By Robert W. Colby, Senior Analyst TraderPlanet.com
Momentum oscillartors show bearish divergence. Fear is starting to rise again.
The S&P 500 and DJIA fell further below the lower boundary lines of their broken Bearish Rising Wedges and below their popular 50-day and 200-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.
VIX “Fear Index” rose to 24.52 from 20.74 on 12/10/08. VIX is above its rising 50-day and 200-day simple moving averages. VIX is a market estimate of expected constant 30-day volatility, calculated by weighting S&P 500 Index CBOE option bid/ask quotes spanning a wide range of strike prices for the two nearest expiration dates.
VXN “Fear Index” rose to 27.89 from 23.47 on 12/7/08. VXN is above its rising 50-day and 200-day simple moving averages. VXN measures Nasdaq Volatility using a method comparable to that used for VIX.
Stagflation: Alan Greenspan, the former Fed chairman, warned of the possibility of rising prices at the same time as the economy cools, and he sees a 50-50 chance of a recession. The November consumer price index rose 0.8%. Excluding food and energy prices, the core CPI was up 0.3%, 50% higher than the consensus forecast. The November PPI surged 3.2%, more than double consensus estimates. It was the biggest inflation in 34 years. 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 rose by 5%, suggesting an increase in selling pressure.
Breadth ended 64% net Bearish, with more Declining stocks than Advancing stocks on the NYSE.
Up-Down Volume finished the day 59% net Bearish, with greater Down Volume than Up Volume on the NYSE.
New Highs-New Lows on the NYSE ended at 87% 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
16.88% , ABK , AMBAC FINL GRP
2.99% , CZN , CITIZENS COMMS STK B
2.90% , PBG , PEPSI BOTTLING
3.19% , MZZ , Short 200% MidCap 400 PS, MZZ
1.47% , HOG , HARLEY DAVIDSON
1.98% , QLGC , QLOGIC
1.59% , BBY , BEST BUY
2.44% , LTR , LOEWS
1.54% , SH , Short 100% S&P 500, SH
4.42% , QID , Short 200% QQQ PS, QID
1.33% , DOG , Short 100% Dow 30, DOG
0.96% , HGSI , Human Genome Sciences Inc
1.47% , GT , GOODYEAR TIRE
1.88% , CTX , CENTEX
2.18% , CTB , COOPER TIRE
0.94% , AOC , AON
2.42% , DXD , Short 200% Dow 30 PS, DXD
3.39% , JCP , JC PENNEY
2.52% , ACE , ACE
2.39% , PSQ , Short 100% QQQ, PSQ
1.35% , SAF , SAFECO
0.89% , TLT , Bond, 20+ Years Treasury, TLT
1.73% , DHI , D.R. HORTON, DHI
1.47% , CCE , COCA COLA ENTER
1.33% , KSS , KOHLS
0.93% , TIF , TIFFANY
0.56% , ROST , Ross Stores Inc
1.44% , JWN , NORDSTROM
1.12% , LTD , LIMITED BRANDS
0.99% , LNCR , Lincare Holdings Inc
0.40% , ESRX , EXPRESS SCRIPTS
0.51% , DDS , DILLARD STK A
0.70% , TGT , TARGET
0.38% , ACS , AFFILIATED COMPUTER
0.16% , IYT , Transportation Av DJ, IYT
0.20% , BNI , BURLINGTON NORTH
1.11% , MAT , MATTEL
2.94% , SDS , Short 200% S&P 500 PS, SDS
0.43% , BJS , BJ SERVICES
0.17% , OMC , OMNICOM
0.28% , VRSN , VeriSign Inc
0.27% , ZMH , ZIMMER HLDGS
0.42% , WMT , WAL MART STORES
0.29% , SHY , Bond, 1-3 Year Treasury, SHY
0.57% , PBI , PITNEY BOWES
0.73% , CIT , CIT GROUP
0.25% , IPG , INTERPUBLIC GRP
0.62% , VLO , VALERO ENERGY
0.05% , LH , LAB CRP OF AMER
0.29% , RSH , RADIOSHACK
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-3.05% , XSD , Semiconductor SPDR, XSD
-11.35% , IR , INGER RAND
-1.24% , ISI , LargeCap Blend S&P 1500 iS, ISI
-8.63% , NOV , NATIONAL OILWELL VARC0
-1.53% , PZJ , SmallCap PS Zacks, PZJ
-6.10% , ITW , ILLINOIS TOOL
-1.58% , PEJ , Leisure & Entertainment, PEJ
-2.28% , VDE , Energy VIPERs, VDE
-2.45% , MTK , Technology MS sT, MTK
-4.44% , EPP , Pacific ex-Japan, EPP
-2.48% , EFV , Value EAFE MSCI, EFV
-1.76% , PHW , Hardware & Electronics, PHW
-1.25% , PFM , Dividend Achievers PS, PFM
-7.05% , FCX , FREEPRT MCMORAN STK B
-4.24% , YHOO , YAHOO
-1.86% , FDV , Value 40 Large Low P/E FT DB, FDV
-1.65% , ELG , Growth Large Cap, ELG
-5.73% , MU , MICRON TECH
-3.92% , AGN , ALLERGAN
-4.59% , WOR , WORTHINGTON INDS
-4.54% , SLB , SCHLUMBERGER
-1.61% , IWB , LargeCap 1000 R, IWB
-1.83% , PMR , Retail, PMR
-2.13% , IXC , Energy Global, IXC
-4.05% , SNA , SNAP ON
-5.59% , EWT , Taiwan Index, EWT
-1.57% , VV , LargeCap VIPERs, VV
-4.37% , LM , LEGG MASON
-2.49% , PXN , Nanotech Lux, PXN
-4.74% , NE , NOBLE
-3.04% , CAT , CATERPILLAR
-2.93% , RYAAY , Ryanair Holdings plc
-3.34% , GNTX , Gentex Corporation
-2.22% , IXG , Financials Global LargeCap Value, IXG
-6.53% , MLNM , Millennium Pharmaceuticals Inc
-5.33% , SSCC , Smurfit-Stone Container Corporation
-2.83% , IXN , Technology Global, IXN
-2.10% , PIV , Value Line Timeliness MidCap Gr, PIV
-1.33% , UTH , Utilities H, UTH
-2.20% , IBB , Biotechnology, IBB
-3.74% , AM , AMER GREETINGS STK A
-1.73% , DGT , Global Titans, DGT
-5.18% , SBUX , STARBUCKS
-1.52% , ELV , Value Large Cap DJ, ELV
-5.49% , PGJ , China LargeCap Growth G D H USX PS, PGJ
-4.38% , ILF , Latin Am 40, ILF
-3.93% , HRB , H&R BLOCK
-5.98% , FXI , China 25 iS, FXI
-3.75% , JNPR , Juniper Networks Inc
-4.19% , PLD , PROLOGIS TRUST
Sectors: among the 9 major U.S. sectors, all 9 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
-0.69% Consumer Staples
-0.93% Consumer Discretionary
-0.93% Utilities
-1.06% Health Care
-1.46% Financial
-1.79% Energy
-1.80% Industrial
-1.91% Technology
-3.55% Materials
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.
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.
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.
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 12/17/07. 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 fell over the past 3 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 rose slightly. 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 recovered moderately. But bonds still could 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 slightly to a new 7-week closing price high. Short-term price momentum since the oversold low at 74.65 on 11/23/07 appears to have slowed. Longer term, 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:
1.23% Canadian Dollar
0.47% 30Y T-Bond
0.32% British Pound
0.31% Swiss Franc
0.26% Japanese Yen
-0.02% US Dollar Index
-0.11% Euro Index
-0.25% Insurance
-0.37% Australian Dollar
-0.41% AMEX Composite
-0.53% Retailers
-0.62% Disk Drives
-0.69% Consumer Staples
-0.74% Dow Transports
-0.80% Canada
-0.91% Banks
-0.93% Consumer Discretionary
-0.93% Utilities
-1.02% Hospitals
-1.06% Health Care
-1.07% Health Care
-1.10% Dow Composite
-1.15% Dow Utilities
-1.15% Drugs
-1.22% Hardware
-1.29% Dow Industrial
-1.31% Oil
-1.42% Broker Dealers
-1.44% S&P 100
-1.44% Netherlands
-1.46% Financial
-1.50% S&P 500
-1.52% Switzerland
-1.53% Russell 1000
-1.56% France
-1.57% Russell 3000
-1.57% Spain
-1.58% Semiconductors
-1.60% Value Line
-1.61% Wilshire 5000
-1.68% S&P Mid Caps
-1.70% Natural Gas
-1.73% Japan
-1.74% Italy
-1.75% NYSE Composite
-1.79% Energy
-1.79% Health Care Products
-1.80% Industrial
-1.83% S&P Small Caps
-1.87% Biotechs
-1.91% Technology
-1.96% United Kingdom
-1.97% Russell 2000
-2.04% Network
-2.14% Belgium
-2.14% Germany
-2.21% Computer Tech
-2.29% Chemicals
-2.29% Malaysia
-2.32% Nasdaq Composite
-2.43% Paper
-2.45% Commodity Related
-2.48% Nasdaq 100
-2.60% REITs
-2.72% DOT
-3.16% Austria
-3.17% Internet
-3.55% Materials
-3.61% Sweden
-3.66% Oil Services
-3.67% Singapore
-3.69% Australia
-3.91% Mexico
-4.00% Gold Mining
-4.41% South Korea
-4.74% Hong Kong
-5.27% Airlines
-5.55% Brazil
-5.59% Taiwan
