Financial Stocks Plunge 5%
Financial and Consumer Discretionary stock sector Relative Strength fell to their lowest levels in 6 years.
Technology stock sector, NASDAQ Composite, and NASDAQ 100 all set new 6-year Relative Strength highs.
Foreign stock Relative Strength made another new high.
Utilities stock sector Relative Strength made a new 5-month high.
Growth Stock/Value Stock Relative Strength ratio rose to a new 20-month high.
December Crude Oil Futures hit a new high of $96.24 before pulling back to close mildly lower.
December Gold Futures hit a new high of $802.50 before pulling back to close mildly lower.
On Thursday, major stock price indices fell steeply in the first 40 minutes following overnight news. The market tried to recover later in the morning, only to tumble again in the afternoon. Prices closed broadly lower and near the lows of the day in active trading.
Traders seemed to be focused on two items of bad news. Citigroup was downgraded by a brokerage firm analyst, who reportedly warned of a possible need to raise more than $30 billion in capital through either asset sales, a dividend cut, and/or an offering of capital securities. In addition, Exxon Mobil reported its biggest drop in quarterly profits in more than 3 years.
Short-term momentum turned down, but the long-term trend of the stock market remains upward. Moreover, seasonal tendencies remain Bullish.
Breadth ended 73% net Bearish, with more Declining stocks than Advancing stocks on the NYSE. The Cumulative Daily Advance-Decline Line for the NYSE broke a short-term uptrend.
Up-Down Volume finished the day 89% net Bearish, with greater Down Volume than Up Volume on the NYSE.
Total volume rose on the NYSE and on the NASDAQ.
New Highs-New Lows on the NYSE ended at 43% net Bearish.
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
8.48% , UNM , UNUMPROVIDENT
7.14% , XRAY , DENTSPLY International Inc
3.82% , AOC , AON
1.60% , MYL , MYLAN LABS
1.36% , PRU , PRUDENTIAL FINL
2.38% , MHS , MEDCO HEALTH
1.66% , PSQ , Short 100% QQQ, PSQ
3.91% , DXD , Short 200% Dow 30 PS, DXD
1.23% , CMI , CUMMINS
4.70% , SDS , Short 200% S&P 500 PS, SDS
3.17% , SH , Short 100% S&P 500, SH
0.79% , ISIL , INTERSIL CORP
2.42% , HSIC , Henry Schein Inc
0.83% , MRVL , MARVELL TECHNOLOGY
1.76% , RIG , TRANSOCEAN
1.41% , ESRX , EXPRESS SCRIPTS
1.22% , IACI , IAC/INTERACTIVCORP
0.71% , AW , ALLIED WASTE IND
2.76% , QID , Short 200% QQQ PS, QID
0.30% , PTEN , Patterson-UTI Energy Inc
0.59% , ODP , OFFICE DEPOT
1.20% , CTL , CENTURYTEL
0.13% , PDCO , Patterson Dental Company
0.50% , SSCC , Smurfit-Stone Container Corporation
0.32% , PGR , PROGRESSIVE OHIO
0.86% , TLT , Bond, 20+ Years Treasury, TLT
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-2.52% , RFV , Value MidCap S&P 400, RFV
-1.85% , RPG , Growth S&P 500, RPG
-19.71% , ABK , AMBAC FINL GRP
-4.75% , PLD , PROLOGIS TRUST
-5.48% , PCG , PG&E
-6.86% , IPG , INTERPUBLIC GRP
-2.15% , VIS , Industrials VIPERs, VIS
-3.86% , IWC , Microcap Russell, IWC
-4.50% , SOV , SOVEREIGN BANC
-1.61% , IYH , Healthcare DJ, IYH
-8.09% , C , CITIGROUP
-11.62% , MTG , MGIC INVESTMENT
-7.55% , STT , STATE STREET
-6.07% , AIG , AMER INTL GROUP
-2.55% , DSG , Growth Small Cap DJ, DSG
-1.66% , BHH , Internet B2B H, BHH
-4.11% , RZV , Value SmallCap S&P 600, RZV
-1.80% , EWP , Spain Index, EWP
-2.72% , VOX , Telecom Services VIPERs, VOX
-3.22% , IYZ , Telecom DJ US, IYZ
-3.38% , IYM , Basic Materials DJ US, IYM
-1.99% , IWZ , Growth LargeCap Russell 3000, IWZ
-2.84% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-2.92% , PWV , Value LargeCap Dynamic PS, PWV
-2.64% , VXF , Extended Mkt VIPERs, VXF
-3.83% , EWA , Australia Index, EWA
-3.40% , PKB , Building & Construction, PKB
-4.46% , GAS , NICOR
-2.03% , HHH , Internet H, HHH
-1.97% , PWO , OTC Dynamic PS, PWO
-4.23% , ADRU , Europe 100 BLDRS, ADRU
-2.18% , EWK , Belgium Index, EWK
-2.45% , IGN , Networking, IGN
-3.35% , PMR , Retail, PMR
-7.64% , WM , WASHINGTON MUT
-5.37% , VRSN , VeriSign Inc
-1.77% , PWP , Value MidCap Dynamic PS, PWP
-4.78% , STI , SUNTRUST BANKS
-5.33% , HAS , HASBRO
-3.39% , SLM , SLM CORP
-11.57% , MBI , MBIA
-2.57% , ISI , LargeCap Blend S&P 1500 iS, ISI
-4.74% , EWT , Taiwan Index, EWT
-2.93% , PHJ , Dividend Growth PS, PHJ
-2.69% , IWV , LargeCap Blend Russell 3000, IWV
-2.65% , IXP , Telecommunications Global, IXP
-3.88% , EWS , Singapore Index, EWS
-2.73% , RSP , LargeCap Blend S&P=Weight R, RSP
-4.45% , FNM , FANNIE MAE
-5.32% , BAC , BANK OF AMERICA
Sectors: among the 9 major U.S. sectors, all 9 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
-1.09% Technology
-1.39% Health Care
-1.70% Industrial
-1.97% Consumer Staples
-2.05% Utilities
-2.54% Consumer Discretionary
-2.93% Energy
-3.47% Materials
-5.13% Financial
Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):
Technology (XLK) Bullish, Overweight. XLK hit another new 6-year price high on 11/1/07, and Relative Strength made a new 3-year high. Long term, XLK has been relatively strong compared to the S&P since its low on 7/24/06.
Energy (XLE) Bullish, Overweight. XLE made an all-time closing price high on 10/16/07, and XLE made an all-time high in Relative Strength on 10/18/07. XLE has been strong compared to the S&P since 3/12/03.
Materials (XLB) Bullish, Overweight. Both Price and Relative Strength made new all-time highs on 10/29/07. The long-term Relative Strength trend has strongly outperformed since 9/27/2000.
Utilities (XLU) Bullish, Overweight. Both Price and Relative Strength for this defensive sector made new 5-month highs on 10/31/07. Utilities have improved significantly since their Relative Strength low on 9/28/07.
Industrial (XLI) Neutral, Market Weight. Industrial stock sector price made an all-time price high on 10/10/07, but Relative Strength has been lagging.
Consumer Staples (XLP) Neutral, Market Weight. This defensive sector’s Relative Strength has improved since its low on 10/9/07.
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 Discretionary (XLY) Bearish, Underweight. On 11/1/07, the XLY/SPY Relative Strength ratio fell to its lowest level in 6 years. Relative Strength has been trending down since 1/5/05.
Financial (XLF) Bearish, Underweight. On 11/1/07, the XLF/SPY Relative Strength ratio fell to its lowest level in more than 6 years. Relative Strength has been trending down since 2/20/07.
Foreign stock Relative Strength made another new high. 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 11/1/07. 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 nearly all Foreign for many months.
NASDAQ Composite and NASDAQ 100 both made new 6-year Relative strength highs. Price confirmed the Bullish trend on 10/31/07. Longer term, NASDAQ has outperformed since 8/8/06.
Growth Stock/Value Stock Relative Strength ratio rose to a new 20-month high. Growth price made a new 6-year high on 10/11/07. Growth stocks outperformed Value stocks since 8/8/06. The main trend for the Growth/Value ratio (IWF/IWD) is confirmed Bullish.
Small Caps substantially underperformed Large Caps since 4/19/06, and the main long-term trend is Bearish for Small Caps.
December Crude Oil Futures hit a new high of $ 96.24 before pulling back to close mildly lower. All trends are still Bullish. Support appears at the low of 88.92, at previous resistance at 84.10, and at 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 Energy stock sector broke down to another new 1-year low relative to oil the commodity. XLE has underperformed the USO since 5/30/07.
December Gold Futures hit a new 28-year high of $ 802.50 before pulling back to close mildly lower. Major trends remain Bullish for Gold and the Gold Trust ETF (NYSE: GLD).
Silver’s main trend is relatively Bearish. Compared to Gold, the iShares Silver Trust (AMEX: SLV) has been relatively weak since 12/7/06.
The Gold Miners ETF (GDX) were hit with minor profit taking a day after braking out to new 2007 highs.
Inflation expectations have been choppy and erratic since 6/22/07. This is based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bonds jumped on a flight to safety. 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.
The U.S. dollar consolidated within its persistent downtrend. The main trend has been confirmed Bearish—again and again. Longer term, the dollar fell 17% from its high of 92.53 on 11/16/05, and the main tidal force remains very Bearish.
Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:
1.08% 30Y T-Bond
0.23% Japanese Yen
0.20% British Pound
0.16% US Dollar Index
0.15% Swiss Franc
0.11% Canadian Dollar
-0.04% Euro Index
-0.96% Oil Services
-1.09% Technology
-1.10% Disk Drives
-1.15% Australian Dollar
-1.25% Japan
-1.36% Computer Tech
-1.39% Health Care
-1.68% Natural Gas
-1.69% Health Care
-1.70% Industrial
-1.71% Drugs
-1.74% Netherlands
-1.77% Semiconductors
-1.78% AMEX Composite
-1.79% Hospitals
-1.80% Spain
-1.87% Nasdaq 100
-1.89% DOT
-1.96% Health Care Products
-1.97% Consumer Staples
-2.01% Hardware
-2.05% Utilities
-2.07% Internet
-2.11% Switzerland
-2.14% Biotechs
-2.18% Belgium
-2.19% S&P Mid Caps
-2.21% Dow Utilities
-2.25% Nasdaq Composite
-2.35% United Kingdom
-2.45% Airlines
-2.54% Consumer Discretionary
-2.55% Dow Composite
-2.55% Austria
-2.56% Russell 1000
-2.56% France
-2.60% Dow Industrial
-2.61% S&P 100
-2.63% Wilshire 5000
-2.63% Chemicals
-2.63% Canada
-2.64% S&P 500
-2.67% Russell 3000
-2.72% Dow Transports
-2.75% Sweden
-2.76% Italy
-2.79% Paper
-2.81% NYSE Composite
-2.83% Brazil
-2.88% Oil
-2.93% Energy
-2.95% Commodity Related
-2.96% Mexico
-2.98% Value Line
-3.03% Germany
-3.16% Retailers
-3.22% Network
-3.47% Materials
-3.48% Insurance
-3.77% Gold Mining
-3.83% Australia
-3.88% Singapore
-3.91% REITs
-3.97% Russell 2000
-3.97% Malaysia
-4.12% S&P Small Caps
-4.14% Hong Kong
-4.57% South Korea
-4.74% Taiwan
-4.88% Broker Dealers
-5.13% Financial
-5.36% Banks
