By Robert W. Colby, Senior Analyst TraderPlanet.com
Stocks broke down below 4-day lows.
Consumer Staples’ Relative Strength Ratio rose to new 5-year high. This “Defensive” Stock Sector is relatively insulated against economic recessions.
Financial and Consumer Discretionary fell the most—again! These sectors are being hit hard by the economic downturn.
U.S. Treasury Bond prices reversed to the upside, hinting at some flight to safety.
Friday was a light news day, but the “reports” of the week were mostly Bearish. Clearly, the economy is weakening. In particular, Wall Street analysts have been cutting their earnings estimates for banks and brokers. Financial stocks have been at the bottom of my rankings for many months. Forewarned is forearmed.
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
5.48% , RHT , Red Hat Inc.
3.96% , THC , TENET HEALTHCARE
3.20% , YHOO , YAHOO
2.42% , PGJ , China LargeCap Growth G D H USX PS, PGJ
0.39% , EWS , Singapore Index, EWS
2.76% , STLD , Steel Dynamics, STLD
1.88% , SRCL , Stericycle, SRCL
2.39% , CAR , Avis Budget Group, Inc. (CAR)
3.43% , X , US STEEL CORP
1.97% , CSX , CSX
0.54% , AM , AMER GREETINGS STK A
1.66% , EWO , Austria Index, EWO
2.29% , PTEN , Patterson-UTI Energy Inc
1.23% , RRD , RR DONNELLEY SON
0.78% , HOT , STARWOOD HOTELS
1.33% , TMO , THERMO ELECTRON
2.47% , ERTS , ELECTRONIC ARTS
1.81% , AW , ALLIED WASTE IND
0.76% , ESRX , EXPRESS SCRIPTS
1.23% , A , AGILENT TECH
0.40% , EWJ , Japan Index, EWJ
0.70% , UIS , UNISYS
1.06% , QCOM , QUALCOMM
1.17% , ACS , AFFILIATED COMPUTER
2.38% , LLL , L-3 COMMS HLDGS
0.85% , BMY , BRISTOL MYERS
0.46% , PKI , PERKINELMER
0.19% , ACV , Alberto-Culver Co.
0.82% , WPI , WATSON PHARM
2.38% , CIT , CIT GROUP
1.38% , BRCM , BROADCOM STK A
0.49% , SNPS , Synopsys Inc
1.25% , IFF , INTL FLAV & FRAG
0.13% , PLL , PALL
0.93% , LLTC , LINEAR TECH
1.71% , HNZ , HJ HEINZ
1.28% , SNA , SNAP ON
0.12% , IPG , INTERPUBLIC GRP
0.24% , AGG , Bond, Aggregate, AGG
0.67% , AFL , AFLAC
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-26.85% , APOL , APOLLO GROUP
-7.50% , JCP , JC PENNEY
-1.01% , UTH , Utilities H, UTH
-9.19% , CECO , CAREER EDUCATION CORP
-2.59% , PEJ , Leisure & Entertainment, PEJ
-5.29% , CC , CIRCUIT CITY STR
-4.72% , LBTYA , Liberty Global Inc. (LBTYA)
-4.06% , AMD , ADV MICRO DEV
-1.09% , VPU , Utilities VIPERs, VPU
-9.10% , LIZ , LIZ CLAIRBORNE
-6.69% , JNY , JONES APPAREL
-6.52% , MTG , MGIC INVESTMENT
-3.91% , DISCA , Discovery Holding Co.
-6.17% , FHN , FIRST TENNESSEE
-0.56% , TTH , Telecom H, TTH
-1.05% , PWP , Value MidCap Dynamic PS, PWP
-4.90% , GRMN , GARMIN LTD
-0.17% , EWI , Italy Index, EWI
-1.80% , XSD , Semiconductor SPDR, XSD
-0.91% , IDU , Utilities DJ, IDU
-3.22% , LM , LEGG MASON
-7.39% , SLM , SLM CORP
-1.11% , IWW , Value LargeCap Russell 3000, IWW
-0.38% , EWQ , France Index, EWQ
-2.54% , Q , QWEST COMMUNICAT
-1.94% , VIA , VIACOM INC. (New)
-2.00% , IYC , Consumer Cyclical DJ, IYC
-5.30% , IGT , INTL GAME TECH
-5.44% , COH , COACH
-4.92% , KSS , KOHLS
-2.43% , CPWR , COMPUWARE
-0.62% , HHH , Internet H, HHH
-1.90% , PWER , POWER ONE
-2.80% , TWX , TIME WARNER INC
-3.11% , SHLD , SEARS HOLDINGS
-3.35% , BBBY , BED BATH BEYOND
-2.97% , WEN , WENDYS INTL
-4.05% , BC , BRUNSWICK
-4.45% , AIV , APT INV MNGMT
-0.77% , NYC , LargeCap Blend NYSE Composite iS, NYC
Sectors: among the 9 major U.S. sectors, all 9 fell.
Major Sectors Ranked for the Day
% Price ChangeSector
-0.11% Consumer Staples SPDR, XLP
-0.25% Health Care SPDR, XLV
-0.27% Energy SPDR, XLE
-0.38% Industrial SPDR, XLI
-0.62% Technology SPDR, XLK
-0.84% Materials SPDR, XLB
-0.92% Utilities SPDR, XLU
-1.93% Consumer Discretionary SPDR, XLY
-2.26% 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.
Consumer Staples (XLP) Neutral, Market Weight. On 3/28/08, 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.
Health Care (XLV) Bearish, Underweight. On 3/20/08, the XLV/SPY Relative Strength Ratio made a new 4-month low.
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.
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 shown better relative strength short-term, since 3/24/08. 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 declined moderately following 3 consecutive up days. The Crude Oil short-term trend might be questioned since it failed to make a new high on the 3-day upward drive. Oil appears to have support in the 98-100 area. 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 fell $18 following a puny rally. The short-term is in doubt, but the long-term trend still may 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 recovered. The 4-day Bearish pressure may be lifting. 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 over the past 2 days. 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 25.71, 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 28.87, 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 0.86, 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 1.10, 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 (1,315.22):
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 (1,315.22):
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:
3.31% China 25 iS, FXI
2.42% China LargeCap Growth G D H USX PS, PGJ
1.88% Short 200% MidCap 400 PS, MZZ
1.69% Short 200% S&P 500 PS, SDS
1.66% Austria Index, EWO
1.26% Short 200% Dow 30 PS, DXD
1.01% Hong Kong Index, EWH
0.97% Bond, 20+ Years Treasury, TLT
0.89% Short 100% MidCap 400, MYY
0.83% Pacific VIPERs, VPL
0.83% Short 200% QQQ PS, QID
0.76% Short 100% Dow 30, DOG
0.74% Bond, TIPS, TIP
0.54% Bond, Corp, LQD
0.53% Short 100% S&P 500, SH
0.43% Asia 50 BLDRS, ADRA
0.43% Japan LargeCap Blend TOPIX 150, ITF
0.42% South Korea Index, EWY
0.40% Japan Index, EWJ
0.39% Bond, 10 Year Treasury, IEF
0.39% Singapore Index, EWS
0.37% Sweden Index, EWD
0.24% Bond, Aggregate, AGG
0.21% Belgium Index, EWK
0.13% Value Line Timeliness MidCap Gr, PIV
0.10% EMU Europe Index, EZU
0.05% Bond, 1-3 Year Treasury, SHY
0.04% Developed 100 BLDRS, ADRD
0.00% Pacific ex-Japan, EPP
-0.01% European VIPERs, VGK
-0.06% Growth EAFE MSCI, EFG
-0.08% EAFE Index, EFA
-0.09% Energy Global, IXC
-0.09% Malaysia Index, EWM
-0.11% Euro STOXX 50, FEZ
-0.11% Consumer Staples SPDR, XLP
-0.12% Consumer Staples VIPERs, VDC
-0.12% Growth SmallCap R 2000, IWO
-0.13% Germany Index, EWG
-0.14% Netherlands Index, EWN
-0.15% Global Titans, DGT
-0.15% Aerospace & Defense, PPA
-0.17% Italy Index, EWI
-0.18% Emerging Markets, EEM
-0.19% Oil & Gas, PXJ
-0.21% Technology Global, IXN
-0.25% Materials VIPERs, VAW
-0.25% Health Care SPDR, XLV
-0.27% Pharmaceutical H, PPH
-0.27% Australia Index, EWA
-0.27% Energy SPDR, XLE
-0.28% Energy VIPERs, VDE
-0.29% Technology MS sT, MTK
-0.29% Value EAFE MSCI, EFV
-0.31% Metals & Mining SPDR, XME
-0.32% Natural Resource iS GS, IGE
-0.33% Software, IGV
-0.35% Switzerland Index, EWL
-0.36% Building & Construction, PKB
-0.37% Food & Beverage, PBJ
-0.37% Energy DJ, IYE
-0.38% France Index, EWQ
-0.38% Industrial SPDR, XLI
-0.40% Consumer Non-Cyclical, IYK
-0.41% Broadband H, BDH
-0.41% Healthcare Global, IXJ
-0.43% Value LargeCap Euro STOXX 50 DJ, FEU
-0.45% MidCap S&P 400 SPDRs, MDY
-0.45% Micro Cap Zachs, PZI
-0.45% Telecommunications Global, IXP
-0.46% Basic Materials DJ US, IYM
-0.46% United Kingdom Index, EWU
-0.47% Industrial LargeCap Blend DJ US, IYJ
-0.47% Pharmaceuticals, PJP
-0.47% Emerging 50 BLDRS, ADRE
-0.48% Latin Am 40, ILF
-0.49% Europe 350 S&P Index, IEV
-0.49% Software H, SWH
-0.50% Energy Exploration & Prod, PXE
-0.50% Internet Architecture H, IAH
-0.50% Growth LargeCap NASDAQ 100, QQQQ
-0.51% Dividend Appreciation Vipers, VIG
-0.52% Value 1000 Russell, IWD
-0.53% Transportation Av DJ, IYT
-0.55% Industrials VIPERs, VIS
-0.55% Technology DJ US, IYW
-0.55% Technology GS, IGM
-0.56% Telecom H, TTH
-0.59% Health Care VIPERs, VHT
-0.61% Spain Index, EWP
-0.62% Internet H, HHH
-0.62% Technology SPDR, XLK
-0.62% Mexico Index, EWW
-0.63% Info Tech VIPERs, VGT
-0.65% MidCap VIPERs, VO
-0.67% Europe 100 BLDRS, ADRU
-0.68% Growth Mid Cap Dynamic PS, PWJ
-0.70% Oil Services H, OIH
-0.73% Emerging VIPERs, VWO
-0.74% Growth Large Cap, ELG
-0.74% Growth VIPERs, VUG
-0.75% DIAMONDS (DJIA), DIA
-0.75% Growth S&P 500/BARRA, IVW
-0.76% MidCap Russell, IWR
-0.77% Insurance, PIC
-0.77% LargeCap Blend NYSE Composite iS, NYC
-0.77% LargeCap VIPERs, VV
-0.77% Healthcare DJ, IYH
-0.78% Retail H, RTH
-0.79% Canada Index, EWC
-0.79% Wilshire 5000 ST TM, TMW
-0.79% Realty Cohen & Steers, ICF
-0.80% Hardware & Electronics, PHW
-0.80% Biotech H, BBH
-0.83% Software, PSJ
-0.84% Dividend Leaders, FDL
-0.84% Materials SPDR, XLB
-0.85% LargeCap Blend Russell 3000, IWV
-0.85% S&P 500 iS LargeCap Blend, IVV
-0.86% Growth MidCap Russell, IWP
-0.86% Value MidCap iS M, JKI
-0.87% LargeCap 1000 R, IWB
-0.87% Growth 1000 Russell, IWF
-0.88% IPOs, First Tr IPOX-100, FPX
-0.88% MidCap Blend Core iS M, JKG
-0.89% Blend Total Market VIPERs, VTI
-0.90% Global 100, IOO
-0.91% LargeCap Blend Total Market DJ, IYY
-0.91% Lg Cap Growth PSD, PWB
-0.91% Value Small Cap DJ, DSV
-0.91% MidCap S&P 400 iS, IJH
-0.91% Utilities DJ, IDU
-0.92% Growth LargeCap iS M, JKE
-0.92% Growth SmallCap VIPERs, VBK
-0.92% Growth MidCap 400 B, IJK
-0.92% Utilities SPDR, XLU
-0.92% Growth LargeCap Russell 3000, IWZ
-0.94% Growth SmallCap Dynamic PS, PWT
-0.94% Value LargeCap NYSE 100 iS, NY
-0.94% REIT Wilshire, RWR
-0.94% LargeCap Blend S&P 100, OEF
-0.95% LargeCap Blend Core iS M, JKD
-0.96% S&P 500 SPDRs LargeCap Blend, SPY
-0.96% Financials Global LargeCap Value, IXG
-0.96% Growth Small Cap DJ, DSG
-0.97% Dividend International, PID
-0.97% LargeCap Rydex Rus Top 50, XLG
-0.98% Networking, IGN
-0.99% Telecom DJ US, IYZ
-0.99% LargeCap Blend S&P 1500 iS, ISI
-1.00% Telecom Services VIPERs, VOX
-1.01% Utilities H, UTH
-1.01% Dividend Achievers PS, PFM
-1.02% Growth LargeCap NASDAQ Fidelity, ONEQ
-1.04% Value S&P 500 B, IVE
-1.04% Value VIPERs, VTV
-1.05% Value MidCap S&P 400 B, IJJ
-1.05% Value MidCap Dynamic PS, PWP
-1.05% Value Large Cap DJ, ELV
-1.07% LargeCap Blend S&P=Weight R, RSP
-1.08% OTC Dynamic PS, PWO
-1.08% LargeCap Blend Socially Responsible iS, KLD
-1.08% Small Cap VIPERs, VB
-1.09% Utilities VIPERs, VPU
-1.10% Growth SmallCap iS M, JKK
-1.10% WilderHill Clean Energy PS, PBW
-1.11% Value MidCap Russell, IWS
-1.11% Value LargeCap Russell 3000, IWW
-1.11% Brazil Index, EWZ
-1.11% Extended Mkt VIPERs, VXF
-1.14% Value LargeCap Dynamic PS, PWV
-1.15% Networking, PXQ
-1.17% Short 100% QQQ, PSQ
-1.17% Value SmallCap VIPERS, VBR
-1.18% REIT VIPERs, VNQ
-1.19% Biotech & Genome, PBE
-1.19% Telecommunications & Wireless, PTE
-1.23% LargeCap Blend Dynamic PS, PWC
-1.24% Growth BARRA Small Cap 600, IJT
-1.24% SmallCap S&P 600, IJR
-1.25% Value LargeCap Fundamental RAFI 1000, PRF
-1.27% MidCap Growth iS M, JKH
-1.27% SmallCap PS Zacks, PZJ
-1.28% Semiconductor H, SMH
-1.30% SmallCap Russell 2000, IWM
-1.30% Taiwan Index, EWT
-1.31% Value SmallCap Dynamic PS, PWY
-1.32% Value LargeCap iS M, JKF
-1.34% Value 40 Large Low P/E FT DB, FDV
-1.34% Water Resources, PHO
-1.34% Dividend Growth PS, PHJ
-1.35% Dividend SPDR, SDY
-1.36% Value SmallCap S&P 600 B, IJS
-1.37% Value SmallCap Russell 2000, IWN
-1.40% Utilities, PUI
-1.43% Ultra Dow30 Double, DDM
-1.45% Semiconductor iS GS, IGW
-1.50% Semiconductors, PSI
-1.51% Ultra QQQ Double, QLD
-1.52% SmallCap Core iS M, JKJ
-1.54% Dividend DJ Select, DVY
-1.54% Real Estate US DJ, IYR
-1.54% Nanotech Lux, PXN
-1.57% Microcap Russell, IWC
-1.59% Oil, Crude, U.S. Oil Fund, USO
-1.64% Growth MidCap S&P 400, RFG
-1.65% Internet Infrastructure H, IIH
-1.69% Biotechnology, IBB
-1.69% Gold Shares S.T., GLD
-1.70% Financials VIPERs, VFH
-1.75% Biotech SPDR, XBI
-1.78% Growth S&P 500, RPG
-1.80% Semiconductor SPDR, XSD
-1.81% Value SmallCap S&P 600, RZV
-1.85% Value SmallCap iS M, JKL
-1.93% Consumer Discretionary SPDR, XLY
-1.93% Ultra S&P500 Double, SSO
-2.00% Consumer Cyclical DJ, IYC
-2.13% Financial DJ US, IYF
-2.15% Ultra MidCap400 Double, MVV
-2.26% Financial SPDR, XLF
-2.32% Bank Regional H, RKH
-2.34% Value MidCap S&P 400, RFV
-2.37% Commodity Tracking, DBC
-2.38% Consumer D. VIPERs, VCR
-2.51% Homebuilders SPDR, XHB
-2.52% Financial Services DJ, IYG
-2.57% South Africa Index, EZA
-2.59% Leisure & Entertainment, PEJ
-2.70% Capital Markets KWB ST, KCE
-2.84% Retail, PMR
-2.94% Value S&P 500, RPV
-3.11% Silver Trust iS, SLV
-3.33% Dividend High Yield Equity PS, PEY
-5.29% Internet B2B H, BHH
