By Robert W. Colby, Senior Analyst TraderPlanet.com
Despite Much Bad News Technology stock sector made a new 6-year Relative Strength high.
Growth Stock/Value Stock Relative Strength ratio rose to a new 20-month high.
Utilities stock sector Relative Strength made a new 5-month high.
December Gold Futures hit another new 28-year closing price high of $810.80.
Inflation expectations rose to a new 14-month high.
Financial and Consumer Discretionary stock sector Relative Strength fell to their lowest levels in 6 years–again.
On Monday, major stock price indices opened lower on seemingly endless reports and worries about actual and potential losses for broker dealers, banks, and financial companies relating to subprime loans gone bad.
By early afternoon, key indicators broke below Friday’s lows–but they held above the more critical low of 10/22/07. The market sprang back after 2:34 p.m. ET, in classic Bear Trap fashion, to close above the open.
The price action of both Monday and Friday showed resilience by springing back from steep losses. Although price fell to about the same level as in October, and the news, rumors, and gossip seem worse, short-term downside momentum is not as Bearish as it was in October. That means Bullish Divergence. Moreover, the long-term trend of the stock market remains upward. And seasonal tendencies remain Bullish. Finally, with the news headlines so negative, the Art of Contrary Thinking could be useful.
Breadth ended 54% net Bearish, with more Declining stocks than Advancing stocks on the NYSE. The Cumulative Daily Advance-Decline Line for the NYSE broke down to a new 7-week low, while the Cumulative Daily Advance-Decline Line for the NASDAQ broke down to a new multi-year low.
Total volume fell on the NYSE and on the NASDAQ.
New Highs-New Lows on the NYSE ended at 63% 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
7.49% , IACI , IAC/INTERACTIVCORP
7.01% , PNW , PINNACLE WEST
4.60% , ETR , ENTERGY
2.36% , SYY , SYSCO
3.11% , SANM , SANMINA
3.71% , MAT , MATTEL
2.17% , ASD , AMER STANDARD
3.46% , WFMI , Whole Foods Market Inc
2.63% , EXC , EXELON CORP
2.02% , GOOG , Google
1.67% , AVP , AVON
1.90% , AMD , ADV MICRO DEV
3.29% , CEG , CONSTELL ENERGY
2.84% , PH , PARKER HANNIFIN
2.17% , SUN , SUNOCO
1.65% , RFMD , RF Micro Devices Inc
1.27% , AGN , ALLERGAN
1.91% , GD , GENERAL DYNAMICS
1.10% , XLU , Utilities SPDR, XLU
1.77% , RHT , Red Hat Inc.
1.75% , CSCO , CISCO SYSTEMS
0.80% , VPU , Utilities VIPERs, VPU
1.22% , D , DOMINION RSCS
2.89% , PKI , PERKINELMER
0.71% , PMCS , PMC SIERRA
1.36% , UTH , Utilities H, UTH
1.83% , WYE , WYETH
2.10% , MZZ , Short 200% MidCap 400 PS, MZZ
1.56% , TAP , ADOLPH COORS STK B, TAP
0.84% , ISIL , INTERSIL CORP
0.80% , YHOO , YAHOO
0.81% , PUI , Utilities, PUI
1.32% , SRE , SEMPRA ENERGY
1.60% , IGT , INTL GAME TECH
0.51% , UIS , UNISYS
0.67% , WPI , WATSON PHARM
0.80% , RIMM , RESEARCH IN MOTION LTD
0.47% , SIAL , SIGMA ALDRICH
0.99% , LAMR , Lamar Advertising Company
1.01% , DE , DEERE & CO
0.89% , BRCM , BROADCOM STK A
0.83% , BUD , ANHEUSER BUSCH
0.65% , MCK , MCKESSON CORP
0.89% , IDU , Utilities DJ, IDU
0.91% , PG , PROCTER & GAMBLE
0.51% , PSQ , Short 100% QQQ, PSQ
0.33% , PCAR , PACCAR
0.39% , AYE , ALLEGHENY ENERGY
0.08% , IGN , Networking, IGN
0.75% , MYY , Short 100% MidCap 400, MYY
% Price Change, Symbol, Name
-1.97% , PKB , Building & Construction, PKB
-2.50% , EWU , United Kingdom Index, EWU
-1.64% , EWM , Malaysia Index, EWM
-6.43% , CAH , CARDINAL HEALTH
-5.84% , PGJ , China LargeCap Growth G D H USX PS, PGJ
-3.24% , DISCA , Discovery Holding Co.
-8.78% , FXI , China 25 iS, FXI
-6.68% , DLTR , Dollar Tree Stores Inc
-3.97% , TRB , TRIBUNE
-1.18% , PMR , Retail, PMR
-1.25% , PHW , Hardware & Electronics, PHW
-6.01% , EWH , Hong Kong Index, EWH
-5.49% , SNDK , SanDisk Corporation
-2.17% , NVLS , NOVELLUS SYS
-0.79% , BDH , Broadband H, BDH
-4.85% , C , CITIGROUP
-0.85% , PWO , OTC Dynamic PS, PWO
-0.55% , DSV , Value Small Cap DJ, DSV
-1.11% , IJK , Growth MidCap 400 B, IJK
-2.61% , AMCC , APPLD MICRO CIRC
-0.86% , FEZ , Euro STOXX 50, FEZ
-1.54% , IXG , Financials Global LargeCap Value, IXG
-1.73% , EWW , Mexico Index, EWW
-3.15% , CTSH , Cognizant Technology Solutions
-4.34% , CAR , Avis Budget Group, Inc. (CAR)
-5.62% , JWN , NORDSTROM
-1.68% , RHI , ROBERT HALF
-1.00% , VCR , Consumer D. VIPERs, VCR
-4.32% , EMC , EMC
-3.69% , HOT , STARWOOD HOTELS
-3.35% , LOW , LOWES
-2.83% , FII , FED INVESTORS STK B
-3.16% , HRB , H&R BLOCK
-5.86% , RYAAY , Ryanair Holdings plc
-1.88% , SWK , STANLEY WORKS
-1.06% , HHH , Internet H, HHH
-2.12% , WEN , WENDYS INTL
-1.85% , BLL , BALL
-1.88% , SHW , SHERWIN WILLIAMS
-3.25% , HPC , HERCULES
-1.62% , PXJ , Oil & Gas, PXJ
-0.97% , IYC , Consumer Cyclical DJ, IYC
-6.42% , MBI , MBIA
-1.09% , PID , Dividend International, PID
-0.84% , PXQ , Networking, PXQ
-1.63% , CZN , CITIZENS COMMS STK B
-2.11% , LM , LEGG MASON
-0.67% , IGV , Software, IGV
-3.55% , COH , COACH
-1.91% , KLAC , KLA TENCOR Sectors: among the 9 major U.S. sectors, 2 rose and 7 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
0.14% Consumer Staples
-0.06% Health Care
-1.34% Consumer Discretionary
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. 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 on 11/5/07. Long term, XLK has been relatively strong compared to the S&P since its low on 7/24/06.
Utilities (XLU) Bullish, Overweight. Relative Strength for this defensive sector made a new 5-month high on 11/5/07. Price made a new 5-month high on 10/31/07. Utilities have improved significantly since their Relative Strength low on 9/28/07.
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.
Industrial (XLI) Neutral, Market Weight. Industrial stock sector price made an all-time price high on 10/10/07, and XLI has turned Relatively Strong since 10/31/07.
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 11/5/07, 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 11/5/07, XLF price hit another new 2-year low and 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 corrected moderately to the downside a day after 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 11/2/07. 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 on 11/2/07. 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 consolidated a day after making a new closing price high of $95.93. 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. The U.S. OIL FUND ETF (AMEX: USO), which is not a pure play on Crude Oil, finally made a new high.
The Energy stock sector has been lagging oil the commodity. XLE has underperformed the USO since 5/30/07.
December Gold Futures hit another new 28-year closing price high of $810.80, but GLD closed lower. This may be only a minor divergence. 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) made a new 2007 intraday price high but closed lower. This could be a minor sign of fatigue after the recent price run-up.
Inflation expectations rose to a new 14-month high. This is based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bonds prices consolidated with an “Inside Day”. The day’s trading range was contained entirely within the previous day’s range. The long-term, iShares Lehman 20+ Year U.S. Treasury Bond ETF (AMEX: TLT) touched a new 11-month high on 11/2/07 but was unable to hold new high territory into the close that day. This could signal fatigue. 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 a day after making a new closing price low of 76.30. 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:
0.71% Dow Utilities
0.41% Japanese Yen
0.22% US Dollar Index
0.14% Consumer Staples
0.06% Swiss Franc
0.04% Canadian Dollar
-0.06% Health Care
-0.07% Computer Tech
-0.15% Health Care
-0.18% Dow Composite
-0.18% Australian Dollar
-0.26% Euro Index
-0.33% 30Y T-Bond
-0.38% Dow Industrial
-0.42% AMEX Composite
-0.44% British Pound
-0.46% S&P 100
-0.50% S&P 500
-0.51% Dow Transports
-0.54% Nasdaq Composite
-0.54% Gold Mining
-0.54% Health Care Products
-0.57% Russell 1000
-0.60% Nasdaq 100
-0.60% Russell 3000
-0.61% Commodity Related
-0.62% Wilshire 5000
-0.80% S&P Mid Caps
-0.82% Oil Services
-0.83% Value Line
-0.92% Russell 2000
-0.93% NYSE Composite
-0.93% Natural Gas
-1.02% S&P Small Caps
-1.34% Consumer Discretionary
-1.86% Disk Drives
-1.95% South Korea
-2.50% United Kingdom
-2.73% Broker Dealers
-6.01% Hong Kong