By Robert W. Colby, Senior Analyst

The “reports” of the day were mostly Bullish for stocks.

Stocks recovered most of their losses from the February highs.

But a drop in volume suggested some reluctance to chase prices higher.

Stock sentiment rapidly reverted to the mean.

Commodities, Oil, and Gold appeared to be losing downside momentum.

Sharp drop in bond prices broke bonds’ upside momentum.

On Monday, major stock price indexes gapped higher on the open and rose strongly for about 45 minutes. Prices turned choppy but managed to trend higher until nearly 1:00 p.m. Stocks chopped sideways for an hour, then headed irregularly lower in the final 2 hours of the trading day, giving up less than a third of the day’s gain. NYSE volume fell by 29%, suggesting some reluctance to chase prices higher after a 4-day rally. Still, the volume of advancing stocks was 4 times greater than the volume of declining stocks, indicating substantial net buying pressure on balance.

The “reports” of the day were mostly Bullish. JPMorgan Chase said it would increase its bid for Bear Stearns, which Bear Stearns’ shareholders protested was too low. Also, February existing home sales rose 2.9%, compared to an expected decline. Finally, the Federal Housing Finance Board authorized Federal Home Loan Banks to increase their purchases of agency mortgage-backed securities, issued by Freddie Mac and Fannie Mae, providing $100 billion in additional liquidity.

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

15.49% , XMSR , XM Satellite R
2.12% , PWT , Growth SmallCap Dynamic PS, PWT
2.92% , PWP , Value MidCap Dynamic PS, PWP
8.62% , SIRI , Sirius Satellite
2.87% , PEJ , Leisure & Entertainment, PEJ
2.78% , BHH , Internet B2B H, BHH
1.56% , KLD , LargeCap Blend Socially Responsible iS, KLD
2.65% , PWY , Value SmallCap Dynamic PS, PWY
2.31% , IGV , Software, IGV
3.62% , PWJ , Growth Mid Cap Dynamic PS, PWJ
10.49% , TIF , TIFFANY
2.16% , SWH , Software H, SWH
3.73% , BDH , Broadband H, BDH
3.86% , VB , Small Cap VIPERs, VB
8.67% , BIG , BIG LOTS
2.82% , IWC , Microcap Russell, IWC
1.85% , PWV , Value LargeCap Dynamic PS, PWV
3.26% , IYZ , Telecom DJ US, IYZ
2.75% , IJK , Growth MidCap 400 B, IJK
2.95% , ADRA , Asia 50 BLDRS, ADRA
3.33% , DSG , Growth Small Cap DJ, DSG
2.11% , EZU , EMU Europe Index, EZU
2.56% , EWP , Spain Index, EWP
2.24% , IXG , Financials Global LargeCap Value, IXG
10.53% , RFMD , RF Micro Devices Inc
3.61% , PMR , Retail, PMR
1.26% , PFM , Dividend Achievers PS, PFM
4.26% , VBK , Growth SmallCap VIPERs, VBK
4.45% , PTE , Telecommunications & Wireless, PTE
2.76% , HHH , Internet H, HHH
7.56% , RHT , Red Hat Inc.
2.89% , PIV , Value Line Timeliness MidCap Gr, PIV
3.69% , IBB , Biotechnology, IBB
1.99% , ADRD , Developed 100 BLDRS, ADRD
8.15% , NVDA , NVIDIA
10.56% , PMCS , PMC SIERRA
6.51% , DHI , D.R. HORTON, DHI
1.74% , PXN , Nanotech Lux, PXN

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

-8.25% , QID , Short 200% QQQ PS, QID
-2.34% , MU , MICRON TECH
-1.77% , TIP , Bond, TIPS, TIP
-4.60% , PSQ , Short 100% QQQ, PSQ
-2.18% , DOG , Short 100% Dow 30, DOG
-2.10% , SH , Short 100% S&P 500, SH
-1.94% , TLT , Bond, 20+ Years Treasury, TLT
-1.76% , IEF , Bond, 10 Year Treasury, IEF
-0.25% , PIC , Insurance, PIC
-0.22% , IDU , Utilities DJ, IDU
-0.73% , AGG , Bond, Aggregate, AGG
-0.45% , PUI , Utilities, PUI
-1.10% , TEVA , Teva Pharmaceutical Industries Limited
-0.22% , ACV , Alberto-Culver Co.
-0.23% , VPU , Utilities VIPERs, VPU
-0.58% , CMS , CMS ENERGY
-0.42% , WHR , WHIRLPOOL
-0.04% , TXT , TEXTRON

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

3.55% Materials SPDR, XLB
3.53% Technology SPDR, XLK
3.33% Consumer Discretionary SPDR, XLY
2.27% Industrial SPDR, XLI
1.75% Energy SPDR, XLE
1.32% Health Care SPDR, XLV
1.29% Financial SPDR, XLF
1.12% Consumer Staples SPDR, XLP
0.32% Utilities SPDR, XLU

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

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.

Consumer Staples (XLP) Neutral, Market Weight. On 3/19/08, the XLP/SPY Relative Strength Ratio rose to new 5-year 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.

Industrial (XLI) Neutral, Market Weight. On 3/18/08, the XLI/SPY Relative Strength Ratio rose to another new all-time high.

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.

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.

Health Care (XLV) Bearish, Underweight. On 3/20/08, the XLV/SPY Relative Strength Ratio made a new 4-month low.

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 turned upward since 3/17/18. The minor Ripple trend appears to be improving in recent days. But longer term, 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) fell modestly but held above last week’s low. 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) ended slightly lower but lost considerable downside momentum. The short-term trend appears to have turned down, but gold might find support above 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 broke sharply to the downside. Short-term Bullish momentum may appear to be broken. 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 4-trading days but may be losing some upside momentum. 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 25.73, 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 28.69, 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 0.63, which indicates Neutral 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 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 (1,349.88):

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

To discover the next Support, traders probably will be watching how the market acts at the following levels for the S&P 500 cash index (1,349.88):

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:

8.20% Ultra QQQ Double, QLD
7.35% Taiwan Index, EWT
6.02% Ultra MidCap400 Double, MVV
4.60% Networking, PXQ
4.56% Metals & Mining SPDR, XME
4.45% Telecommunications & Wireless, PTE
4.36% Networking, IGN
4.28% Ultra S&P500 Double, SSO
4.26% Growth SmallCap VIPERs, VBK
4.14% WilderHill Clean Energy PS, PBW
3.97% Semiconductor SPDR, XSD
3.94% Biotech & Genome, PBE
3.94% Biotech SPDR, XBI
3.91% Singapore Index, EWS
3.87% Growth SmallCap iS M, JKK
3.86% Small Cap VIPERs, VB
3.83% Emerging Markets, EEM
3.77% China LargeCap Growth G D H USX PS, PGJ
3.75% Emerging VIPERs, VWO
3.74% Hardware & Electronics, PHW
3.73% Broadband H, BDH
3.72% SmallCap Russell 2000, IWM
3.69% Biotechnology, IBB
3.68% Value SmallCap S&P 600, RZV
3.62% Growth Mid Cap Dynamic PS, PWJ
3.62% Extended Mkt VIPERs, VXF
3.61% Retail, PMR
3.60% Growth SmallCap R 2000, IWO
3.59% South Korea Index, EWY
3.56% Semiconductors, PSI
3.55% Materials SPDR, XLB
3.53% Technology SPDR, XLK
3.46% Growth LargeCap NASDAQ 100, QQQQ
3.45% Pacific ex-Japan, EPP
3.44% Mexico Index, EWW
3.39% Ultra Dow30 Double, DDM
3.38% Consumer D. VIPERs, VCR
3.34% Germany Index, EWG
3.33% Consumer Discretionary SPDR, XLY
3.33% Growth Small Cap DJ, DSG
3.33% MidCap Growth iS M, JKH
3.33% Technology MS sT, MTK
3.26% Telecom DJ US, IYZ
3.25% SmallCap PS Zacks, PZJ
3.24% Materials VIPERs, VAW
3.21% Lg Cap Growth PSD, PWB
3.21% Info Tech VIPERs, VGT
3.20% Transportation Av DJ, IYT
3.17% Semiconductor iS GS, IGW
3.15% SmallCap Core iS M, JKJ
3.11% Emerging 50 BLDRS, ADRE
3.10% SmallCap S&P 600, IJR
3.10% Telecom Services VIPERs, VOX
3.08% Building & Construction, PKB
3.07% Japan Index, EWJ
3.06% MidCap S&P 400 iS, IJH
3.04% Growth BARRA Small Cap 600, IJT
3.03% MidCap S&P 400 SPDRs, MDY
3.03% MidCap VIPERs, VO
3.01% Basic Materials DJ US, IYM
3.00% Growth VIPERs, VUG
2.95% Asia 50 BLDRS, ADRA
2.95% Value MidCap S&P 400, RFV
2.93% Value S&P 500, RPV
2.92% Value MidCap Dynamic PS, PWP
2.91% Growth LargeCap NASDAQ Fidelity, ONEQ
2.89% Value Line Timeliness MidCap Gr, PIV
2.87% Leisure & Entertainment, PEJ
2.86% Technology GS, IGM
2.82% Microcap Russell, IWC
2.79% Dividend SPDR, SDY
2.78% Internet B2B H, BHH
2.77% Telecom H, TTH
2.76% Internet H, HHH
2.76% Austria Index, EWO
2.75% Growth MidCap 400 B, IJK
2.75% Internet Infrastructure H, IIH
2.73% Homebuilders SPDR, XHB
2.73% Australia Index, EWA
2.72% MidCap Blend Core iS M, JKG
2.72% Consumer Cyclical DJ, IYC
2.68% Technology DJ US, IYW
2.65% Value SmallCap Dynamic PS, PWY
2.64% Value SmallCap S&P 600 B, IJS
2.63% Growth MidCap Russell, IWP
2.62% Internet Architecture H, IAH
2.61% Water Resources, PHO
2.58% Value SmallCap VIPERS, VBR
2.56% Spain Index, EWP
2.55% Growth MidCap S&P 400, RFG
2.55% REIT Wilshire, RWR
2.53% Value SmallCap Russell 2000, IWN
2.51% LargeCap Blend S&P=Weight R, RSP
2.50% Retail H, RTH
2.44% Semiconductor H, SMH
2.43% Growth Large Cap, ELG
2.42% Micro Cap Zachs, PZI
2.35% IPOs, First Tr IPOX-100, FPX
2.35% Value SmallCap iS M, JKL
2.34% Canada Index, EWC
2.33% Pacific VIPERs, VPL
2.31% Software, IGV
2.27% Industrial SPDR, XLI
2.25% Global 100, IOO
2.25% OTC Dynamic PS, PWO
2.24% Financials Global LargeCap Value, IXG
2.24% Japan LargeCap Blend TOPIX 150, ITF
2.20% LargeCap VIPERs, VV
2.19% MidCap Russell, IWR
2.17% France Index, EWQ
2.17% Telecommunications Global, IXP
2.17% Blend Total Market VIPERs, VTI
2.16% Software H, SWH
2.15% Latin Am 40, ILF
2.15% Technology Global, IXN
2.14% Oil & Gas, PXJ
2.13% European VIPERs, VGK
2.12% Growth SmallCap Dynamic PS, PWT
2.11% EMU Europe Index, EZU
2.08% Software, PSJ
2.06% United Kingdom Index, EWU
2.05% Growth LargeCap iS M, JKE
2.00% S&P 500 SPDRs LargeCap Blend, SPY
1.99% Developed 100 BLDRS, ADRD
1.99% Dividend International, PID
1.99% Belgium Index, EWK
1.95% Growth S&P 500/BARRA, IVW
1.95% Value MidCap S&P 400 B, IJJ
1.93% Growth LargeCap Russell 3000, IWZ
1.92% Global Titans, DGT
1.92% Euro STOXX 50, FEZ
1.91% Value Small Cap DJ, DSV
1.89% Industrial LargeCap Blend DJ US, IYJ
1.88% Europe 100 BLDRS, ADRU
1.85% Netherlands Index, EWN
1.85% Value LargeCap Dynamic PS, PWV
1.84% Energy VIPERs, VDE
1.83% Italy Index, EWI
1.83% EAFE Index, EFA
1.83% Commodity Tracking, DBC
1.81% Value EAFE MSCI, EFV
1.80% Sweden Index, EWD
1.80% Aerospace & Defense, PPA
1.80% Growth 1000 Russell, IWF
1.79% Wilshire 5000 ST TM, TMW
1.79% Europe 350 S&P Index, IEV
1.75% Energy Exploration & Prod, PXE
1.75% Energy SPDR, XLE
1.74% Nanotech Lux, PXN
1.74% Industrials VIPERs, VIS
1.71% LargeCap Rydex Rus Top 50, XLG
1.71% Real Estate US DJ, IYR
1.69% S&P 500 iS LargeCap Blend, IVV
1.69% Capital Markets KWB ST, KCE
1.66% Value LargeCap Euro STOXX 50 DJ, FEU
1.65% Growth EAFE MSCI, EFG
1.63% Energy Global, IXC
1.62% LargeCap Blend Total Market DJ, IYY
1.61% Oil Services H, OIH
1.60% LargeCap Blend S&P 1500 iS, ISI
1.60% Malaysia Index, EWM
1.57% Value VIPERs, VTV
1.56% LargeCap Blend Socially Responsible iS, KLD
1.48% Value 40 Large Low P/E FT DB, FDV
1.44% Hong Kong Index, EWH
1.43% South Africa Index, EZA
1.43% Value MidCap Russell, IWS
1.43% Dividend High Yield Equity PS, PEY
1.42% Value MidCap iS M, JKI
1.39% Natural Resource iS GS, IGE
1.37% Value S&P 500 B, IVE
1.37% LargeCap Blend Dynamic PS, PWC
1.36% Pharmaceuticals, PJP
1.34% Dividend Growth PS, PHJ
1.34% Biotech H, BBH
1.32% Consumer Staples VIPERs, VDC
1.32% Health Care SPDR, XLV
1.29% Financial SPDR, XLF
1.28% LargeCap Blend S&P 100, OEF
1.27% Consumer Non-Cyclical, IYK
1.26% Dividend Achievers PS, PFM
1.24% Value LargeCap Fundamental RAFI 1000, PRF
1.23% LargeCap Blend Russell 3000, IWV
1.22% Energy DJ, IYE
1.20% Dividend Appreciation Vipers, VIG
1.17% Growth S&P 500, RPG
1.15% Value Large Cap DJ, ELV
1.14% LargeCap 1000 R, IWB
1.13% Health Care VIPERs, VHT
1.12% Consumer Staples SPDR, XLP
1.06% LargeCap Blend NYSE Composite iS, NYC
1.05% Switzerland Index, EWL
1.01% Dividend DJ Select, DVY
1.01% Financials VIPERs, VFH
1.00% China 25 iS, FXI
0.99% Food & Beverage, PBJ
0.98% LargeCap Blend Core iS M, JKD
0.85% Healthcare Global, IXJ
0.85% Value LargeCap iS M, JKF
0.79% Brazil Index, EWZ
0.78% Healthcare DJ, IYH
0.52% Value LargeCap Russell 3000, IWW
0.52% Financial DJ US, IYF
0.51% Silver Trust iS, SLV
0.36% Value LargeCap NYSE 100 iS, NY
0.32% Utilities SPDR, XLU
0.24% Financial Services DJ, IYG
0.24% Value 1000 Russell, IWD
0.21% Gold Shares S.T., GLD
0.17% Pharmaceutical H, PPH
0.05% Dividend Leaders, FDL
-0.19% Bond, Corp, LQD
-0.22% Utilities DJ, IDU
-0.23% Utilities VIPERs, VPU
-0.25% Insurance, PIC
-0.27% Realty Cohen & Steers, ICF
-0.42% Bond, 1-3 Year Treasury, SHY
-0.45% Utilities H, UTH
-0.45% Utilities, PUI
-0.56% Bank Regional H, RKH
-0.73% Bond, Aggregate, AGG
-1.28% Oil, Crude, U.S. Oil Fund, USO
-1.76% Bond, 10 Year Treasury, IEF
-1.77% Bond, TIPS, TIP
-1.94% Bond, 20+ Years Treasury, TLT
-2.10% Short 100% S&P 500, SH
-2.18% Short 100% Dow 30, DOG
-2.43% Short 100% MidCap 400, MYY
-3.23% Short 200% Dow 30 PS, DXD
-3.88% Short 200% S&P 500 PS, SDS
-4.60% Short 100% QQQ, PSQ
-6.38% Short 200% MidCap 400 PS, MZZ
-8.25% Short 200% QQQ PS, QID