By Robert W. Colby, Senior Analyst TraderPlanet.com
Stocks: short-term Bearish trend confirmed.
U.S. Treasury Bond prices broke sharply to the downside, breaking 8-day lows.
The Defensive Stock Sectors, Utilities, Health Care, and Consumer Staples, were relatively strong.
Financial, Industrial, Energy, Consumer Discretionary, and Technology Stock Sectors were relatively weak.
The “reports” of the day were mostly Bearish again. Wall Street analysts cut their earnings estimates for banks and brokers again. Vague but unsettling reports of rumors about Lehman Brothers were circulated by the media. Oracle reported revenue that was below expectations. Google fell on reports that “pay per click” is weak. The CRB Index and Crude Oil rose again, suggesting inflation.
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
7.13% , CAG , CONAGRA FOODS
4.79% , MKC , MCCORMICK
3.88% , SRE , SEMPRA ENERGY
1.88% , ATVI , Activision Inc.
2.81% , TE , TECO ENERGY
4.31% , EBAY , EBAY
3.26% , CEG , CONSTELL ENERGY
9.96% , CCU , CLEAR CHANNEL
0.96% , EWD , Sweden Index, EWD
2.13% , SNDK , SanDisk Corporation
4.15% , HGSI , Human Genome Sciences Inc
3.46% , EP , EL PASO
0.97% , EWO , Austria Index, EWO
3.31% , LUV , SOUTHWEST AIRLS
1.72% , SLE , SARA LEE
1.12% , MYY , Short 100% MidCap 400, MYY
1.79% , TER , TERADYNE
0.73% , PUI , Utilities, PUI
1.33% , MZZ , Short 200% MidCap 400 PS, MZZ
0.57% , ADRU , Europe 100 BLDRS, ADRU
1.43% , PAYX , PAYCHEX
1.10% , DBC , Commodity Tracking, DBC
0.51% , XLV , Health Care SPDR, XLV
2.51% , TEVA , Teva Pharmaceutical Industries Limited
1.17% , GIS , GENERAL MILLS
0.22% , EFG , Growth EAFE MSCI, EFG
0.67% , DTE , DTE ENERGY
1.75% , ETR , ENTERGY
1.94% , PNC , PNC FINL SVC
0.77% , NCR , NCR
1.76% , LEN , Lennar Corp. (LEN)
0.80% , WWY , WM WRIGLEY JR
0.97% , ALL , ALLSTATE
0.72% , RSH , RADIOSHACK
2.38% , QID , Short 200% QQQ PS, QID
0.56% , EZA , South Africa Index, EZA
3.11% , XRAY , DENTSPLY International Inc
0.61% , WMB , WILLIAMS
0.52% , FDX , FEDEX
0.90% , CBE , COOPER INDS STK A
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-1.54% , PSI , Semiconductors, PSI
-8.90% , LEH , LEHMAN BROS HLDG
-7.73% , IGT , INTL GAME TECH
-0.93% , EWK , Belgium Index, EWK
-5.17% , ABK , AMBAC FINL GRP
-1.72% , XME , Metals & Mining SPDR, XME
-5.30% , SNV , SYNOVUS
-1.27% , IIH , Internet Infrastructure H, IIH
-4.98% , KG , KING PHARM
-2.36% , IYW , Technology DJ US, IYW
-1.14% , JKI , Value MidCap iS M, JKI
-1.19% , IWV , LargeCap Blend Russell 3000, IWV
-2.02% , PHW , Hardware & Electronics, PHW
-4.00% , ADSK , AUTODESK
-2.94% , NTAP , NETWK APPLIANCE
-1.05% , FPX , IPOs, First Tr IPOX-100, FPX
-3.09% , QLGC , QLOGIC
-3.22% , TDC , Teradata Corporation, TDC
-4.42% , MAT , MATTEL
-3.50% , CTSH , Cognizant Technology Solutions
-1.70% , FDL , Dividend Leaders, FDL
-4.03% , ZION , ZIONS
-3.28% , FO , FORTUNE BRANDS
-2.60% , IYG , Financial Services DJ, IYG
-8.07% , XMSR , XM Satellite R
-6.43% , NYT , NY TIMES STK A
-7.21% , ORCL , ORACLE
-2.15% , TBH , Telebras HOLDRS, TBH*
-4.39% , MS , MORGAN STANLEY
-4.96% , JNPR , Juniper Networks Inc
-2.81% , KEY , KEYCORP
-3.64% , XLNX , XILINX
-2.38% , SWK , STANLEY WORKS
-1.99% , IAH , Internet Architecture H, IAH
-3.23% , ITT , ITT INDS
-2.73% , BA , BOEING
-7.53% , APOL , APOLLO GROUP
-5.67% , MER , MERRILL LYNCH
-3.42% , DELL , DELL
-4.61% , CHKP , Check Point Software Technologies Ltd
Sectors: among the 9 major U.S. sectors, 3 rose and 6 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.01% Utilities SPDR, XLU
0.51% Health Care SPDR, XLV
0.50% Consumer Staples SPDR, XLP
-0.27% Materials SPDR, XLB
-0.79% Technology SPDR, XLK
-0.95% Consumer Discretionary SPDR, XLY
-1.01% Energy SPDR, XLE
-1.10% Industrial SPDR, XLI
-1.56% Financial SPDR, XLF
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.
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.
Consumer Staples (XLP) Neutral, Market Weight. On 3/19/08, the XLP/SPY Relative Strength Ratio rose to new 5-year high.
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.
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 appear uncertain, short-term. 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 underperformed. The minor Ripple trend appears questionable. 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 futures rose again to approach the highs. Oil rose 3 consecutive days after finding 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 futures eased modestly lower. Both the short-term and long-term trends still appear to be Bullish.
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, breaking 8-day lows. Short-term momentum is Bearish. 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.
The U.S. dollar consolidated recent losses. The minor and major trends of the dollar are both down.
The Art of Contrary Thinking: Traders need to be extremely nimble to keep up with rapid changes in the mass mood of late. The business and financial news has flipped from fear to hope and back again many times in recent weeks, creating an extremely choppy trading environment. 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, without warning, risk control becomes more important than aggressive profit seeking. Stay flexible.
Sentiment/Contrary Opinion: There were 36.7% Bulls versus 41.4% Bears as of 3/26/08, according to the weekly Investors Intelligence survey of newsletter advisors. The Bull/Bear ratio rose to 0.89, up from 0.69 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 25.88, 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 29.55, 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 0.84, 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 0.81, 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.
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 (1,325.76):
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
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:
2.76% Short 100% QQQ, PSQ
2.38% Short 200% QQQ PS, QID
1.33% Short 200% MidCap 400 PS, MZZ
1.12% Short 100% MidCap 400, MYY
1.10% Commodity Tracking, DBC
1.10% Emerging VIPERs, VWO
1.08% Oil, Crude, U.S. Oil Fund, USO
1.03% Short 200% Dow 30 PS, DXD
1.01% Utilities SPDR, XLU
0.97% Austria Index, EWO
0.96% Sweden Index, EWD
0.91% Utilities VIPERs, VPU
0.91% Hong Kong Index, EWH
0.88% China 25 iS, FXI
0.88% Short 200% S&P 500 PS, SDS
0.85% Nanotech Lux, PXN
0.73% Utilities, PUI
0.69% Utilities H, UTH
0.69% Short 100% Dow 30, DOG
0.64% Healthcare Global, IXJ
0.61% China LargeCap Growth G D H USX PS, PGJ
0.57% Europe 100 BLDRS, ADRU
0.56% South Africa Index, EZA
0.52% Silver Trust iS, SLV
0.51% Health Care SPDR, XLV
0.50% Consumer Staples SPDR, XLP
0.49% Pharmaceutical H, PPH
0.49% Utilities DJ, IDU
0.47% Singapore Index, EWS
0.43% Food & Beverage, PBJ
0.38% Short 100% S&P 500, SH
0.35% Germany Index, EWG
0.28% Telecommunications Global, IXP
0.28% European VIPERs, VGK
0.22% Growth EAFE MSCI, EFG
0.20% Health Care VIPERs, VHT
0.20% Bond, TIPS, TIP
0.16% Mexico Index, EWW
0.12% Europe 350 S&P Index, IEV
0.11% Bond, 1-3 Year Treasury, SHY
0.09% Value LargeCap Euro STOXX 50 DJ, FEU
0.06% Telecom H, TTH
0.05% Dividend International, PID
0.05% Spain Index, EWP
0.04% Bond, Aggregate, AGG
0.03% Biotechnology, IBB
0.03% Internet B2B H, BHH
0.00% Canada Index, EWC
0.00% Insurance, PIC
0.00% Malaysia Index, EWM
-0.02% Healthcare DJ, IYH
-0.04% Switzerland Index, EWL
-0.08% EAFE Index, EFA
-0.09% Homebuilders SPDR, XHB
-0.10% Global 100, IOO
-0.11% Euro STOXX 50, FEZ
-0.12% Consumer Staples VIPERs, VDC
-0.13% Bond, 10 Year Treasury, IEF
-0.14% Netherlands Index, EWN
-0.15% Telecom Services VIPERs, VOX
-0.15% Biotech SPDR, XBI
-0.17% Italy Index, EWI
-0.18% Biotech & Genome, PBE
-0.18% Value EAFE MSCI, EFV
-0.20% LargeCap Blend NYSE Composite iS, NYC
-0.20% Consumer Non-Cyclical, IYK
-0.26% Water Resources, PHO
-0.27% Materials SPDR, XLB
-0.30% EMU Europe Index, EZU
-0.30% Global Titans, DGT
-0.32% S&P 500 SPDRs LargeCap Blend, SPY
-0.32% Japan Index, EWJ
-0.32% United Kingdom Index, EWU
-0.33% Energy Exploration & Prod, PXE
-0.34% Telecom DJ US, IYZ
-0.35% France Index, EWQ
-0.36% Gold Shares S.T., GLD
-0.37% Blend Total Market VIPERs, VTI
-0.42% Real Estate US DJ, IYR
-0.45% LargeCap Blend S&P 100, OEF
-0.45% South Korea Index, EWY
-0.46% Value LargeCap NYSE 100 iS, NY
-0.47% Developed 100 BLDRS, ADRD
-0.48% Emerging Markets, EEM
-0.49% Value S&P 500, RPV
-0.50% Energy VIPERs, VDE
-0.52% Value Large Cap DJ, ELV
-0.52% S&P 500 iS LargeCap Blend, IVV
-0.53% Value 40 Large Low P/E FT DB, FDV
-0.54% Internet H, HHH
-0.55% WilderHill Clean Energy PS, PBW
-0.55% Japan LargeCap Blend TOPIX 150, ITF
-0.57% Dividend Achievers PS, PFM
-0.57% Growth S&P 500, RPG
-0.59% Energy Global, IXC
-0.59% Pacific ex-Japan, EPP
-0.60% Oil Services H, OIH
-0.60% Industrials VIPERs, VIS
-0.61% Bond, Corp, LQD
-0.61% Ultra S&P500 Double, SSO
-0.62% DIAMONDS (DJIA), DIA
-0.62% LargeCap Blend S&P 1500 iS, ISI
-0.65% Value LargeCap Dynamic PS, PWV
-0.65% Natural Resource iS GS, IGE
-0.65% LargeCap Blend Core iS M, JKD
-0.65% MidCap S&P 400 SPDRs, MDY
-0.66% Growth SmallCap Dynamic PS, PWT
-0.69% Australia Index, EWA
-0.69% Emerging 50 BLDRS, ADRE
-0.70% Pharmaceuticals, PJP
-0.70% Bond, 20+ Years Treasury, TLT
-0.71% Growth 1000 Russell, IWF
-0.72% Telecommunications & Wireless, PTE
-0.73% Value MidCap Dynamic PS, PWP
-0.74% Transportation Av DJ, IYT
-0.75% Extended Mkt VIPERs, VXF
-0.75% Small Cap VIPERs, VB
-0.75% Value LargeCap iS M, JKF
-0.76% Financials Global LargeCap Value, IXG
-0.76% Oil & Gas, PXJ
-0.78% Building & Construction, PKB
-0.78% SmallCap PS Zacks, PZJ
-0.79% Energy DJ, IYE
-0.79% Dividend Appreciation Vipers, VIG
-0.79% SmallCap Russell 2000, IWM
-0.79% LargeCap Rydex Rus Top 50, XLG
-0.79% Technology SPDR, XLK
-0.80% MidCap S&P 400 iS, IJH
-0.81% Realty Cohen & Steers, ICF
-0.82% Value SmallCap VIPERS, VBR
-0.82% Growth Mid Cap Dynamic PS, PWJ
-0.82% REIT VIPERs, VNQ
-0.84% Dividend Growth PS, PHJ
-0.86% Value LargeCap Fundamental RAFI 1000, PRF
-0.87% Pacific VIPERs, VPL
-0.88% Growth Small Cap DJ, DSG
-0.89% Microcap Russell, IWC
-0.90% Lg Cap Growth PSD, PWB
-0.91% LargeCap VIPERs, VV
-0.93% Belgium Index, EWK
-0.94% Wilshire 5000 ST TM, TMW
-0.95% Consumer Discretionary SPDR, XLY
-0.96% Value MidCap Russell, IWS
-0.96% Growth Large Cap, ELG
-0.96% LargeCap Blend S&P=Weight R, RSP
-0.98% LargeCap Blend Socially Responsible iS, KLD
-0.98% Value S&P 500 B, IVE
-0.98% Value VIPERs, VTV
-1.00% Growth LargeCap Russell 3000, IWZ
-1.00% MidCap Growth iS M, JKH
-1.01% Biotech H, BBH
-1.01% Materials VIPERs, VAW
-1.01% Energy SPDR, XLE
-1.01% REIT Wilshire, RWR
-1.03% LargeCap Blend Total Market DJ, IYY
-1.04% Latin Am 40, ILF
-1.04% Value LargeCap Russell 3000, IWW
-1.04% Industrial LargeCap Blend DJ US, IYJ
-1.05% IPOs, First Tr IPOX-100, FPX
-1.05% Growth MidCap Russell, IWP
-1.06% Consumer Cyclical DJ, IYC
-1.06% Software, IGV
-1.06% Aerospace & Defense, PPA
-1.07% Growth VIPERs, VUG
-1.08% Value Small Cap DJ, DSV
-1.09% Value MidCap S&P 400 B, IJJ
-1.09% LargeCap Blend Dynamic PS, PWC
-1.09% MidCap VIPERs, VO
-1.09% MidCap Russell, IWR
-1.10% Industrial SPDR, XLI
-1.12% Asia 50 BLDRS, ADRA
-1.12% Growth S&P 500/BARRA, IVW
-1.12% LargeCap 1000 R, IWB
-1.13% Growth SmallCap VIPERs, VBK
-1.14% Ultra Dow30 Double, DDM
-1.14% MidCap Blend Core iS M, JKG
-1.14% Value MidCap iS M, JKI
-1.15% Retail, PMR
-1.16% Value MidCap S&P 400, RFV
-1.16% Value SmallCap Dynamic PS, PWY
-1.18% Basic Materials DJ US, IYM
-1.19% LargeCap Blend Russell 3000, IWV
-1.21% Value SmallCap iS M, JKL
-1.21% Semiconductor SPDR, XSD
-1.21% Leisure & Entertainment, PEJ
-1.22% Consumer D. VIPERs, VCR
-1.22% Ultra MidCap400 Double, MVV
-1.23% Value 1000 Russell, IWD
-1.23% Dividend DJ Select, DVY
-1.24% Growth SmallCap R 2000, IWO
-1.25% Growth SmallCap iS M, JKK
-1.27% Internet Infrastructure H, IIH
-1.30% Dividend SPDR, SDY
-1.34% Growth MidCap 400 B, IJK
-1.36% Growth BARRA Small Cap 600, IJT
-1.42% SmallCap Core iS M, JKJ
-1.45% Growth LargeCap iS M, JKE
-1.50% SmallCap S&P 600, IJR
-1.53% Broadband H, BDH
-1.54% Semiconductors, PSI
-1.55% Financials VIPERs, VFH
-1.56% Financial SPDR, XLF
-1.60% Dividend High Yield Equity PS, PEY
-1.61% Micro Cap Zachs, PZI
-1.63% Value SmallCap Russell 2000, IWN
-1.64% Growth MidCap S&P 400, RFG
-1.69% Info Tech VIPERs, VGT
-1.70% Dividend Leaders, FDL
-1.72% Metals & Mining SPDR, XME
-1.73% Semiconductor H, SMH
-1.79% Retail H, RTH
-1.80% Growth LargeCap NASDAQ Fidelity, ONEQ
-1.80% Financial DJ US, IYF
-1.89% Brazil Index, EWZ
-1.92% Software, PSJ
-1.98% Value SmallCap S&P 600 B, IJS
-1.99% Internet Architecture H, IAH
-2.00% Networking, IGN
-2.02% Hardware & Electronics, PHW
-2.05% Ultra QQQ Double, QLD
-2.07% Bank Regional H, RKH
-2.19% Technology Global, IXN
-2.21% Growth LargeCap NASDAQ 100, QQQQ
-2.24% Technology GS, IGM
-2.25% Taiwan Index, EWT
-2.26% OTC Dynamic PS, PWO
-2.36% Technology DJ US, IYW
-2.48% Technology MS sT, MTK
-2.56% Value Line Timeliness MidCap Gr, PIV
-2.58% Semiconductor iS GS, IGW
-2.60% Financial Services DJ, IYG
-2.84% Networking, PXQ
-2.91% Value SmallCap S&P 600, RZV
-3.02% Capital Markets KWB ST, KCE
-3.64% Software H, SWH
