% , PMR , Retail, PMR
-1.90% , CPB , CAMPBELL SOUP
-0.53% , ISI , LargeCap Blend S&P 1500 iS, ISI
-2.71% , HPC , HERCULES
-0.62% , EFG , Growth EAFE MSCI, EFG
-0.77% , RZV , Value SmallCap S&P 600, RZV
-0.92% , VDE , Energy VIPERs, VDE
-0.85% , EWG , Germany Index, EWG
-0.57% , SWH , Software H, SWH
-1.72% , LNCR , Lincare Holdings Inc
-1.77% , FII , FED INVESTORS STK B
-0.59% , PWY , Value SmallCap Dynamic PS, PWY
-0.23% , RPG , Growth S&P 500, RPG
-0.27% , NY , Value LargeCap NYSE 100 iS, NY
-2.61% , CTSH , Cognizant Technology Solutions
-3.78% , CIT , CIT GROUP
-2.65% , RIG , TRANSOCEAN
-0.35% , VDC , Consumer Staples VIPERs, VDC
-0.89% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-1.51% , PXJ , Oil & Gas, PXJ
-2.09% , DBC , Commodity Tracking, DBC
-0.14% , PKB , Building & Construction, PKB
-0.15% , JKD , LargeCap Blend Core iS M, JKD
-3.02% , FHN , FIRST TENNESSEE
-0.78% , IXP , Telecommunications Global, IXP
-0.78% , ADRA , Asia 50 BLDRS, ADRA
-0.33% , PWV , Value LargeCap Dynamic PS, PWV
-0.48% , IWB , LargeCap 1000 R, IWB
-0.20% , JKE , Growth LargeCap iS M, JKE
-0.18% , IGN , Networking, IGN
-1.51% , HES , AMERADA HESS
-1.65% , EPP , Pacific ex-Japan, EPP
-0.29% , IBB , Biotechnology, IBB
-0.41% , RSP , LargeCap Blend S&P=Weight R, RSP
-0.38% , PKI , PERKINELMER
-0.51% , VTV , Value VIPERs, VTV
-0.51% , IWS , Value MidCap Russell, IWS
-2.44% , USO , Oil, Crude, U.S. Oil Fund, USO
-1.45% , ZION , ZIONS
Sectors: among the 9 major U.S. sectors, 1 rose and 8 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
0.18% Technology
-0.15% Utilities
-0.17% Industrial
-0.58% Materials
-0.64% Consumer Staples
-0.66% Consumer Discretionary
-0.69% Health Care
-1.01% Energy
-1.37% Financial
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 10/8/07, 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.
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 10-week low on 10/8/07.
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.
Financial (XLF) Bearish, Underweight. The long-term trend of relative strength has been trending down since 2/20/07.
Foreign stock indices underperformed on Monday after setting new highs on Friday. 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 10/8/07. 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 10/5/07 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 fell more steeply. Oil traded below but closed 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 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 turned down. 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 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 rebounded relatively strongly. The short-term trend seems uncertain. 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:
1.92% Hardware
1.64% Canadian Dollar
1.07% Computer Tech
1.07% Australian Dollar
1.05% Internet
0.87% DOT
0.70% Airlines
0.64% Disk Drives
0.63% Nasdaq 100
0.59% US Dollar Index
0.46% Semiconductors
0.37% Mexico
0.25% Nasdaq Composite
0.21% British Pound
0.18% Technology
0.12% Euro Index
0.07% Paper
0.06% 30Y T-Bond
-0.10% Insurance
-0.15% Utilities
-0.15% Swiss Franc
-0.16% Dow Industrial
-0.17% Industrial
-0.20% Dow Utilities
-0.24% S&P 100
-0.27% Oil
-0.28% Wilshire 5000
-0.31% Russell 1000
-0.32% S&P 500
-0.33% Brazil
-0.34% Russell 3000
-0.35% Drugs
-0.36% Chemicals
-0.36% Health Care
-0.41% Japanese Yen
-0.45% Canada
-0.48% S&P Mid Caps
-0.48% Switzerland
-0.49% Dow Composite
-0.53% Value Line
-0.55% Japan
-0.56% Russell 2000
-0.58% Materials
-0.60% NYSE Composite
-0.63% AMEX Composite
-0.63% Taiwan
-0.64% Consumer Staples
-0.65% Hospitals
-0.66% Consumer Discretionary
-0.67% Banks
-0.68% Netherlands
-0.69% Health Care
-0.70% S&P Small Caps
-0.71% Network
-0.73% Retailers
-0.73% Belgium
-0.77% Health Care Products
-0.85% Germany
-0.92% Biotechs
-0.94% Natural Gas
-0.98% Italy
-0.99% Commodity Related
-1.01% Energy
-1.03% South Korea
-1.05% France
-1.18% United Kingdom
-1.21% Singapore
-1.24% Dow Transports
-1.28% Spain
-1.29% Broker Dealers
-1.35% Australia
-1.37% Financial
-1.42% REITs
-1.42% Austria
-1.42% Sweden
-1.46% Malaysia
-1.58% Gold Mining
-2.24% Oil Services
-2.35% Hong Kong
