By Robert W. Colby, Senior Analyst TraderPlanet.com
Hopes for some kind of a rescue.
Health Care Stock Sector Relative Strength Ratio fell to a new 4-month low.
Commodities, Oil, Gold, Energy stocks and Materials stocks broke sharply to the downside last week, following warnings by Wall Street strategists. They quickly reached short-term oversold.
Fears of financial crisis are just under the surface, cutting into probabilities of more than brief oversold bounces.
Sentiment has been Bearish, but that does not necessarily mean a sustainable uptrend anytime soon.
Financial stocks, which were the most oversold, led the way higher following news of the Fed’s expansion of its money lending program, now allowing the use collateralized mortgage obligations and AAA rated commercial mortgage-backed securities for collateral, and designed to provide liquidity to banks holding securities which currently are difficult to trade.
The main technical trend is still down for the broad-based stock price indexes. But some days, the fundamental worries are temporarily displaced by hopes for some kind of a rescue, from the Fed, the government, or big investors. Day to day, the stock market has been quite reactive to the news, rumors, and “reports” of the day, which certainly have been plentiful, although not always accurate. These “reports” strike at any unpredictable moment, like bolts out of the blue, disrupting trends and making short-term trading risky. In such a shifty market, be nimble, be quick, and control your risk.
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
2.63% , PHJ , Dividend Growth PS, PHJ
5.21% , WOR , WORTHINGTON INDS
11.16% , ROST , Ross Stores Inc
1.96% , IGW , Semiconductor iS GS, IGW
3.09% , VCR , Consumer D. VIPERs, VCR
7.48% , COH , COACH
13.14% , S , SPRINT NEXTEL
8.80% , NKE , NIKE STK B
6.03% , MCO , MOODYS CORP
14.73% , ABK , AMBAC FINL GRP
1.55% , FDV , Value 40 Large Low P/E FT DB, FDV
8.75% , CCL , CARNIVAL STK A
5.87% , VFH , Financials VIPERs, VFH
6.93% , EWT , Taiwan Index, EWT
1.10% , JKG , MidCap Blend Core iS M, JKG
2.35% , RFV , Value MidCap S&P 400, RFV
5.14% , MV , METAVANTE TECHNOLOGIES, MV
7.32% , GT , GOODYEAR TIRE
2.92% , VC , VISTEON
3.49% , EWM , Malaysia Index, EWM
8.52% , FDO , FAMILY DLR STRS
2.27% , JKL , Value SmallCap iS M, JKL
9.50% , CC , CIRCUIT CITY STR
3.91% , EWS , Singapore Index, EWS
6.50% , SHLD , SEARS HOLDINGS
5.46% , TIF , TIFFANY
4.92% , AM , AMER GREETINGS STK A
3.12% , F , FORD MOTOR
3.88% , HOLX , Hologic, Inc., HOLX
7.45% , JNY , JONES APPAREL
1.90% , DSV , Value Small Cap DJ, DSV
1.94% , JKJ , SmallCap Core iS M, JKJ
9.64% , KBH , KB HOME
3.31% , YUM , YUM BRANDS
3.65% , CTB , COOPER TIRE
7.68% , DDS , DILLARD STK A
5.01% , Q , QWEST COMMUNICAT
3.12% , EFX , EQUIFAX
1.69% , PKB , Building & Construction, PKB
1.16% , IAH , Internet Architecture H, IAH
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-17.27% , CIT , CIT GROUP
-7.63% , PEG , PUBL SVC ENTER
-5.31% , JBL , JABIL CIRCUIT
-4.76% , ADM , ARCHER DANIELS
-3.30% , COL , ROCKWELL COLLINS
-4.13% , SLM , SLM CORP
-4.03% , DBC , Commodity Tracking, DBC
-2.56% , GR , GOODRICH CORP
-1.60% , TWX , TIME WARNER INC
-1.49% , HON , HONEYWELL INTL
-1.80% , UNP , UNION PACIFIC
-1.46% , LNCR , Lincare Holdings Inc
-5.64% , NEM , NEWMONT MINING
-2.77% , IP , INTL PAPER
-2.64% , AA , ALCOA
-1.87% , MMM , 3M
-2.77% , QLGC , QLOGIC
-0.88% , BSX , BOSTON SCIENT
-1.20% , VIA.B , VIACOM STK B
-0.79% , XTO , XTO ENERGY INC
-0.44% , IXC , Energy Global, IXC
-1.12% , VIA , VIACOM INC. (New)
-1.13% , CR , CRANE
-0.86% , MOT , MOTOROLA
-3.87% , SANM , SANMINA
-1.45% , NOV , NATIONAL OILWELL VARC0
-0.66% , LMT , LOCKHEED MARTIN
-1.18% , SRE , SEMPRA ENERGY
-0.29% , VAW , Materials VIPERs, VAW
-0.38% , EWO , Austria Index, EWO
-1.19% , LH , LAB CRP OF AMER
-1.76% , MON , MONSANTO
-2.04% , CEG , CONSTELL ENERGY
-1.00% , XLU , Utilities SPDR, XLU
-2.86% , WAT , WATERS
-2.18% , APA , APACHE
-0.89% , LLL , L-3 COMMS HLDGS
-0.76% , HPC , HERCULES
-0.26% , EP , EL PASO
-8.49% , SLV , Silver Trust iS, SLV
Sectors: among the 9 major U.S. sectors, 6 rose and 3 fell.
Major Sectors Ranked for the Day
% Price Change Sector
6.34% Financial SPDR, XLF
2.80% Consumer Discretionary SPDR, XLY
1.08% Technology SPDR, XLK
0.62% Consumer Staples SPDR, XLP
0.60% Industrial SPDR, XLI
0.16% Energy SPDR, XLE
-0.32% Health Care SPDR, XLV
-0.65% Materials SPDR, XLB
-1.00% Utilities SPDR, XLU
Consumer Staples (XLP) Neutral, Market Weight. On 3/19/08, the XLP/SPY Relative Strength Ratio rose to new 5-year high.
Energy (XLE) Neutral, Market Weight. On 3/6/08, the XLE/SPY Relative Strength Ratio rose to new all-time high, confirming a major uptrend.
Industrial (XLI) Neutral, Market Weight. On 3/18/08, the XLI/SPY Relative Strength Ratio rose to another new all-time high.
Materials (XLB) Neutral, Market Weight. On 3/6/08, the XLB/SPY Relative Strength Ratio rose to a new all-time high, confirming a major uptrend.
Utilities (XLU) Neutral, Market Weight. The XLU/SPY Relative Strength Ratio has eroded significantly since its all-time high on 1/9/08, and so Utilities have been slipping in these rankings.
Technology (XLK) Bearish, Underweight. On 2/25/08, the XLK/SPY Relative Strength Ratio fell to a new 10-month low, confirming a significant downtrend.
Health Care (XLV) Bearish, Underweight. On 3/20/08, the XLV/SPY Relative Strength Ratio made a new 4-month low.
Consumer Discretionary (XLY) Bearish, Underweight. On 2/21/08, the XLY/SPY Relative Strength Ratio fell to a new 3-week low, suggesting short-term weakness. On 1/11/08, the XLY/SPY Relative Strength Ratio fell to a new 6-year low, confirming a major downtrend.
Financial (XLF) Bearish, Underweight. On 3/17/08, both absolute price and the XLF/SPY Relative Strength Ratio fell to their lowest levels in nearly 5-years, again confirming a major Bearish trend.
Foreign stock indexes have turned relatively weak since 3/12/08. In addition, intermediate term, the EFA (the EAFE, international developed country stock markets,(ex the U.S. and Canada) has underperformed since 11/27/07.
NASDAQ Composite price remains Bearish. On 3/3/08, Relative Strength fell to a new 9-month low, confirming a significant downtrend.
Growth Stock/Value Stock Relative Strength Ratio turned down since 3/6/08 and 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 (April futures contract) broke down below the lowest lows of March but closed well above the lows. The short-term trend appears to have turned down but could find support in the 98-100 area. The long-term trend still appears to be up. 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 (April futures contract) broke down below the lowest lows of the previous 20 trading days. The short-term trend appears to have turned down, but gold might find support around 900. The long-term trend still appears to be up.
Silver sharply underperformed Gold since 3/5/07. In addition, iShares Silver Trust (AMEX: SLV) has been relatively weak compared to Gold longer term, since 12/7/06. Finally, for the past 28 years, since 1/2/80, Silver has underperformed Gold.
The Gold Miners ETF (GDX) fell hard since 3/14/08. Longer-term, GDX significantly underperformed Gold since 10/31/07. Therefore, GDX trends have been Bearish relative to Gold itself.
U.S. Treasury Bond prices soared to another new 8-week price high. Bond prices benefit from fears of financial crisis, and they correct when crisis takes a back seat to some other news of the day. U.S. governments have been strong ,while corporate have been weak. U.S. Treasury Bond prices generally have been 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 over the past 3-trading days. No trend is a straight line, but the counter-trend corrections are hard to catch, and they pale in comparison to the major trend movements. The major trend of the dollar is down.
The Art of Contrary Thinking: Traders need to be extremely nimble to keep up with rapid changes in the mass mood of late. Beyond the day-to-day swings, sentiment never really reached levels associated with extreme pessimism. So, crowd psychology could get more Bearish before it is over. The business and financial news has flipped from fear to hope and back again every few days. Investors’ moods and stock volatility have jumped up and down abruptly with the latest “reports”. When mass psychology shifts so dramatically and unpredictably from hope to fear from one day to the next, risk control becomes more important than aggressive profit seeking. Stay flexible.
Sentiment/Contrary Opinion: There are more Bears than Bulls for the first time in years. According to the weekly Investors Intelligence newsletter survey as of 3/19/08, there were 30.9% Bulls and 44.7% Bears. The ratio of Bullish advisors to Bearish advisors fell to 0.69, the lowest level in more than 5 years, and down from 0.71 the previous week. The ratio’s 38-year range is 0.28 to 17.51, and the median is 1.47.
VIX “Fear Index”, now at 26.62, 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 29.05, 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 0.80, which indicates 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 0.85 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.
To discover the next Resistance, traders probably will be watching how the market acts at the following levels for the Standard & Poor’s 500 cash index (1,329.51):
Potential Resistance
1,576.09, high of 10/11/2007
1,552.76, high of 10/31/2007
1,523.57, high of 12/11/2007
1,498.85, high of 12/26/2007
1,403.45, low of 1/7/2008
1,396.02, high of 2/1/2008
1,388.34, high of 2/27/2008
1,341.51, high of 3/19/2008
Potential Support
1,256.98, low of 3/17/2008
1,224.54, low of 7/18/2006
1,219.29, low of 6/14/2006
1,214.45, low of 11/4/2005
1,201.07, low of 11/2/2005
1,168.20, low of 10/13/2005
1,163.23, high of 3/5/2004
1,159.86, low of 5/17/2005
1,153.64, low of 5/16/2005
1,146.18, low of 5/13/2005
1,139.14, low of 4/29/2005
1,136.37, low of 4/20/2005
Daily Rankings of Major ETFs, Ranked from Strongest to Weakest of the Day:
8.13% Financial Services DJ, IYG
7.71% Homebuilders SPDR, XHB
7.20% Bank Regional H, RKH
6.93% Taiwan Index, EWT
6.89% Capital Markets KWB ST, KCE
6.44% Dividend Leaders, FDL
6.41% Financial DJ US, IYF
6.34% Financial SPDR, XLF
5.87% Financials VIPERs, VFH
5.08% Dividend High Yield Equity PS, PEY
4.96% Realty Cohen & Steers, ICF
4.31% Retail H, RTH
4.30% Retail, PMR
4.18% Real Estate US DJ, IYR
3.94% Financials Global LargeCap Value, IXG
3.91% Singapore Index, EWS
3.79% South Korea Index, EWY
3.73% Ultra S&P500 Double, SSO
3.66% Ultra Dow30 Double, DDM
3.50% Dividend DJ Select, DVY
3.50% Transportation Av DJ, IYT
3.49% Malaysia Index, EWM
3.35% Value LargeCap iS M, JKF
3.33% REIT VIPERs, VNQ
3.25% Leisure & Entertainment, PEJ
3.23% Value S&P 500 B, IVE
3.17% Value S&P 500, RPV
3.17% Value SmallCap S&P 600, RZV
3.09% Consumer D. VIPERs, VCR
3.03% Consumer Cyclical DJ, IYC
2.90% Telecom DJ US, IYZ
2.89% Value 1000 Russell, IWD
2.85% Ultra MidCap400 Double, MVV
2.84% Technology Global, IXN
2.83% Value LargeCap Russell 3000, IWW
2.83% Ultra QQQ Double, QLD
2.83% LargeCap Blend S&P 100, OEF
2.82% Internet Infrastructure H, IIH
2.80% Consumer Discretionary SPDR, XLY
2.74% China 25 iS, FXI
2.73% Internet H, HHH
2.72% Value MidCap iS M, JKI
2.63% Value SmallCap S&P 600 B, IJS
2.63% Dividend Growth PS, PHJ
2.58% Value LargeCap NYSE 100 iS, NY
2.55% Value VIPERs, VTV
2.53% Nanotech Lux, PXN
2.51% Telecom Services VIPERs, VOX
2.47% Value SmallCap Russell 2000, IWN
2.46% Microcap Russell, IWC
2.45% Telecom H, TTH
2.40% Value SmallCap VIPERS, VBR
2.36% Value LargeCap Fundamental RAFI 1000, PRF
2.35% Value MidCap S&P 400, RFV
2.33% SmallCap S&P 600, IJR
2.28% LargeCap Blend S&P 1500 iS, ISI
2.27% Value SmallCap iS M, JKL
2.26% Insurance, PIC
2.25% LargeCap Blend Russell 3000, IWV
2.25% Growth BARRA Small Cap 600, IJT
2.21% LargeCap 1000 R, IWB
2.21% Japan LargeCap Blend TOPIX 150, ITF
2.16% LargeCap Blend NYSE Composite iS, NYC
2.15% Value MidCap Russell, IWS
2.14% LargeCap Blend Total Market DJ, IYY
2.13% S&P 500 iS LargeCap Blend, IVV
2.09% Blend Total Market VIPERs, VTI
2.08% Growth MidCap 400 B, IJK
2.05% Dividend Appreciation Vipers, VIG
2.04% Hong Kong Index, EWH
2.02% IPOs, First Tr IPOX-100, FPX
2.01% Telecommunications Global, IXP
2.01% Growth SmallCap R 2000, IWO
2.00% MidCap Russell, IWR
2.00% Growth MidCap S&P 400, RFG
1.96% Growth LargeCap NASDAQ 100, QQQQ
1.96% Semiconductor iS GS, IGW
1.96% Value MidCap S&P 400 B, IJJ
1.95% SmallCap PS Zacks, PZJ
1.95% REIT Wilshire, RWR
1.94% SmallCap Core iS M, JKJ
1.92% Netherlands Index, EWN
1.91% Growth SmallCap iS M, JKK
1.90% Value Small Cap DJ, DSV
1.89% Value SmallCap Dynamic PS, PWY
1.88% LargeCap Blend Core iS M, JKD
1.86% Water Resources, PHO
1.86% Japan Index, EWJ
1.85% Micro Cap Zachs, PZI
1.84% Value Large Cap DJ, ELV
1.83% LargeCap VIPERs, VV
1.83% Networking, IGN
1.82% Networking, PXQ
1.80% Growth LargeCap NASDAQ Fidelity, ONEQ
1.79% Growth MidCap Russell, IWP
1.78% SmallCap Russell 2000, IWM
1.76% WilderHill Clean Energy PS, PBW
1.76% Telecommunications & Wireless, PTE
1.76% Value EAFE MSCI, EFV
1.75% Industrials VIPERs, VIS
1.75% LargeCap Rydex Rus Top 50, XLG
1.75% Semiconductor SPDR, XSD
1.75% Consumer Non-Cyclical, IYK
1.75% Semiconductors, PSI
1.73% LargeCap Blend S&P=Weight R, RSP
1.72% Technology GS, IGM
1.72% Software, IGV
1.71% Global Titans, DGT
1.70% Software H, SWH
1.69% Healthcare Global, IXJ
1.69% Software, PSJ
1.69% Building & Construction, PKB
1.69% Emerging Markets, EEM
1.67% Dividend Achievers PS, PFM
1.66% Asia 50 BLDRS, ADRA
1.62% Spain Index, EWP
1.62% Technology DJ US, IYW
1.61% Growth LargeCap Russell 3000, IWZ
1.61% Growth S&P 500/BARRA, IVW
1.60% Technology MS sT, MTK
1.59% Industrial LargeCap Blend DJ US, IYJ
1.55% Value 40 Large Low P/E FT DB, FDV
1.51% Emerging VIPERs, VWO
1.51% EAFE Index, EFA
1.50% LargeCap Blend Socially Responsible iS, KLD
1.50% China LargeCap Growth G D H USX PS, PGJ
1.48% MidCap Growth iS M, JKH
1.47% Global 100, IOO
1.43% Wilshire 5000 ST TM, TMW
1.41% Internet B2B H, BHH
1.41% Growth LargeCap iS M, JKE
1.39% MidCap VIPERs, VO
1.38% Growth 1000 Russell, IWF
1.38% DIAMONDS (DJIA), DIA
1.36% MidCap S&P 400 SPDRs, MDY
1.35% S&P 500 SPDRs LargeCap Blend, SPY
1.33% MidCap S&P 400 iS, IJH
1.32% Semiconductor H, SMH
1.32% Small Cap VIPERs, VB
1.31% Consumer Staples VIPERs, VDC
1.27% Extended Mkt VIPERs, VXF
1.27% Europe 350 S&P Index, IEV
1.26% United Kingdom Index, EWU
1.24% Growth SmallCap VIPERs, VBK
1.23% Dividend International, PID
1.21% Value LargeCap Dynamic PS, PWV
1.17% Growth S&P 500, RPG
1.16% Pacific VIPERs, VPL
1.16% Internet Architecture H, IAH
1.14% Biotech & Genome, PBE
1.14% Pharmaceuticals, PJP
1.11% Mexico Index, EWW
1.10% MidCap Blend Core iS M, JKG
1.09% Growth Large Cap, ELG
1.08% Technology SPDR, XLK
1.08% Biotech H, BBH
1.07% LargeCap Blend Dynamic PS, PWC
1.06% Biotech SPDR, XBI
1.03% Biotechnology, IBB
0.95% Growth Small Cap DJ, DSG
0.94% Food & Beverage, PBJ
0.90% Growth VIPERs, VUG
0.89% European VIPERs, VGK
0.89% Belgium Index, EWK
0.89% EMU Europe Index, EZU
0.89% Info Tech VIPERs, VGT
0.85% Healthcare DJ, IYH
0.84% Health Care VIPERs, VHT
0.79% France Index, EWQ
0.73% Switzerland Index, EWL
0.69% Emerging 50 BLDRS, ADRE
0.69% Growth SmallCap Dynamic PS, PWT
0.65% OTC Dynamic PS, PWO
0.65% Euro STOXX 50, FEZ
0.62% Consumer Staples SPDR, XLP
0.61% Growth EAFE MSCI, EFG
0.60% Industrial SPDR, XLI
0.60% Broadband H, BDH
0.59% Developed 100 BLDRS, ADRD
0.58% Energy DJ, IYE
0.53% Bond, Corp, LQD
0.42% Pharmaceutical H, PPH
0.36% Sweden Index, EWD
0.35% Bond, Aggregate, AGG
0.31% Value LargeCap Euro STOXX 50 DJ, FEU
0.30% Germany Index, EWG
0.25% Bond, 20+ Years Treasury, TLT
0.24% Brazil Index, EWZ
0.22% Bond, TIPS, TIP
0.22% Bond, 10 Year Treasury, IEF
0.20% Utilities VIPERs, VPU
0.19% Utilities H, UTH
0.16% Energy SPDR, XLE
0.15% Utilities DJ, IDU
0.15% Growth Mid Cap Dynamic PS, PWJ
0.14% Pacific ex-Japan, EPP
0.13% Hardware & Electronics, PHW
0.11% Latin Am 40, ILF
0.10% Dividend SPDR, SDY
0.06% Lg Cap Growth PSD, PWB
0.06% Utilities, PUI
0.05% Aerospace & Defense, PPA
0.00% Canada Index, EWC
-0.07% Value Line Timeliness MidCap Gr, PIV
-0.11% Energy VIPERs, VDE
-0.12% Bond, 1-3 Year Treasury, SHY
-0.19% Europe 100 BLDRS, ADRU
-0.22% Italy Index, EWI
-0.27% Australia Index, EWA
-0.29% Materials VIPERs, VAW
-0.29% Natural Resource iS GS, IGE
-0.32% Health Care SPDR, XLV
-0.32% Basic Materials DJ US, IYM
-0.33% Oil & Gas, PXJ
-0.35% Energy Exploration & Prod, PXE
-0.37% Oil Services H, OIH
-0.37% Value MidCap Dynamic PS, PWP
-0.38% Austria Index, EWO
-0.44% Energy Global, IXC
-0.57% Metals & Mining SPDR, XME
-0.65% Materials SPDR, XLB
-0.70% Short 100% QQQ, PSQ
-0.72% South Africa Index, EZA
-1.00% Utilities SPDR, XLU
-1.20% Oil, Crude, U.S. Oil Fund, USO
-1.52% Short 100% MidCap 400, MYY
-1.69% Short 100% Dow 30, DOG
-2.04% Short 100% S&P 500, SH
-2.80% Short 200% QQQ PS, QID
-2.92% Short 200% MidCap 400 PS, MZZ
-3.36% Gold Shares S.T., GLD
-3.88% Short 200% S&P 500 PS, SDS
-4.03% Commodity Tracking, DBC
-4.48% Short 200% Dow 30 PS, DXD
-8.49% Silver Trust iS, SLV
