By Robert W. Colby, Senior Analyst TraderPlanet.com
U.S. Treasury Bond prices broke down below 4-week lows, continuing an upside correction for long-term interest rates.
On Monday, major stock price indices rose in the morning. Stock prices turned choppy in the afternoon but managed to hold on to most of their early gains.
Stocks were stimulated by news about capital infusions for some financial companies. Also, there is general hope that the FOMC will cut the fed funds rate at Tuesday’s meeting by at least 25 basis points, to 4.25% from 4.5%, and will cut the discount rate by 50 basis points, to 4.5% from 5.0%. But that hope ought to be discounted before the actual announcement.
Volume on both the NYSE and NASDAQ fell again, suggesting increasing hesitation and fatigue after a steep 10-day market stock market rebound from an oversold condition to an overbought condition.
Breadth ended 29% net Bullish, with more Advancing stocks than Declining stocks on the NYSE.
Up-Down Volume finished the day 47% net Bullish, with greater Up Volume than Down Volume on the NYSE.
New Highs-New Lows on the NYSE ended at 20% net Bullish.
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
9.61% , ABK , AMBAC FINL GRP
13.17% , MBI , MBIA
6.10% , MLNM , Millennium Pharmaceuticals Inc
11.28% , MTG , MGIC INVESTMENT
1.21% , IJR , SmallCap S&P 600, IJR
1.04% , JKK , Growth SmallCap iS M, JKK
3.67% , VC , VISTEON
0.65% , PEJ , Leisure & Entertainment, PEJ
3.21% , CAT , CATERPILLAR
6.89% , SOV , SOVEREIGN BANC
5.18% , MS , MORGAN STANLEY
4.21% , LM , LEGG MASON
2.31% , PJP , Pharmaceuticals, PJP
1.24% , BDH , Broadband H, BDH
4.12% , NVLS , NOVELLUS SYS
0.98% , EWI , Italy Index, EWI
0.64% , RFV , Value MidCap S&P 400, RFV
0.95% , NY , Value LargeCap NYSE 100 iS, NY
3.26% , ALL , ALLSTATE
0.89% , IWB , LargeCap 1000 R, IWB
1.18% , FPX , IPOs, First Tr IPOX-100, FPX
3.38% , HPC , HERCULES
2.65% , STI , SUNTRUST BANKS
4.46% , X , US STEEL CORP
6.33% , CIT , CIT GROUP
4.13% , FITB , FIFTH THIRD BANC
1.62% , TBH , Telebras HOLDRS, TBH*
3.61% , CC , CIRCUIT CITY STR
0.28% , PIC , Insurance, PIC
2.91% , JPM , J P MORGAN CHASE
0.54% , ADRA , Asia 50 BLDRS, ADRA
1.39% , IYM , Basic Materials DJ US, IYM
1.26% , GCI , GANNETT
0.75% , IYJ , Industrial LargeCap Blend DJ US, IYJ
1.98% , EK , EASTMAN KODAK
1.27% , VAW , Materials VIPERs, VAW
0.91% , IWR , MidCap Russell, IWR
1.43% , EDS , ELECTR DATA
1.88% , TUP , TUPPERWARE
2.89% , MCD , MCDONALDS
1.85% , TYC , TYCO INTL
0.15% , PSJ , Software, PSJ
4.47% , WM , WASHINGTON MUT
0.51% , VPL , Pacific VIPERs, VPL
0.82% , VIG , Dividend Appreciation Vipers, VIG
1.91% , KCE , Capital Markets KWB ST, KCE
0.78% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
1.95% , WMI , WASTE MANAGEMENT
1.26% , IVE , Value S&P 500 B, IVE
1.20% , CCL , CARNIVAL STK A Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-2.70% , RHT , Red Hat Inc.
-1.68% , YHOO , YAHOO
-1.45% , CCU , CLEAR CHANNEL
-1.49% , LTD , LIMITED BRANDS
-3.16% , AN , AUTONATION
-2.14% , TIF , TIFFANY
-0.76% , IBB , Biotechnology, IBB
-1.68% , PETM , PETsMART Inc
-1.36% , RFMD , RF Micro Devices Inc
-0.84% , IIH , Internet Infrastructure H, IIH
-1.34% , DIS , WALT DISNEY
-2.62% , MRVL , MARVELL TECHNOLOGY
-1.04% , AGN , ALLERGAN
-0.47% , HET , HARRAHS ENTER
-1.60% , IVGN , Invitrogen Corporation
-1.04% , NWS.A , NEWS CORP STK A
-1.03% , DISCA , Discovery Holding Co.
-1.37% , AMZN , Amazoncom Inc
-0.58% , VRSN , VeriSign Inc
-0.98% , CMI , CUMMINS
-1.48% , T , AT&T Corp., T
-0.52% , TXT , TEXTRON
-0.51% , MYY , Short 100% MidCap 400, MYY
-0.42% , WEN , WENDYS INTL
-0.83% , TEVA , Teva Pharmaceutical Industries Limited
-0.20% , AGG , Bond, Aggregate, AGG
-0.97% , CPWR , COMPUWARE
-0.35% , D , DOMINION RSCS
-0.98% , TWX , TIME WARNER INC
-0.80% , LXK , LEXMARK INTL STK A
-1.13% , NSC , NORFOLK SOUTHERN
-0.69% , BC , BRUNSWICK
-3.38% , SLM , SLM CORP
-0.52% , AOC , AON
-0.16% , ADRE , Emerging 50 BLDRS, ADRE
-1.19% , CL , COLGATE
-0.37% , DGX , QUEST DIAG
-0.23% , IEF , Bond, 10 Year Treasury, IEF
-0.98% , BMC , BMC SOFTWARE
-0.89% , NOC , NORTHROP GRUMMAN
-1.54% , DXD , Short 200% Dow 30 PS, DXD
-0.56% , BA , BOEING
-0.35% , HRB , H&R BLOCK
-0.32% , A , AGILENT TECH
-0.69% , RAI , RJR TOBACCO HLDS
-0.15% , YUM , YUM BRANDS
-0.15% , EMC , EMC
-0.77% , ITT , ITT INDS
-0.42% , NUE , NUCOR
-0.05% , EMR , EMERSON ELECTRIC
Sectors: among the 9 major U.S. sectors, all 9 rose.
% Price Change, Sector
0.19% Health Care
0.10% Consumer Staples
0.06% Consumer Discretionary
Energy (XLE) Bullish, Overweight. Relative Strength made a new all-time high on 11/8/07. 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.
Utilities (XLU) Bullish, Overweight. This defensive sector’s Relative Strength made a new 6-year high on 12/5/07, and price made a new all-time high on 12/10/07.
Materials (XLB) Bullish, Overweight. The short-term turned down but the long-term trend is still up. Relative Strength made new all-time high on 11/8/07. Price made new all-time high on 10/29/07. The long-term Relative Strength trend has strongly outperformed since 9/27/2000.
Consumer Staples (XLP) Bullish, Overweight. This defensive sector’s price made a new all-time high on 12/10/07, and Relative Strength made a new 6-year high on 11/26/07.
Technology (XLK) Neutral, Market Weight. Relative Strength made a new 7-week low on 11/30/07. Still, long term, XLK has been relatively strong compared to the S&P since its low on 7/24/06.
Industrial (XLI) Neutral, Market Weight. Price and Relative Strength have been chopping sideways since 8/3/07. Longer-term trends appear Bullish.
Health Care (XLV) Neutral, Market Weight. XLV price moved up to a new 6-month high on 12/3/07. Relative Strength moved up to a new 13-month high on 11/27/07.
Consumer Discretionary (XLY) Bearish, Underweight. On 11/27/07, price made a new 14-month low. On 12/6/07, 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. XLF underperformed substantially on Tuesday and Wednesday. The oversold bounce in late November is history. XLF price hit another new 2.5-year low on 11/26/07, and the XLF/SPY Relative Strength ratio fell to its lowest level in more than 7 years on 11/26/07. Relative Strength has been trending down since 2/20/07.
Foreign stock indices have underperformed U.S. stock indices short term, since 11/27/07. 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 11/27/07. 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 underperformed the S&P since 11/7/07. But trends in different time frames conflict. Longer term, NASDAQ outperformed from 8/8/06 to 11/7/07, including a new 6-year Relative strength high on 11/7/07 and a new price high on 10/31/07.
Growth Stock/Value Stock Relative Strength ratio has been in a neutral trend since 11/7/07. The long-term, the main trend for the Growth/Value ratio (IWF/IWD) has been rising since 8/8/06.
Small Caps have recovered mildly since 12/4/07, when Relative Strength hit a new low. Small Caps substantially underperformed Large Caps since 4/19/06, and so the main long-term trend is Bearish for Small Caps.
January Crude Oil Futures appear to be in a correction. Watch to see if the 12/6/07 low at 85.82 holds. The next Potential Support levels might be 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) is not a pure play on Crude Oil, although it generally moves in the same direction.
The Energy stock sector outperformed the USO since 11/26/07. Previously, over the 6 months from 5/30/07 to 11/26/07, XLE lagged oil the commodity.
December Gold Futures rose to a new 8-day high, but Gold is still well below its top at 848.00 set on 11/7/07.
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) has underperformed Gold Futures since 10/31/07.
Inflation expectations recovered weakly after moving steadily down from 11/23/07 to 12/5/07. A new 3-month low on 12/05/07 suggests that a downside correction is underway, based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices broke down below 4-week lows. A steepening correction appears to be underway since bonds made new 28-month price highs on 11/26/07. 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 eased below a 10-day uptrend line. The short-term trend now appears uncertain, at best. Longer term, the main trend is still Bearish. The dollar fell 19% from its high of 92.53 on 11/16/05 to its low of 74.65 on 11/23/07, moving it into “oversold”.
Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:
2.54% Broker Dealers
1.26% Commodity Related
1.23% Gold Mining
1.18% Oil Services
1.08% United Kingdom
1.03% AMEX Composite
0.82% Natural Gas
0.81% NYSE Composite
0.80% S&P Mid Caps
0.80% Value Line
0.77% Wilshire 5000
0.76% Russell 1000
0.76% Russell 3000
0.75% S&P 500
0.75% Disk Drives
0.74% Dow Industrial
0.74% S&P 100
0.73% Health Care Products
0.72% Russell 2000
0.72% S&P Small Caps
0.71% British Pound
0.66% Australian Dollar
0.60% Dow Composite
0.55% Computer Tech
0.51% Dow Transports
0.47% Nasdaq Composite
0.39% Euro Index
0.38% Dow Utilities
0.23% Nasdaq 100
0.19% Health Care
0.16% Health Care
0.13% Hong Kong
0.11% Swiss Franc
0.10% Consumer Staples
0.06% Consumer Discretionary
0.02% Japanese Yen
-0.27% Canadian Dollar
-0.32% US Dollar Index
-0.35% 30Y T-Bond
-1.46% South Korea