By Robert W. Colby, Senior Analyst TraderPlanet.com

Better than expected retail sales–sell on the news.

This kind of data is volatile and subject to large revisions.

Materials Stock Sector Relative Strength Ratio rose a new all-time high.

Crude Oil eased slightly lower within its uptrend.

Energy Stock Sector fell.

On Tuesday, major stock price indexes gapped higher on the open and ran up to a peak at about 11:15 a.m., the time of the U.S. government’s announcement of “Project Lifeline”. Prices worked irregularly lower to close below the midpoint of the day but still very slightly above the open, for a Spinning Top Candlestick. Volume on the NYSE rose 13%%, indicating greater interest in trading stocks.

The news of the day included (before the open) Warren Buffett’s Berkshire Hathaway offer to assume $800 billion in municipal bond liabilities from 3 major bond insurers. At 11:15 a.m., the U.S. government’s unveiled “Project Lifeline”, where 6 major mortgage lenders help homeowners avoid foreclosure. In addition, the price of crude oil eased lower, taking a bit of pressure off concerns about inflation.

The market certainly 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. On the other hand, there is hope that the government or somebody might come up with a solution to the ongoing financial crisis. For stock trading, it appears to be a high-risk environment, both for longs and for shorts.

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

9.48% , TAP , ADOLPH COORS STK B, TAP
2.10% , EWI , Italy Index, EWI
2.54% , IEV , Europe 350 S&P Index, IEV
1.53% , EWL , Switzerland Index, EWL
5.39% , ERTS , ELECTRONIC ARTS
3.00% , EWQ , France Index, EWQ
6.28% , MCO , MOODYS CORP
2.57% , EWG , Germany Index, EWG
3.59% , OMC , OMNICOM
4.22% , ESRX , EXPRESS SCRIPTS
3.86% , HSY , HERSHEY FOODS
5.52% , EQR , EQUITY RESIDENT BEN INT
0.87% , IVE , Value S&P 500 B, IVE
3.02% , PAYX , PAYCHEX
0.68% , IXJ , Healthcare Global, IXJ
3.97% , AVP , AVON
3.76% , CFC , COUNTRYWIDE FNCL
5.87% , SGP , SCHERING PLOUGH
2.10% , RKH , Bank Regional H, RKH
0.37% , PWO , OTC Dynamic PS, PWO
1.63% , ACS , AFFILIATED COMPUTER
4.24% , FITB , FIFTH THIRD BANC
4.07% , KEY , KEYCORP
1.62% , CTL , CENTURYTEL
0.70% , SWH , Software H, SWH
3.53% , HOT , STARWOOD HOTELS
0.51% , IVW , Growth S&P 500/BARRA, IVW
1.77% , IOO , Global 100, IOO
3.36% , CCE , COCA COLA ENTER
0.95% , IYK , Consumer Non-Cyclical, IYK
2.69% , MRK , MERCK & CO
2.41% , EZU , EMU Europe Index, EZU
3.00% , BA , BOEING
3.99% , CTSH , Cognizant Technology Solutions
2.07% , CHKP , Check Point Software Technologies Ltd
2.67% , EZA , South Africa Index, EZA
0.88% , PWP , Value MidCap Dynamic PS, PWP
3.58% , AIV , APT INV MNGMT
1.80% , XLB , Materials SPDR, XLB
1.52% , PIC , Insurance, PIC
2.59% , DD , DU PONT
1.60% , VPL , Pacific VIPERs, VPL
3.02% , FHN , FIRST TENNESSEE
2.05% , NTRS , NORTHERN TRUST
2.20% , CEG , CONSTELL ENERGY
2.78% , MU , MICRON TECH
2.65% , TUP , TUPPERWARE
1.28% , PFM , Dividend Achievers PS, PFM
2.29% , CMS , CMS ENERGY
2.54% , DE , DEERE & CO

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

-15.08% , ABK , AMBAC FINL GRP
-10.98% , MAS , MASCO
-8.59% , EXPD , Expeditors International WA
-3.76% , TDC , Teradata Corporation, TDC
-2.37% , BDH , Broadband H, BDH
-15.32% , MBI , MBIA
-4.77% , NEM , NEWMONT MINING
-2.81% , GS , GOLDMAN SACHS
-2.81% , LVLT , LEVEL 3 COMMUNICATIONS
-4.85% , SANM , SANMINA
-2.32% , WY , WEYERHAEUSER
-3.42% , LEH , LEHMAN BROS HLDG
-4.80% , LPX , LOUISIANA PAC
-2.41% , SVU , SUPERVALU
-2.04% , SNDK , SanDisk Corporation
-3.54% , JCP , JC PENNEY
-2.35% , HUM , HUMANA
-0.51% , PXQ , Networking, PXQ
-1.79% , LBTYA , Liberty Global Inc. (LBTYA)
-4.12% , LRCX , LAM RESEARCH CORP
-3.01% , XME , Metals & Mining SPDR, XME
-2.97% , NTAP , NETWK APPLIANCE
-2.19% , GLD , Gold Shares S.T., GLD
-1.27% , SIRI , Sirius Satellite
-2.19% , IAU , Gold COMEX iS, IAU
-1.96% , ADSK , AUTODESK
-1.47% , DLX , DELUXE
-2.09% , VLO , VALERO ENERGY
-3.03% , DDS , DILLARD STK A
-0.69% , ABT , ABBOTT LABS
-1.19% , AES , AES
-2.86% , BRCM , BROADCOM STK A
-1.77% , RAI , RJR TOBACCO HLDS
-1.19% , WYE , WYETH
-2.58% , CECO , CAREER EDUCATION CORP
-1.61% , BDK , BLACK & DECKER
-3.13% , CC , CIRCUIT CITY STR
-1.63% , EBAY , EBAY
-2.20% , QCOM , QUALCOMM
-1.09% , JNY , JONES APPAREL
-1.66% , ATVI , Activision Inc.
-1.06% , FLEX , Flextronics International Ltd
-0.07% , PHW , Hardware & Electronics, PHW
-0.57% , CCU , CLEAR CHANNEL
-0.67% , DOG , Short 100% Dow 30, DOG
-1.11% , KLAC , KLA TENCOR
-0.71% , OIH , Oil Services H, OIH
-0.96% , STLD , Steel Dynamics, STLD
-1.63% , CMI , CUMMINS
-1.04% , BSC , BEAR STEARNS

Sectors: among the 9 major U.S. sectors, 8 rose and 1 fell.
Major Sectors Ranked for the Day
% Price Change Sector

2.75% Financial
1.80% Materials
1.70% Utilities
1.45% Health Care
1.33% Consumer Staples
1.01% Industrial
0.22% Technology
0.19% Consumer Discretionary
-0.06% Energy

Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):

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. The XLB/SPY Relative Strength Ratio made a new all-time high on 2/12/08. 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. 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 eased slightly lower within its 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 below the lows of the previous 2 days, calling into question the short-term trend.

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 broke down below the lows of the past 2 days. 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 over the past 3 days. 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 26.33 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 28.22 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 0.78, which indicates moderately Bearish 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 0.82, which indicates 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:

3.00% France
2.78% REITs
2.75% Financial
2.62% Sweden
2.57% Germany
2.55% Spain
2.24% Belgium
2.18% United Kingdom
2.12% Singapore
2.10% Italy
1.92% Austria
1.80% Materials
1.75% Taiwan
1.70% Utilities
1.55% Drugs
1.53% Netherlands
1.53% Switzerland
1.49% Banks
1.49% Japan
1.45% Health Care
1.37% Paper
1.36% Australia
1.33% Consumer Staples
1.31% Chemicals
1.30% Malaysia
1.23% Hospitals
1.21% Health Care
1.21% Brazil
1.13% Insurance
1.09% NYSE Composite
1.09% Dow Industrial
1.01% Industrial
0.96% Dow Utilities
0.91% Health Care Products
0.84% S&P 100
0.82% Russell 2000
0.73% S&P 500
0.70% S&P Small Caps
0.69% Hong Kong
0.66% Russell 3000
0.65% Russell 1000
0.63% Wilshire 5000
0.63% British Pound
0.62% Dow Composite
0.60% South Korea
0.54% Value Line
0.52% Euro Index
0.41% Mexico
0.22% Technology
0.21% Oil
0.20% S&P Mid Caps
0.19% Consumer Discretionary
0.16% Biotechs
0.06% Australian Dollar
0.05% Network
0.00% Nasdaq Composite
0.00% Canadian Dollar
-0.01% DOT
-0.06% AMEX Composite
-0.06% Energy
-0.07% Computer Tech
-0.09% Swiss Franc
-0.14% Hardware
-0.16% Disk Drives
-0.20% Canada
-0.30% US Dollar Index
-0.32% Dow Transports
-0.34% Internet
-0.45% Natural Gas
-0.46% Commodity Related
-0.48% Japanese Yen
-0.53% Broker Dealers
-0.66% Semiconductors
-0.66% 30Y T-Bond
-0.70% Nasdaq 100
-0.74% Retailers
-0.87% Oil Services
-1.86% Airlines
-2.98% Gold Mining