By Robert W. Colby, Senior Analyst TraderPlanet.com
Nothing to fear?
The DJIA moved above 50- and 200-day simple moving averages.
The Small Cap/Large Cap Relative Strength Ratio has started to show its typical seasonal strength.
The Energy Stock Sector: both Price and Relative Strength Ratio (XLE/SPY) rose to new all-time highs.
The Consumer Discretionary Stock Sector Relative Strength Ratio (XLY/SPY) fell to its lowest level in 6 years.
Crude Oil Futures broke out above previous 5-day price highs and broke out above a 3-week downtrend line.
Gold jumped up above a 6-week downtrend line, ending a Triangle Consolidation Pattern.
Bond prices hit resistance and fell sharply.
VXN “Fear Index” fell to 20.90 from 23.15. VXN is now below its 50- and 200-day simple moving averages. VXN measures Nasdaq Volatility using a method comparable to that used for VIX
On Friday, major stock price indexes opened higher in reaction to good overnight news (RIMM and MER) and worked a bit higher in the first hour. Stocks consolidated in choppy trading into early afternoon. Another rally started at about 2:00 pm that carried major stock price indexes above their morning highs into a strong close. Stocks closed above their highest highs over the previous 4 trading days, which may be interpreted as a sign of strength for the very short term.
Volume on the NYSE rose by 28%, with part of the increase in trading activity due to expiration of options and futures.
Breadth ended 50% net Bullish, with a greater number of Advancing stocks than Declining stocks on the NYSE.
But still, the New Highs-New Lows on the NYSE ended at 35% 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
0.71% , XSD , Semiconductor SPDR, XSD
2.67% , XME , Metals & Mining SPDR, XME
5.30% , MMC , MARSH & MCLENNAN
2.34% , PWT , Growth SmallCap Dynamic PS, PWT
8.14% , HBAN , HUNTINGTON
10.17% , UIS , UNISYS
5.68% , CHKP , Check Point Software Technologies Ltd
6.44% , DLX , DELUXE
7.75% , NCC , NATIONAL CITY
5.14% , RIG , TRANSOCEAN
2.30% , PXE , Energy Exploration & Prod, PXE
1.41% , TMW , Wilshire 5000 ST TM, TMW
4.03% , PHO , Water Resources, PHO
4.14% , INTU , INTUIT
1.27% , MTK , Technology MS sT, MTK
2.18% , EWG , Germany Index, EWG
7.07% , KEY , KEYCORP
2.29% , VOX , Telecom Services VIPERs, VOX
4.05% , GAS , NICOR
5.29% , CMA , COMERICA
10.22% , RHT , Red Hat Inc.
5.94% , X , US STEEL CORP
3.65% , WY , WEYERHAEUSER
1.15% , ADRD , Developed 100 BLDRS, ADRD
4.12% , PGR , PROGRESSIVE OHIO
7.81% , TBH , Telebras HOLDRS, TBH*
5.30% , PCAR , PACCAR
9.98% , VC , VISTEON
2.54% , IGE , Natural Resource iS GS, IGE
2.11% , EWC , Canada Index, EWC
9.73% , HES , AMERADA HESS
1.70% , RFV , Value MidCap S&P 400, RFV
1.51% , OEF , LargeCap Blend S&P 100, OEF
1.30% , XBI , Biotech SPDR, XBI
0.73% , PZJ , SmallCap PS Zacks, PZJ
3.44% , BIG , BIG LOTS
2.69% , ERIC.O , LM Ericsson Telephone Company
4.36% , OXY , OCCIDENTAL
3.11% , GPC , GENUINE PARTS
4.05% , SGP , SCHERING PLOUGH
2.90% , THC , TENET HEALTHCARE
3.67% , IP , INTL PAPER
2.76% , NEM , NEWMONT MINING
7.91% , FHN , FIRST TENNESSEE
2.78% , NI , NISOURCE
2.54% , COL , ROCKWELL COLLINS
2.00% , EMN , EASTMAN CHEM
4.64% , Q , QWEST COMMUNICAT
3.03% , T , AT&T Corp., T
3.72% , ALL , ALLSTATE
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-28.68% , CC , CIRCUIT CITY STR
-21.66% , JBL , JABIL CIRCUIT
-1.24% , PEJ , Leisure & Entertainment, PEJ
-4.92% , MU , MICRON TECH
-2.34% , LUV , SOUTHWEST AIRLS
-1.19% , MV , METAVANTE TECHNOLOGIES, MV
-1.43% , SH , Short 100% S&P 500, SH
-2.16% , PCG , PG&E
-1.08% , FPL , FPL GROUP INC
-2.59% , XMSR , XM Satellite R
-0.52% , BMC , BMC SOFTWARE
-1.67% , SOV , SOVEREIGN BANC
-0.77% , PWER , POWER ONE
-0.46% , PPL , PPL
-0.51% , CAH , CARDINAL HEALTH
-0.72% , IEF , Bond, 10 Year Treasury, IEF
-0.51% , XLY , Consumer Discretionary SPDR, XLY
-0.49% , ERTS , ELECTRONIC ARTS
-0.75% , DTE , DTE ENERGY
-0.67% , UST , UST
-1.38% , BRCM , BROADCOM STK A
-0.57% , ACV , Alberto-Culver Co.
-1.65% , FRE , FREDDIE MAC
-2.82% , ODP , OFFICE DEPOT
-3.89% , WM , WASHINGTON MUT
-0.44% , SDY , Dividend SPDR, SDY
-0.45% , HGSI , Human Genome Sciences Inc
-0.47% , SHLD , SEARS HOLDINGS
-2.64% , DXD , Short 200% Dow 30 PS, DXD
-0.46% , ROH , ROHM & HAAS
-0.89% , WWY , WM WRIGLEY JR
-1.47% , DOG , Short 100% Dow 30, DOG
-0.58% , S , SPRINT NEXTEL
-0.34% , LEG , LEGGETT & PLATT
-1.39% , MYY , Short 100% MidCap 400, MYY
-1.03% , MYL , MYLAN LABS
-0.22% , LLL , L-3 COMMS HLDGS
-0.61% , TIP , Bond, TIPS, TIP
-0.20% , HPC , HERCULES
-0.60% , PETM , PETsMART Inc
-0.07% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
-0.24% , MO , ALTRIA GROUP
-0.15% , DGX , QUEST DIAG
-0.22% , KMB , KIMBERLY CLARK
-2.26% , AMD , ADV MICRO DEV
-0.12% , CA , COMPUTER ASSOC
-0.30% , WEN , WENDYS INTL
-1.46% , TLT , Bond, 20+ Years Treasury, TLT
-0.56% , XLU , Utilities SPDR, XLU
-0.66% , OMX , OFFICEMAX INC., OMX
Sectors: among the 9 major U.S. sectors, all 9 rose.
Major Sectors Ranked for the Day
% Price Change, Sector
2.40% Consumer Staples
0.62% Health Care
0.20% Consumer Discretionary
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.
Materials (XLB) Bullish, Overweight. The XLB/SPY Relative Strength Ratio made a 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.
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 12/21/07, 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 12/20/07, the XLF/SPY Relative Strength Ratio fell to its lowest level in 7 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 has started to show its typical seasonal strength. Year end and early January often has been good for small caps. But the main long-term trend is Relatively Bearish for Small Caps. The ratio fell to a new 2.5-year low on 12/17/07. Small Caps substantially underperformed Large Caps since 4/19/06.
Crude Oil Futures broke out above previous 5-day price highs and broke out above a 3-week downtrend line. Crude appears to be in position to test Resistance at the 12/13/07 high of 94.85 and possibly 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 jumped up above a 6-week downtrend line. Gold appears to be ending a Triangle Consolidation Pattern. The 6-week price range is between 855.00 set on 11/7/07 and 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 13-week low on 12/18/07.
Inflation expectations have recovered since 12/5/07. The short-term trend has been mostly rising, based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices fell sharply. Bonds appear to have hit resistance after rising most the past week. Bonds have been in short-term correction since their price top 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 slightly, a day after making a 2-month closing price high. The short-term price trend has been up since the oversold low at 74.65 on 11/23/07. 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”.
3.84% Gold Mining
3.83% Hong Kong
3.21% Commodity Related
3.13% Oil Services
2.99% South Korea
2.70% Broker Dealers
2.40% Consumer Staples
2.37% S&P Small Caps
2.35% Russell 2000
2.03% Nasdaq 100
1.99% AMEX Composite
1.98% Natural Gas
1.94% Nasdaq Composite
1.83% Value Line
1.72% NYSE Composite
1.70% Russell 3000
1.67% S&P 500
1.65% Wilshire 5000
1.64% Russell 1000
1.60% Computer Tech
1.59% S&P 100
1.56% S&P Mid Caps
1.55% Dow Industrial
1.31% Dow Transports
1.29% Dow Composite
1.25% United Kingdom
1.10% Health Care
1.09% Health Care Products
0.83% Australian Dollar
0.69% Canadian Dollar
0.67% Dow Utilities
0.62% Health Care
0.20% Consumer Discretionary
0.11% Disk Drives
0.09% British Pound
0.07% Euro Index
-0.06% US Dollar Index
-0.07% Swiss Franc
-0.87% Japanese Yen
-1.85% 30Y T-Bond