By Robert W. Colby, Senior Analyst TraderPlanet.com
CRB commodity price index jumped to another new all-time high, confirming a major uptrend.
Crude Oil broke out to a new 4-week high.
Energy and Technology Stock Sectors gained the most.
Financial and Health Care Stock Sectors fell.
The news of the day included another rise in the price of crude oil, up 3 days in a row. The market seems to be quite reactive to the news of the day. In the longer-term picture, major underlying technical trends remain Bearish for stocks. In addition, underlying fundamental trends appear to be deteriorating. There has been a sense that big problems are already baked into the cake, in the pipeline. Therefore, it appears to be a high-risk environment—especially for longs.
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
2.45% , IGE , Natural Resource iS GS, IGE
8.00% , DRI , DARDEN REST
6.56% , IGT , INTL GAME TECH
2.09% , XSD , Semiconductor SPDR, XSD
1.07% , IGV , Software, IGV
3.32% , IIH , Internet Infrastructure H, IIH
0.61% , BDH , Broadband H, BDH
12.98% , BIG , BIG LOTS
1.30% , IYC , Consumer Cyclical DJ, IYC
3.15% , ILF , Latin Am 40, ILF
0.82% , FPX , IPOs, First Tr IPOX-100, FPX
3.81% , NIHD , NII Holdings, Inc.
5.88% , VRSN , VeriSign Inc
2.14% , IYM , Basic Materials DJ US, IYM
5.10% , F , FORD MOTOR
5.12% , GM , GENERAL MOTORS
5.90% , JBL , JABIL CIRCUIT
5.37% , ATI , ALLEGHENY TECH
6.57% , BJS , BJ SERVICES
0.90% , EWO , Austria Index, EWO
5.13% , NBR , NABORS
3.70% , PBW , WilderHill Clean Energy PS, PBW
4.34% , CPWR , COMPUWARE
3.12% , AMAT , APPLIED MATERIAL
3.32% , MAS , MASCO
2.58% , XLE , Energy SPDR, XLE
0.41% , EWQ , France Index, EWQ
3.60% , EXC , EXELON CORP
1.56% , MVV , Ultra MidCap400 Double, MVV
0.96% , PBJ , Food & Beverage, PBJ
2.79% , OXY , OCCIDENTAL
3.95% , WMB , WILLIAMS
1.48% , CVX , CHEVRONTEXACO
4.61% , DVN , DEVON ENERGY
2.50% , PTV , PACTIV
3.57% , SIAL , SIGMA ALDRICH
1.81% , WEN , WENDYS INTL
2.09% , TUP , TUPPERWARE
1.29% , IGM , Technology GS, IGM
3.56% , HGSI , Human Genome Sciences Inc
4.04% , APC , ANADARKO PETRO
1.72% , PIV , Value Line Timeliness MidCap Gr, PIV
0.64% , JKK , Growth SmallCap iS M, JKK
4.58% , EOG , EOG RESOURCES
1.05% , BHI , BAKER HUGHES
1.50% , IAH , Internet Architecture H, IAH
0.71% , ITF , Japan LargeCap Blend TOPIX 150, ITF
2.53% , EWW , Mexico Index, EWW
2.53% , RTH , Retail H, RTH
3.46% , DYN , DYNEGY
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-11.72% , AIG , AMER INTL GROUP
-8.34% , LTR , LOEWS
-3.77% , TNB , THOMAS & BETTS
-6.98% , XL , XL CAPITAL STK A
-8.07% , MTG , MGIC INVESTMENT
-4.57% , HIG , HARTFORD FINL
-0.68% , RPV , Value S&P 500, RPV
-6.28% , PRU , PRUDENTIAL FINL
-0.38% , EWU , United Kingdom Index, EWU
-1.58% , VFH , Financials VIPERs, VFH
-3.55% , MMC , MARSH & MCLENNAN
-2.29% , SRCL , Stericycle, SRCL
-1.01% , LNCR , Lincare Holdings Inc
-4.40% , FNM , FANNIE MAE
-0.80% , IYG , Financial Services DJ, IYG
-1.52% , LXK , LEXMARK INTL STK A
-2.38% , GNTX , Gentex Corporation
-2.42% , FRE , FREDDIE MAC
-1.03% , VMC , VULCAN MATERIALS
-1.22% , DOW , DOW CHEMICAL
-2.24% , SAF , SAFECO
-3.31% , MET , METLIFE
-1.30% , PGR , PROGRESSIVE OHIO
-1.10% , AOC , AON
-0.98% , MV , METAVANTE TECHNOLOGIES, MV
-0.81% , DGT , Global Titans, DGT
-0.74% , CINF , CINCINNATI FIN
-4.41% , COF , CAPITAL ONE FNCL
-0.85% , RHI , ROBERT HALF
-1.86% , PCL , PLUM CREEK TIMB
-2.98% , LEH , LEHMAN BROS HLDG
-2.14% , ABC , AMERISOURCEBERGN
-0.57% , FDL , Dividend Leaders, FDL
-0.14% , EWK , Belgium Index, EWK
-5.00% , LVLT , LEVEL 3 COMMUNICATIONS
-2.00% , RWR , REIT Wilshire, RWR
-1.79% , IYF , Financial DJ US, IYF
-1.88% , AMP , Ameriprise Financial Inc.
-2.86% , CMA , COMERICA
-3.10% , LNC , LINCOLN NATL
-2.37% , CB , CHUBB
-0.73% , JKL , Value SmallCap iS M, JKL
-1.23% , MSFT , MICROSOFT
-0.92% , MO , ALTRIA GROUP
-3.87% , ETFC.O , E*TRADE FINANCIAL
-1.83% , ALL , ALLSTATE
-0.33% , HON , HONEYWELL INTL
-1.37% , MHS , MEDCO HEALTH
-0.35% , IWN , Value SmallCap Russell 2000, IWN
-0.92% , CI , CIGNA
Sectors: among the 9 major U.S. sectors, 7 rose and 2 fell.
Major Sectors Ranked for the Day
% Price Change Sector
2.58% Energy
1.75% Technology
1.27% Consumer Staples
1.05% Consumer Discretionary
1.00% Industrial
0.82% Utilities
0.35% Materials
-0.30% Health Care
-2.21% Financial
Energy (XLE) Neutral, Market Weight. Price hit a new 5-month low on 1/22/08. On 1/3/08, both XLE Price and Relative Strength made new all-time highs. XLE has been strong compared to the S&P since 3/12/03.
Materials (XLB) Neutral, Market Weight. Price touched a new 5-month low on 1/23/08. The XLB/SPY Relative Strength Ratio made a new all-time high on 2/8/08. The long-term Relative Strength trend has strongly outperformed since 9/27/2000.
Consumer Staples (XLP) Neutral, Market Weight. Price touched a new 15-month low on 1/22/08. Price made a new all-time high on 12/10/07, and Relative Strength made a new 3-year high on 1/17/08.
Utilities (XLU) Neutral, Market Weight. Price touched a new 12-month low on 1/22/08. Relative Strength made a new all-time high on 1/9/08, and Price made a new all-time high on 12/10/07.
Industrial (XLI) Neutral, Market Weight. Price touched a new 16-month low on 1/22/08. On 2/6/08, Relative Strength made a new all-time high.
Health Care (XLV) Neutral, Market Weight. Price touched a new 18-month low on 1/22/08. Relative Strength moved up to a new 26-month high on 1/17/08.
Technology (XLK) Bearish, Underweight. Price touched a new 17-month low on 1/22/08. On 2/8/08, Relative Strength fell to a new 7-month low. XLK/SPY has underperformed since 11/5/07.
Consumer Discretionary (XLY) Bearish, Underweight. Price touched a new 4-year low on 1/22/08. On 1/11/08, the XLY/SPY Relative Strength Ratio fell to its lowest level in 6 years.
Financial (XLF) Bearish, Underweight. Price touched a new 4-year low on 1/22/08. On 1/8/08, Relative Strength fell to a new 7-year low. These confirmed a Bearish major trend.
Foreign stock indexes remain in downtrends. Relative Strength of EFA/SPY fell to a new 13-month low on 2/8/08. EFA price fell to a new 17-month low on 1/23/08. The EFA (the EAFE, international developed country stock markets, ex the U.S. and Canada) underperformed since 11/27/07.
NASDAQ Composite price remains Bearish. On 2/7/08, Relative Strength fell to a new 7-month low. Relative Strength underperformed the S&P since 11/7/07. On 1/23/08, price touched a new 15-month price low.
Growth Stock/Value Stock Relative Strength Ratio made a new 3-month low on 2/1/08 and has underperformed since the peak on 11/7/07. The Growth/Value ratio (IWF/IWD) appears to be in an intermediate-term correction phase.
The Small Cap/Large Cap Relative Strength Ratio broke down to a new 2.5-year low on 1/11/07. It has been trending down since 4/19/06. The main long-term trend is Relatively Bearish for Small Caps.
Crude Oil broke out to a new 4-week high. Oil is in a short-term uptrend. Oil appears to have support near December’s low at 85.37. Resistance is evident at recent highs at 92.71 and 99.77. 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 has underperformed Crude Oil since 12/10/07.
Gold closed above the highest highs of the previous 5 days, confirming a short-term uptrend.
Silver’s main trend is Bearish compared to Gold. The iShares Silver Trust (AMEX: SLV) has outperformed slightly since 12/14/07. But that is nothing compared to the long-term trend. Silver has been relatively weak compared to Gold since 12/7/06. In addition, for the past 27 years, since 1/2/80, Silver has underperformed Gold.
The Gold Miners ETF (GDX) has underperformed Gold futures significantly since 10/31/07. GDX is Bearish relative to Gold itself.
Inflation expectations have been trending down since 1/30/08, based on the behavior of the ratio of two ETFs, TIP/IEF.
U.S. Treasury Bond prices recovered fractionally. On Thursday, 2/7/08, prices fell below the lowest lows of the previous 5-weeks, signaling a downtrend for the short term. The major long-term trend may still be up. 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 corrected moderately lower. On 2/7/08, the dollar broke out above the highs of the previous 11 trading-days, thereby confirming the preexisting short-term uptrend. On 1/30/08, the dollar reversed to the upside at a price of 74.66, which could be a critical support level. The main long-term trend remains Bearish.
The Art of Contrary Thinking: The mood has been moving away from optimism as stock prices move lower. Sentiment is far from a level associated with extreme pessimism. So, crowd psychology could get more Bearish before it is over. The business and financial news has flipped from Bearish to Bullish and back again. Investors’ moods and stock volatility have jumped up and down abruptly with the latest news. When everything shifts so dramatically from one day to the next, risk control becomes more important than aggressive profit seeking. Stay flexible.
Sentiment/Contrary Opinion: Bullish opinion is moderately below normal. According to the weekly Investors Intelligence newsletter survey as of 2/8/08, there were 41.6% Bulls and 32.6% Bears. The ratio of Bullish advisors to Bearish advisors rose to 1.28 to 1, up from 1.25 to 1. This is below its 38-year median at 1.47 to 1. The ratio’s 38-year range is 0.28 to 17.51.
VIX “Fear Index”, now at 27.60 and falling, is relatively normal by Bear Market standards (around 20 to 40) but relatively high by Bull Market standards (around 10 to 20). Longer term, VIX has been in a rising trend since it hit a 13-year low of 9.89 on 1/24/07. The all-time high was 45.74 on 10/8/98. 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”, now at 29.09 and falling, is relatively low by Bear Market standards (around 35 to 80) but relatively high by Bull Market standards (around 12 to 26). Longer term, VXN has been in a rising trend since it hit its all-time low of 12.61 on 7/29/05. The all-time high was 114.23 on 10/8/98. VXN measures Nasdaq Volatility using a method comparable to that used for VIX.
CBOE Put/Call Ratio is 0.68, which indicates near normal sentiment. Its 4-year simple moving average and median are 0.62, and its 4-year range is 0.35 to 1.28.
ISEE Call/Put Ratio is 1.15, which indicates moderately Bearish sentiment. It is below its 4-year simple moving average at 1.50 and its 4-year median at 1.47. That means customers opened fewer long call options and more long put options than normal. Its 4-year range is 0.51 to 3.04.
Fundamentals: The 2003-2007 Bull Market was fed by abundant global liquidly, M&A, leveraged buyouts, corporate stock buybacks, and the net balance of positive earnings surprises. The unfolding fallout from the subprime credit market crisis has derailed that engine. Economic statistics and corporate earnings have been weakening.
The Primary Tide Major Trend turned Bearish, and that is a strong force. The Dow Theory confirmed a Primary Bear Market on 11/21/07 when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed below their respective closing price lows of August, 2007. On 11/7/07, the Transports closed below their 8/16/07 closing price low of 4,671.88. Then on 11/21/07, the Dow-Jones Industrial Average closed below its 8/16/07 closing price low of 12,845.78, thereby turning the Primary Tide Bearish.
Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:
3.53% Brazil
3.51% Oil Services
3.31% Natural Gas
2.58% Energy
2.53% Mexico
2.37% Retailers
2.05% Paper
1.79% Commodity Related
1.75% Technology
1.71% Chemicals
1.55% Semiconductors
1.41% Oil
1.27% Consumer Staples
1.21% Hardware
1.09% Internet
1.08% Malaysia
1.05% Consumer Discretionary
1.03% Computer Tech
1.03% Canada
1.01% DOT
1.00% Industrial
1.00% Japan
0.97% Australian Dollar
0.96% Taiwan
0.90% Austria
0.82% Utilities
0.78% Dow Transports
0.75% AMEX Composite
0.71% Dow Utilities
0.66% Nasdaq Composite
0.62% Dow Composite
0.61% Russell 1000
0.60% Italy
0.57% S&P Mid Caps
0.57% Russell 3000
0.57% Wilshire 5000
0.57% Australia
0.52% Value Line
0.51% NYSE Composite
0.51% S&P 100
0.47% Germany
0.47% 30Y T-Bond
0.46% Gold Mining
0.46% Japanese Yen
0.42% Network
0.41% Disk Drives
0.41% France
0.35% Materials
0.35% South Korea
0.25% S&P Small Caps
0.24% Netherlands
0.22% Health Care Products
0.19% Sweden
0.16% Drugs
0.14% British Pound
0.06% Swiss Franc
0.04% Spain
0.01% Euro Index
0.00% Dow Industrial
0.00% S&P 500
0.00% Russell 2000
0.00% Nasdaq 100
0.00% Hong Kong
-0.08% US Dollar Index
-0.09% Health Care
-0.14% Belgium
-0.23% Canadian Dollar
-0.30% Health Care
-0.38% Switzerland
-0.38% United Kingdom
-0.44% Biotechs
-0.50% Airlines
-0.51% Singapore
-0.69% Broker Dealers
-1.01% Hospitals
-1.11% Banks
-1.45% Insurance
-1.73% REITs
-2.21% Financial
