By Robert W. Colby, Senior Analyst TraderPlanet.com
Energy Sector Relative Strength made a new all-time high.
Consumer Discretionary Sector Relative Strength ratio fell to its lowest level in 6 years.On Wednesday, major stock price indices gapped much higher on big news from the Fed. Stock traders were thoroughly whipsawed after Tuesday’s disappointing Fed announcement, which seemed to indicate that the Fed was not going to be as accommodative as hoped. Stock prices gave up most of the early gains and closed below the midpoint of the day’s wide range.
The Fed announced before the open that it would coordinate with foreign central banks to add liquidity through term funds auctions and foreign exchange swap lines. This would enable the Fed to inject term funds through a broad range of counterparties and against a broad range of collateral. Some said this could be more powerful than a discount rate cut. Others wondered why the Fed did not announce this on Tuesday to avoid unnecessary market turmoil.
Volume on the NYSE rose by 10%, reflecting a disorderly market whipsawed by Fed news.
Breadth ended 12% net Bullish, with more Advancing stocks than Declining stocks on the NYSE.
New Highs-New Lows on the NYSE ended at 40% 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 4.20% , RFMD , RF Micro Devices Inc
11.11% , BHH , Internet B2B H, BHH
2.39% , PIV , Value Line Timeliness MidCap Gr, PIV
3.21% , SWK , STANLEY WORKS
7.11% , HES , AMERADA HESS
3.74% , IYZ , Telecom DJ US, IYZ
5.18% , USO , Oil, Crude, U.S. Oil Fund, USO
1.31% , KCE , Capital Markets KWB ST, KCE
2.34% , IEV , Europe 350 S&P Index, IEV
2.16% , WAT , WATERS
5.00% , APA , APACHE
3.77% , PFG , PRINCIPAL FINL
1.28% , PZJ , SmallCap PS Zacks, PZJ
3.35% , AOC , AON
2.53% , VDE , Energy VIPERs, VDE
2.73% , DBC , Commodity Tracking, DBC
2.03% , SAF , SAFECO
5.51% , CMI , CUMMINS
2.01% , PBG , PEPSI BOTTLING
2.27% , SANM , SANMINA
1.27% , NWS.A , NEWS CORP STK A
5.05% , RDC , ROWAN COMPANIES
3.50% , BF.B , BROWN FORMAN STK B
2.37% , MMM , 3M
2.19% , PTEN , Patterson-UTI Energy Inc
5.61% , CCE , COCA COLA ENTER
1.73% , EWD , Sweden Index, EWD
1.90% , ALTR , ALTERA
2.23% , VLO , VALERO ENERGY
0.99% , ADRU , Europe 100 BLDRS, ADRU
2.49% , RRD , RR DONNELLEY SON
2.25% , SLB , SCHLUMBERGER
2.46% , IYE , Energy DJ, IYE
1.60% , WMB , WILLIAMS
1.61% , ADRD , Developed 100 BLDRS, ADRD
2.48% , ACV , Alberto-Culver Co.
1.17% , HHH , Internet H, HHH
2.25% , LNCR , Lincare Holdings Inc
0.62% , DGT , Global Titans, DGT
1.63% , NYT , NY TIMES STK A
2.06% , VGK , European VIPERs, VGK
1.00% , BLL , BALL
0.47% , RPG , Growth S&P 500, RPG
3.69% , XTO , XTO ENERGY INC
3.07% , APC , ANADARKO PETRO
0.89% , CA , COMPUTER ASSOC
0.41% , JKF , Value LargeCap iS M, JKF
2.11% , PEP , PEPSICO
2.08% , GENZ , GENZYME GEN
0.99% , RHT , Red Hat Inc. Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name -10.80% , SLM , SLM CORP
-11.48% , ODP , OFFICE DEPOT
-9.89% , XMSR , XM Satellite R
-3.66% , SGP , SCHERING PLOUGH
-6.00% , SIRI , Sirius Satellite
-3.31% , IIH , Internet Infrastructure H, IIH
-5.30% , C , CITIGROUP
-4.24% , XL , XL CAPITAL STK A
-6.05% , FITB , FIFTH THIRD BANC
-3.34% , OMX , OFFICEMAX INC., OMX
-3.39% , WB , WACHOVIA
-4.93% , LVLT , LEVEL 3 COMMUNICATIONS
-2.51% , WWY , WM WRIGLEY JR
-3.55% , PNC , PNC FINL SVC
-2.73% , BAC , BANK OF AMERICA
-2.06% , LUV , SOUTHWEST AIRLS
-3.57% , EK , EASTMAN KODAK
-5.00% , NCC , NATIONAL CITY
-3.57% , MI , MARSHAL & ILSLEY
-1.29% , CCU , CLEAR CHANNEL
-2.12% , COH , COACH
-2.18% , HBAN , HUNTINGTON
-2.59% , GT , GOODYEAR TIRE
-2.01% , BA , BOEING
-3.32% , COF , CAPITAL ONE FNCL
-1.72% , AGN , ALLERGAN
-3.35% , LPX , LOUISIANA PAC
-3.73% , KEY , KEYCORP
-1.62% , DTE , DTE ENERGY
-1.69% , BCR , C R BARD
-0.94% , BEAS , BEA Systems Inc
-3.11% , RF , REGIONS FINAN
-2.81% , EQR , EQUITY RESIDENT BEN INT
-0.80% , ETR , ENTERGY
-1.95% , DRI , DARDEN REST
-1.68% , LIZ , LIZ CLAIRBORNE
-2.04% , MCO , MOODYS CORP
-4.38% , MTG , MGIC INVESTMENT
-1.89% , AIV , APT INV MNGMT
-2.92% , GRMN , GARMIN LTD
-1.13% , MRK , MERCK & CO
-1.48% , DELL , DELL
-1.84% , SDS , Short 200% S&P 500 PS, SDS
-1.75% , QID , Short 200% QQQ PS, QID
-5.16% , FHN , FIRST TENNESSEE
-0.84% , CMCSA , COMCAST HOLDINGS STK A
-0.71% , AEP , AM ELEC POWER
-1.43% , HSY , HERSHEY FOODS
-0.64% , HCR , MANOR CARE
-4.29% , NIHD , NII Holdings, Inc.
Sectors: among the 9 major U.S. sectors, 8 rose and 1 fell.
% Price Change, Sector 3.26% Energy
0.33% Consumer Discretionary
0.27% Consumer Staples
0.06% Health Care
-0.76% Financial Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):
Energy (XLE) Bullish, Overweight. Relative Strength made a new all-time high on 12/12/07. 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 turned up from a low on 11/30/07. And, 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 12/12/07, 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 substantially underperformed Large Caps since 4/19/06, and so the main long-term trend is Bearish for Small Caps.
January Crude Oil Futures rose sharply after the government reported unexpected declines in supplies of crude and heating oil. The short-term trend is now up. Resistance is at the 11/21/07 high at 99.29. Oil found support at the 12/6/07 low at 85.82. 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 slightly. But Gold remains well below the top at 848.00 set on 11/7/07and still could be in a correction.
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 have been recovering since 12/5/07. The short-term trend is up, based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices gave up most of Tuesdays gain on a flight to safety. 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 slightly lower and appears mildly corrective short-term. 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:
3.91% South Korea
2.74% Oil Services
2.51% United Kingdom
2.47% Natural Gas
2.46% Commodity Related
2.12% Gold Mining
1.58% Hong Kong
1.05% Computer Tech
0.85% NYSE Composite
0.85% Nasdaq 100
0.84% AMEX Composite
0.71% Nasdaq Composite
0.71% Russell 2000
0.67% Australian Dollar
0.65% Broker Dealers
0.61% S&P 500
0.55% S&P 100
0.54% Russell 3000
0.53% Russell 1000
0.50% S&P Small Caps
0.47% Wilshire 5000
0.47% British Pound
0.36% Value Line
0.34% S&P Mid Caps
0.33% Consumer Discretionary
0.31% Dow Industrial
0.27% Consumer Staples
0.22% Dow Composite
0.20% Dow Utilities
0.18% Euro Index
0.15% Health Care
0.11% Health Care Products
0.08% Disk Drives
0.07% Dow Transports
0.06% Health Care
-0.04% Canadian Dollar
-0.12% US Dollar Index
-0.19% Swiss Franc
-0.70% 30Y T-Bond
-1.08% Japanese Yen