By Robert W. Colby, Senior Analyst TraderPlanet.com
Consolidating losses in a high risk environment.
The S&P 500 and DJIA remain below the lower boundary lines of their broken Bearish Rising Wedges and below their popular 50-day simple moving averages.
Energy Sector Relative Strength made a new all-time high.
Consumer Discretionary Sector Relative Strength ratio fell to its lowest level in 6 years.
The November PPI surged 3.2%, more than double the consensus estimate of an increase of 1.5%. It was the biggest inflation in 34 years—at a time when more economists are revising estimates down to recession levels. Recall that the Stagflation of the 1970’s was a very difficult time for investors.
Volume on the NYSE fell by 19%, suggesting a lack of confidence in a market upset and whipsawed by too many surprising news items.
Breadth ended 33% net Bearish, with more Declining stocks than Advancing stocks on the NYSE.
Up-Down Volume finished the day 31% net Bearish, with greater Down Volume than Up Volume on the NYSE.
New Highs-New Lows on the NYSE ended at 73% 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
6.32% , DOW , DOW CHEMICAL
3.01% , XRAY , DENTSPLY International Inc
2.27% , IGT , INTL GAME TECH
2.79% , TRB , TRIBUNE
4.10% , TYC , TYCO INTL
2.88% , SUN , SUNOCO
3.12% , KSU , Kansas City Southern, KSU
0.41% , FDV , Value 40 Large Low P/E FT DB, FDV
2.53% , MOLX , MOLEX
2.19% , HGSI , Human Genome Sciences Inc
0.35% , IVW , Growth S&P 500/BARRA, IVW
5.04% , HON , HONEYWELL INTL
0.99% , IDU , Utilities DJ, IDU
2.77% , CI , CIGNA
0.51% , PXJ , Oil & Gas, PXJ
3.59% , CSX , CSX
3.08% , SWY , SAFEWAY
1.28% , PPG , PPG INDUSTRIES
2.50% , ERTS , ELECTRONIC ARTS
1.33% , BMC , BMC SOFTWARE
2.18% , MSFT , MICROSOFT
0.62% , CTB , COOPER TIRE
0.24% , PWER , POWER ONE
1.91% , TROW , T ROWE PRICE GP
0.83% , VIS , Industrials VIPERs, VIS
0.13% , IWW , Value LargeCap Russell 3000, IWW
1.51% , D , DOMINION RSCS
2.06% , CNP , CENTERPNT ENERGY
0.54% , DDM , Ultra Dow30 Double, DDM
0.51% , FPX , IPOs, First Tr IPOX-100, FPX
0.36% , PWO , OTC Dynamic PS, PWO
0.44% , XLP , Consumer Staples SPDR, XLP
3.24% , CCE , COCA COLA ENTER
0.02% , TMW , Wilshire 5000 ST TM, TMW
1.49% , DIS , WALT DISNEY
3.62% , FAST , Fastenal Company
0.70% , DOV , DOVER
0.48% , CEG , CONSTELL ENERGY
0.53% , VAW , Materials VIPERs, VAW
0.63% , AOC , AON
0.46% , JKD , LargeCap Blend Core iS M, JKD
2.22% , WLP , WELLPOINT HEALTH
0.02% , DJ , DOW JONES
0.31% , OEF , LargeCap Blend S&P 100, OEF
0.05% , ELV , Value Large Cap DJ, ELV
0.79% , NKE , NIKE STK B
0.09% , PPA , Aerospace & Defense, PPA
0.08% , MTK , Technology MS sT, MTK
0.43% , YUM , YUM BRANDS
1.13% , DUK , DUKE ENERGY
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-23.68% , BIIB , BIOGEN IDEC
-12.06% , CIEN.O , CIENA
-0.82% , PXQ , Networking, PXQ
-8.30% , NIHD , NII Holdings, Inc.
-3.63% , BBH , Biotech H, BBH
-1.02% , PHW , Hardware & Electronics, PHW
-2.66% , DISCA , Discovery Holding Co.
-5.24% , MAR , MARRIOTT INTL STK A
-3.92% , BHH , Internet B2B H, BHH
-2.35% , COST , COSTCO WHOLESAL
-2.27% , TBH , Telebras HOLDRS, TBH*
-1.65% , EPP , Pacific ex-Japan, EPP
-4.14% , ABK , AMBAC FINL GRP
-2.04% , EFA , EAFE Index, EFA
-3.97% , RHI , ROBERT HALF
-0.30% , XBI , Biotech SPDR, XBI
-2.82% , WOR , WORTHINGTON INDS
-2.64% , FISV , FISERV
-0.41% , IYC , Consumer Cyclical DJ, IYC
-2.01% , PETM , PETsMART Inc
-2.44% , ADRA , Asia 50 BLDRS, ADRA
-2.80% , SPLS , STAPLES
-4.07% , FXI , China 25 iS, FXI
-1.50% , PBE , Biotech & Genome, PBE
-1.79% , EWP , Spain Index, EWP
-5.15% , HRB , H&R BLOCK
-1.49% , EWW , Mexico Index, EWW
-2.86% , PGR , PROGRESSIVE OHIO
-0.93% , PXN , Nanotech Lux, PXN
-0.76% , XME , Metals & Mining SPDR, XME
-2.37% , DISH , EchoStar Communications Corporation
-0.47% , JKJ , SmallCap Core iS M, JKJ
-2.40% , FHN , FIRST TENNESSEE
-3.63% , ISIL , INTERSIL CORP
-0.99% , PMCS , PMC SIERRA
-0.82% , EWC , Canada Index, EWC
-4.43% , DYN , DYNEGY
-1.30% , MCK , MCKESSON CORP
-1.89% , VPL , Pacific VIPERs, VPL
-0.29% , KLD , LargeCap Blend Socially Responsible iS, KLD
-1.38% , EWH , Hong Kong Index, EWH
-4.82% , TER , TERADYNE
-0.67% , ACV , Alberto-Culver Co.
-2.31% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-1.68% , MIL , MILLIPORE
-2.32% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-0.28% , FDL , Dividend Leaders, FDL
-5.42% , XL , XL CAPITAL STK A
-1.10% , BIG , BIG LOTS
-2.15% , ROST , Ross Stores Inc
Sectors: among the 9 major U.S. sectors, 5 rose and 4 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
0.44% Consumer Staples
-0.06% Health Care
-0.65% Consumer Discretionary
Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):
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 12/13/07, 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 in recent days. 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 gave back a fraction of Wednesday’s sharp gain as they fell 2% to 92.50. It could be a normal pullback after a steep 2-day upmove. 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 fell steeply, breaking 3-day lows. Gold remains well below the top at 848.00 set on 11/7/07and 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. Price made a new 7-week low on 12/13/07.
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 appear to be in a short-term correction since 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 rose to a new 6-week closing price high. This may encourage bottom fishing over the short-term. Longer term, however, 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”.
1.13% Dow Utilities
0.53% Dow Composite
0.52% US Dollar Index
0.44% Dow Transports
0.44% Consumer Staples
0.42% Computer Tech
0.33% Dow Industrial
0.23% S&P 100
0.14% Oil Services
0.12% S&P 500
0.11% Russell 1000
0.09% Natural Gas
0.08% Russell 3000
0.04% Wilshire 5000
-0.02% S&P Mid Caps
-0.06% Health Care
-0.09% Japanese Yen
-0.10% Nasdaq Composite
-0.25% Health Care
-0.29% Russell 2000
-0.31% Value Line
-0.32% Nasdaq 100
-0.38% S&P Small Caps
-0.40% British Pound
-0.58% NYSE Composite
-0.65% Consumer Discretionary
-0.69% Euro Index
-0.70% Swiss Franc
-0.71% Canadian Dollar
-0.74% Disk Drives
-0.78% Commodity Related
-0.87% Australian Dollar
-0.91% AMEX Composite
-0.99% Health Care Products
-1.00% 30Y T-Bond
-1.22% Broker Dealers
-1.38% Hong Kong
-1.63% South Korea
-2.26% United Kingdom
-2.89% Gold Mining