By Robert W. Colby, Senior Analyst TraderPlanet.com
Consumer Discretionary stock sector: Relative Strength fell to its lowest level in 6 years–again.
Inflation expectations rose to a new 14-month high.
December Crude Oil Futures made a new closing price high at $96.70.
December Gold Futures hit another new 28-year closing price high at $823.40.
The U.S. dollar fell to another new price low.
The stage was set for a rally over the previous 2 trading days. 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 was not as Bearish as it was in October. That meant 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 29% net Bullish, with more Advancing stocks than Declining stocks on the NYSE.
Total volume rose on both the NYSE and on the NASDAQ to confirm the price uptrend.
New Highs-New Lows on the NYSE ended at 22% 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
22.29% , THC , TENET HEALTHCARE
11.68% , XMSR , XM Satellite R
1.64% , PWT , Growth SmallCap Dynamic PS, PWT
9.03% , FLEX , Flextronics International Ltd
6.87% , ADM , ARCHER DANIELS
1.69% , EFG , Growth EAFE MSCI, EFG
5.85% , URBN , Urban Outfitters Inc.
2.65% , IYM , Basic Materials DJ US, IYM
6.83% , EXPD , Expeditors International WA
6.10% , NE , NOBLE
4.35% , PBW , WilderHill Clean Energy PS, PBW
3.38% , UST , UST
3.01% , PXE , Energy Exploration & Prod, PXE
4.77% , VLO , VALERO ENERGY
1.59% , PWB , Lg Cap Growth PSD, PWB
4.78% , SIRI , Sirius Satellite
5.18% , SLV , Silver Trust iS, SLV
1.94% , IAU , Gold COMEX iS, IAU
2.78% , AES , AES
5.28% , VMC , VULCAN MATERIALS
7.73% , NOV , NATIONAL OILWELL VARC0
7.57% , JNS , JANUS CAPITAL
1.18% , IWZ , Growth LargeCap Russell 3000, IWZ
1.62% , IJT , Growth BARRA Small Cap 600, IJT
1.98% , FPX , IPOs, First Tr IPOX-100, FPX
3.66% , APD , AIR PRODS & CHEM
2.13% , IGN , Networking, IGN
2.21% , HAL , HALLIBURTON
4.57% , RIG , TRANSOCEAN
4.17% , OXY , OCCIDENTAL
7.05% , HES , AMERADA HESS
5.34% , EMR , EMERSON ELECTRIC
3.22% , MLNM , Millennium Pharmaceuticals Inc
2.70% , EWD , Sweden Index, EWD
4.82% , CBE , COOPER INDS STK A
6.52% , FNM , FANNIE MAE
3.98% , CIEN.O , CIENA
3.35% , ADSK , AUTODESK
2.28% , ETN , EATON
1.35% , EFV , Value EAFE MSCI, EFV
2.03% , KCE , Capital Markets KWB ST, KCE
5.48% , EWY , South Korea Index, EWY
1.86% , MRVL , MARVELL TECHNOLOGY
3.72% , ECL , ECOLAB
2.66% , VDE , Energy VIPERs, VDE
2.11% , GLD , Gold Shares S.T., GLD
1.12% , KLD , LargeCap Blend Socially Responsible iS, KLD
3.44% , ORCL , ORACLE
0.98% , PWO , OTC Dynamic PS, PWO
2.30% , NOC , NORTHROP GRUMMAN
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-19.21% , CTSH , Cognizant Technology Solutions
-14.57% , CTB , COOPER TIRE
-7.08% , CECO , CAREER EDUCATION CORP
-6.44% , NIHD , NII Holdings, Inc.
-3.97% , SNPS , Synopsys Inc
-4.68% , SYMC , SYMANTEC
-1.93% , NYT , NY TIMES STK A
-2.37% , TAP , ADOLPH COORS STK B, TAP
-4.56% , YHOO , YAHOO
-1.75% , COF , CAPITAL ONE FNCL
-1.87% , LUV , SOUTHWEST AIRLS
-1.53% , FE , FIRSTENERGY
-1.05% , PTV , PACTIV
-0.88% , CAR , Avis Budget Group, Inc. (CAR)
-1.18% , IPG , INTERPUBLIC GRP
-1.82% , STJ , ST JUDE MEDICAL
-2.46% , DDS , DILLARD STK A
-1.42% , HAS , HASBRO
-1.85% , LSI , LSI LOGIC
-1.43% , SOV , SOVEREIGN BANC
-0.60% , AM , AMER GREETINGS STK A
-1.62% , ATVI , Activision Inc.
-1.13% , CPWR , COMPUWARE
-0.62% , INTU , INTUIT
-0.59% , AMAT , APPLIED MATERIAL
-0.62% , LPX , LOUISIANA PAC
-3.12% , MV , METAVANTE TECHNOLOGIES, MV
-1.24% , PCG , PG&E
-0.68% , SSCC , Smurfit-Stone Container Corporation
-1.22% , CVG , CONVERGYS
-2.03% , Q , QWEST COMMUNICAT
-0.87% , MSFT , MICROSOFT
-1.09% , HSIC , Henry Schein Inc
-3.05% , JWN , NORDSTROM
-0.88% , OMC , OMNICOM
-2.17% , MU , MICRON TECH
-0.61% , LQD , Bond, Corp, LQD
-1.27% , EP , EL PASO
-0.81% , WHR , WHIRLPOOL
-1.56% , COH , COACH
-1.31% , AN , AUTONATION
-0.68% , PETM , PETsMART Inc
-1.22% , DRI , DARDEN REST
-1.31% , PDCO , Patterson Dental Company
-0.34% , UPS , UNITED PARCEL STK B
-0.06% , PEJ , Leisure & Entertainment, PEJ
-0.53% , ACV , Alberto-Culver Co.
-1.59% , LOW , LOWES
-0.09% , CAG , CONAGRA FOODS
-1.36% , MHP , MCGRAW HILL
Sectors: among the 9 major U.S. sectors, all 9 rose.
Major Sectors Ranked for the Day
% Price Change, Sector
0.88% Consumer Discretionary
0.68% Consumer Staples
0.54% Health Care
Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):
Energy (XLE) Bullish, Overweight. Relative Strength made new all-time high on 11/6/07. XLE made an all-time closing price high on 10/16/07. 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.
Materials (XLB) Bullish, Overweight. Relative Strength made new all-time high on 11/6/07. Price made new all-time high on 10/29/07. The long-term Relative Strength trend has strongly outperformed since 9/27/2000.
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.
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 11/6/07, 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 indices outperformed again. 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 made a new closing price high at $96.70. All trends are still Bullish, obviously. 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 $823.40, and GLD confirmed. Major trends obviously remain Bullish for Gold and the Gold Trust ETF (NYSE: GLD).
Silver’s main trend is Bearish compared to Gold. The iShares Silver Trust (AMEX: SLV) has been relatively weak since 12/7/06.
The Gold Miners ETF (GDX) gapped up to a new 2007 price high.
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 fell 2 consecutive days, after hitting resistance. 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 fell to another a new price low. 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:
5.48% South Korea
5.42% Hong Kong
3.52% Gold Mining
3.15% Oil Services
2.56% Commodity Related
1.79% AMEX Composite
1.63% Broker Dealers
1.44% NYSE Composite
1.43% Russell 2000
1.36% S&P Small Caps
1.25% S&P Mid Caps
1.22% Russell 3000
1.21% Canadian Dollar
1.20% S&P 500
1.20% Russell 1000
1.19% Wilshire 5000
1.17% S&P 100
1.17% Value Line
1.13% Natural Gas
1.07% Nasdaq Composite
1.07% Nasdaq 100
1.03% Computer Tech
0.99% United Kingdom
0.88% Consumer Discretionary
0.87% Dow Industrial
0.85% Dow Transports
0.70% Swiss Franc
0.68% Consumer Staples
0.66% Dow Composite
0.66% Australian Dollar
0.60% Euro Index
0.54% Health Care
0.40% Health Care
0.32% British Pound
0.16% Health Care Products
-0.07% Dow Utilities
-0.17% Japanese Yen
-0.40% Disk Drives
-0.44% 30Y T-Bond
-0.51% US Dollar Index