By Robert W. Colby, Senior Analyst TraderPlanet.com

Downtrends in multiple time frames.

The S&P 500 broke below previous 6-day lows.

The S&P 500 closed below its popular 200-day simple moving averages.

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.

The Cumulative Daily Advance-Decline Lines are Bearish for both the NYSE and the NASDAQ.

The Small Cap/Large Cap Relative Strength ratio fell to a new 2.5-year low.

Financial and Consumer Discretionary Sector Relative Strength ratios both fell to their lowest level in 6 years. These two sectors have been at the bottom of my rankings for many months.


On Friday, major stock price indices gapped down on news of greater than expected CPI inflation. Stocks recovered until 11:00 a.m., but then began a slide back to the opening lows. A wave of selling in the final 75 minutes drove socks down to below the lowest lows of the previous 6 trading days, thereby confirming a short-term downtrend. Prices closed on their worst levels of the day.

Stagflation: The November consumer price index rose 0.8%. Excluding food and energy prices, the core CPI was up 0.3%, 50% higher that the 0.2% increase generally expected. 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 6%, suggesting a lack of confidence in a market upset and whipsawed by too many surprising news items. Falling volume suggests hesitation and fatigue.

Breadth ended 57% net Bearish, with more Declining stocks than Advancing stocks on the NYSE.

Up-Down Volume finished the day 70% 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

1.77% , HCR , MANOR CARE
2.04% , ADM , ARCHER DANIELS
1.70% , EFX , EQUIFAX
1.55% , PBW , WilderHill Clean Energy PS, PBW
1.18% , MYL , MYLAN LABS
0.72% , Q , QWEST COMMUNICAT
0.42% , NOVL , NOVELL
1.88% , PMTC.O , PARAMETRIC
4.22% , PKI , PERKINELMER
1.84% , TDC , Teradata Corporation, TDC
0.91% , VLO , VALERO ENERGY
0.51% , CCL , CARNIVAL STK A
1.54% , HES , AMERADA HESS
0.89% , MIL , MILLIPORE
1.03% , MYY , Short 100% MidCap 400, MYY
1.74% , STJ , ST JUDE MEDICAL
0.89% , CECO , CAREER EDUCATION CORP
0.66% , TWX , TIME WARNER INC
0.94% , NOV , NATIONAL OILWELL VARC0
1.29% , MHS , MEDCO HEALTH
1.61% , RIMM , RESEARCH IN MOTION LTD
1.09% , LMT , LOCKHEED MARTIN
0.33% , SCHW.O , CHARLES SCHWAB
0.34% , ADI , ANALOG DEVICES
0.62% , COL , ROCKWELL COLLINS
0.31% , CL , COLGATE
0.55% , CMCSA , COMCAST HOLDINGS STK A
0.34% , HMA , HEALTH MGMT STK A
0.27% , BF.B , BROWN FORMAN STK B
1.18% , PSQ , Short 100% QQQ, PSQ
0.76% , DIS , WALT DISNEY
0.27% , TXT , TEXTRON

Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name

-8.51% , BDK , BLACK & DECKER
-0.90% , IIH , Internet Infrastructure H, IIH
-1.32% , TTH , Telecom H, TTH
-1.12% , PMR , Retail, PMR
-4.45% , DLTR , Dollar Tree Stores Inc
-2.51% , VNQ , REIT VIPERs, VNQ
-6.89% , MAR , MARRIOTT INTL STK A
-1.93% , IXC , Energy Global, IXC
-3.14% , AA , ALCOA
-7.96% , CC , CIRCUIT CITY STR
-4.15% , SWK , STANLEY WORKS
-1.26% , PWT , Growth SmallCap Dynamic PS, PWT
-4.42% , EZA , South Africa Index, EZA
-1.06% , FPX , IPOs, First Tr IPOX-100, FPX
-4.08% , ADBE , ADOBE SYS
-5.15% , LVLT , LEVEL 3 COMMUNICATIONS
-2.86% , JBL , JABIL CIRCUIT
-2.41% , VGK , European VIPERs, VGK
-2.76% , EWD , Sweden Index, EWD
-1.98% , IOO , Global 100, IOO
-1.77% , SDY , Dividend SPDR, SDY
-0.84% , IGV , Software, IGV
-2.78% , MV , METAVANTE TECHNOLOGIES, MV
-2.29% , EWK , Belgium Index, EWK
-2.50% , PWP , Value MidCap Dynamic PS, PWP
-2.52% , EFG , Growth EAFE MSCI, EFG
-3.91% , EWJ , Japan Index, EWJ
-1.90% , CSC , COMPUTER SCIENCE
-4.35% , MLNM , Millennium Pharmaceuticals Inc
-1.78% , DSV , Value Small Cap DJ, DSV
-2.61% , MAT , MATTEL
-4.31% , MAS , MASCO
-2.47% , JKL , Value SmallCap iS M, JKL
-3.25% , VAW , Materials VIPERs, VAW
-3.42% , WPI , WATSON PHARM
-2.02% , ADRU , Europe 100 BLDRS, ADRU
-3.28% , SYY , SYSCO
-1.13% , LQD , Bond, Corp, LQD
-2.76% , ERIC.O , LM Ericsson Telephone Company
-3.36% , NE , NOBLE
-2.04% , PKB , Building & Construction, PKB
-1.13% , IGM , Technology GS, IGM
-1.89% , EWN , Netherlands Index, EWN
-2.30% , VDE , Energy VIPERs, VDE
-4.46% , THC , TENET HEALTHCARE
-2.82% , R , RYDER SYSTEM
-3.89% , VOX , Telecom Services VIPERs, VOX
-1.55% , PWV , Value LargeCap Dynamic PS, PWV
-4.08% , EBAY , EBAY
-2.84% , SPG , SIMON PROP GRP

Sectors: among the 9 major U.S. sectors, all 9 fell.
Major Sectors Ranked for the Day
% Price Change, Sector

-0.63% Technology
-1.10% Industrial
-1.23% Consumer Staples
-1.31% Consumer Discretionary
-1.52% Health Care
-1.60% Energy
-1.76% Materials
-1.80% Financial
-1.86% Utilities

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 12/13/07. 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 12/14/07, the XLY/SPY Relative Strength ratio fell to its lowest level in 6 years. Relative Strength has been trending down since 1/5/05. XLY price made a new 14-month low on 11/27/07.

Financial (XLF) Bearish, Underweight. On 12/14/07, the XLF/SPY Relative Strength ratio fell to its lowest level in 6 years. Relative Strength has been trending down since 2/20/07. XLF price hit a new 2.5-year low on 11/26/07.

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.

The Small Cap/Large Cap Relative Strength ratio fell to a new 2.5-year low on 12/14/07. Small Caps substantially underperformed Large Caps since 4/19/06. The main long-term trend is Relatively Bearish for Small Caps.

January Crude Oil Futures eased lower over the past 2 trading days. It could be a normal pullback after a previous steeper 2-day upmove. Resistance is at the 12/13/07 high of 94.85 and at the 11/21/07 high of 99.29. Oil found support at the 12/6/07 low of 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.

February Gold Futures worked lower over the past 2 days. Gold remains in a consolidation pattern, with the upper end of the trading range at 855.00 set on 11/7/07 and the lower end at 778.40 set on 11/20/07.

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. Price made a new 10-week low on 12/14/07.

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 still 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 again to a new 7-week closing price high. Short-term price strength since the oversold low at 74.65 on 11/23/07 seems to have further encouraged bottom fishers. Longer term, however, there could be plenty of overhead resistance and 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:

2.34% Airlines
1.13% US Dollar Index
0.21% Canadian Dollar
-0.24% Mexico
-0.28% Broker Dealers
-0.54% Canada
-0.60% 30Y T-Bond
-0.63% Technology
-0.64% Biotechs
-0.78% AMEX Composite
-0.78% Internet
-0.90% Health Care Products
-0.94% Hardware
-0.95% Health Care
-0.98% Hospitals
-1.02% Japanese Yen
-1.03% Oil
-1.05% Swiss Franc
-1.08% Nasdaq 100
-1.08% Computer Tech
-1.10% Industrial
-1.14% British Pound
-1.23% Nasdaq Composite
-1.23% Consumer Staples
-1.31% Consumer Discretionary
-1.32% Dow Industrial
-1.32% S&P 100
-1.35% Euro Index
-1.36% Russell 1000
-1.37% S&P 500
-1.38% Wilshire 5000
-1.41% Dow Utilities
-1.41% Russell 3000
-1.45% Dow Composite
-1.45% DOT
-1.52% Health Care
-1.52% Commodity Related
-1.52% Drugs
-1.58% S&P Mid Caps
-1.60% Energy
-1.61% Gold Mining
-1.61% Semiconductors
-1.61% Taiwan
-1.66% Natural Gas
-1.68% NYSE Composite
-1.69% Australian Dollar
-1.70% Dow Transports
-1.71% Chemicals
-1.74% Value Line
-1.74% Austria
-1.76% Materials
-1.78% Network
-1.80% Financial
-1.81% Oil Services
-1.85% Insurance
-1.86% Utilities
-1.86% Malaysia
-1.88% United Kingdom
-1.89% Netherlands
-2.02% Russell 2000
-2.10% S&P Small Caps
-2.12% Banks
-2.16% Disk Drives
-2.21% Hong Kong
-2.29% Belgium
-2.30% Switzerland
-2.35% Retailers
-2.46% Italy
-2.46% Singapore
-2.48% Spain
-2.56% Germany
-2.71% South Korea
-2.76% Sweden
-2.78% France
-2.91% Brazil
-3.10% REITs
-3.14% Paper
-3.91% Japan
-4.26% Australia