By Robert W. Colby, Senior Analyst TraderPlanet.com
Commodities decline took some pressure off stocks.
Industrial Stock Sector Relative Strength Ratio rose to another new all-time high.
The “reports” of the day were mixed. Treasury Secretary Paulson proposed streamlining the U.S. financial regulatory bureaucracy. Crude oil fell steeply, breaking down below 3-day lows. The Chicago Purchasing Manager’s Index was 48.2, which was above the consensus estimate of 46.0 but still indicates a weakening economy, consistent with most data in recent months.
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
8.83% , FO , FORTUNE BRANDS
9.34% , MU , MICRON TECH
8.71% , RDC , ROWAN COMPANIES
1.14% , XSD , Semiconductor SPDR, XSD
3.37% , NE , NOBLE
0.59% , JKF , Value LargeCap iS M, JKF
0.71% , MTK , Technology MS sT, MTK
0.97% , RZV , Value SmallCap S&P 600, RZV
3.71% , PRU , PRUDENTIAL FINL
1.03% , IJH , MidCap S&P 400 iS, IJH
1.36% , EWN , Netherlands Index, EWN
2.57% , TNB , THOMAS & BETTS
3.92% , ABT , ABBOTT LABS
1.06% , IWR , MidCap Russell, IWR
0.71% , IWC , Microcap Russell, IWC
2.35% , XBI , Biotech SPDR, XBI
3.80% , SNA , SNAP ON
0.52% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
2.87% , NOV , NATIONAL OILWELL VARC0
3.97% , RYAAY , Ryanair Holdings plc
0.31% , DSV , Value Small Cap DJ, DSV
0.55% , HHH , Internet H, HHH
6.16% , SNDK , SanDisk Corporation
3.60% , SWY , SAFEWAY
0.48% , FEZ , Euro STOXX 50, FEZ
0.69% , KLD , LargeCap Blend Socially Responsible iS, KLD
4.38% , SCHW.O , CHARLES SCHWAB
1.75% , FRX , FOREST LABS STK A
2.53% , AMP , Ameriprise Financial Inc.
1.72% , SAF , SAFECO
4.03% , GT , GOODYEAR TIRE
2.48% , CTAS , CINTAS
3.62% , MLNM , Millennium Pharmaceuticals Inc
1.83% , EWD , Sweden Index, EWD
0.84% , PBE , Biotech & Genome, PBE
2.59% , LLY , ELI LILLY
1.93% , SIAL , SIGMA ALDRICH
0.77% , EZU , EMU Europe Index, EZU
3.08% , AVY , AVERY DENNISON
0.39% , XLG , LargeCap Rydex Rus Top 50, XLG
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-25.99% , SGP , SCHERING PLOUGH
-14.74% , MRK , MERCK & CO
-69.93% , MO , ALTRIA GROUP
-51.01% , STLD , Steel Dynamics, STLD
-8.31% , PLL , PALL
-4.02% , CTXS , CITRIX SYSTEMS
-1.93% , PPH , Pharmaceutical H, PPH
-1.87% , MAT , MATTEL
-2.65% , ADM , ARCHER DANIELS
-3.99% , SLV , Silver Trust iS, SLV
-1.58% , BDX , BECTON DICKINSON
-5.56% , FMCN , Focus Media, FMCN
-3.57% , USO , Oil, Crude, U.S. Oil Fund, USO
-2.75% , RAI , RJR TOBACCO HLDS
-2.45% , MON , MONSANTO
-2.69% , NEM , NEWMONT MINING
-2.25% , MRVL , MARVELL TECHNOLOGY
-1.62% , UST , UST
-2.00% , ABI , Applera Corp-Applied Biosystems Group (ABI)
-0.53% , VC , VISTEON
-0.93% , HPQ , HEWLETT PACKARD
-2.56% , RFMD , RF Micro Devices Inc
-3.69% , GRMN , GARMIN LTD
-4.75% , CAR , Avis Budget Group, Inc. (CAR)
-1.17% , TYC , TYCO INTL
-2.09% , WOR , WORTHINGTON INDS
-1.91% , NUE , NUCOR
-1.35% , DGT , Global Titans, DGT
-1.14% , DGX , QUEST DIAG
-2.70% , RIMM , RESEARCH IN MOTION LTD
-2.31% , CFC , COUNTRYWIDE FNCL
-1.47% , CMI , CUMMINS
-1.12% , HMA , HEALTH MGMT STK A
-1.14% , BCR , C R BARD
-1.03% , ABK , AMBAC FINL GRP
-0.93% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-0.92% , USB , US BANCORP
-0.86% , WMI , WASTE MANAGEMENT
-1.45% , IAU , Gold COMEX iS, IAU
-0.95% , HRB , H&R BLOCK
Sectors: among the 9 major U.S. sectors, 5 rose and 4 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.52% Industrial SPDR, XLI
0.90% Energy SPDR, XLE
0.89% Financial SPDR, XLF
0.82% Utilities SPDR, XLU
0.62% Consumer Discretionary SPDR, XLY
-0.07% Consumer Staples SPDR, XLP
-0.12% Materials SPDR, XLB
-0.13% Technology SPDR, XLK
-0.51% Health Care SPDR, XLV
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 3/31/08, 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 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 fell steeply, breaking down below 3-day lows. 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 steeply. The short-term may be down, 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 rose above previous 4-day highs. The short-term trend seems to have turned up. 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 3 trading 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 25.61, 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 29.04, 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 0.85, 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 1.16, 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 (1,322.70):
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:
3.33% Homebuilders SPDR, XHB
2.81% Internet B2B H, BHH
2.53% Mexico Index, EWW
2.35% Biotech SPDR, XBI
2.23% Capital Markets KWB ST, KCE
1.83% Sweden Index, EWD
1.80% Ultra MidCap400 Double, MVV
1.68% Leisure & Entertainment, PEJ
1.68% Biotechnology, IBB
1.65% Italy Index, EWI
1.57% Biotech H, BBH
1.54% Malaysia Index, EWM
1.52% Industrial SPDR, XLI
1.52% Oil Services H, OIH
1.50% Value MidCap S&P 400 B, IJJ
1.41% Belgium Index, EWK
1.40% Broadband H, BDH
1.38% Value SmallCap iS M, JKL
1.37% Value MidCap Dynamic PS, PWP
1.36% Netherlands Index, EWN
1.35% Utilities H, UTH
1.30% Telecom DJ US, IYZ
1.28% France Index, EWQ
1.26% Value SmallCap Dynamic PS, PWY
1.25% Telecom H, TTH
1.23% Value MidCap Russell, IWS
1.22% Consumer D. VIPERs, VCR
1.21% IPOs, First Tr IPOX-100, FPX
1.19% Semiconductors, PSI
1.18% South Korea Index, EWY
1.16% Telecom Services VIPERs, VOX
1.14% Consumer Cyclical DJ, IYC
1.14% Semiconductor SPDR, XSD
1.11% Growth BARRA Small Cap 600, IJT
1.09% Switzerland Index, EWL
1.09% Dividend Achievers PS, PFM
1.08% Utilities, PUI
1.08% Semiconductor iS GS, IGW
1.06% MidCap Russell, IWR
1.05% Value 1000 Russell, IWD
1.04% Oil & Gas, PXJ
1.03% Insurance, PIC
1.03% MidCap S&P 400 iS, IJH
1.02% Value S&P 500, RPV
1.02% SmallCap Core iS M, JKJ
1.02% Utilities DJ, IDU
1.00% Value SmallCap S&P 600 B, IJS
1.00% Dividend SPDR, SDY
0.99% Latin Am 40, ILF
0.98% Growth S&P 500, RPG
0.97% Utilities VIPERs, VPU
0.97% Value SmallCap S&P 600, RZV
0.97% MidCap Blend Core iS M, JKG
0.95% Value MidCap iS M, JKI
0.95% SmallCap PS Zacks, PZJ
0.93% Dividend Appreciation Vipers, VIG
0.90% Growth MidCap 400 B, IJK
0.90% Energy SPDR, XLE
0.89% Financial Services DJ, IYG
0.89% Financial SPDR, XLF
0.86% Extended Mkt VIPERs, VXF
0.86% Dividend Growth PS, PHJ
0.85% Europe 100 BLDRS, ADRU
0.85% Growth EAFE MSCI, EFG
0.84% Biotech & Genome, PBE
0.84% OTC Dynamic PS, PWO
0.83% Pharmaceuticals, PJP
0.83% Retail H, RTH
0.82% Utilities SPDR, XLU
0.82% Value LargeCap Dynamic PS, PWV
0.81% Growth SmallCap Dynamic PS, PWT
0.81% Growth LargeCap NASDAQ Fidelity, ONEQ
0.81% Europe 350 S&P Index, IEV
0.79% MidCap Growth iS M, JKH
0.77% EMU Europe Index, EZU
0.77% Value LargeCap Fundamental RAFI 1000, PRF
0.77% LargeCap Blend Dynamic PS, PWC
0.77% Financial DJ US, IYF
0.76% Value LargeCap Russell 3000, IWW
0.74% Growth Large Cap, ELG
0.73% Lg Cap Growth PSD, PWB
0.73% Growth LargeCap iS M, JKE
0.72% Industrial LargeCap Blend DJ US, IYJ
0.72% European VIPERs, VGK
0.71% Microcap Russell, IWC
0.71% Technology MS sT, MTK
0.69% LargeCap Blend Socially Responsible iS, KLD
0.68% Software H, SWH
0.67% Semiconductor H, SMH
0.66% Real Estate US DJ, IYR
0.66% Growth MidCap Russell, IWP
0.64% Realty Cohen & Steers, ICF
0.63% LargeCap 1000 R, IWB
0.62% Technology Global, IXN
0.62% Consumer Discretionary SPDR, XLY
0.61% LargeCap VIPERs, VV
0.61% Germany Index, EWG
0.60% Energy DJ, IYE
0.60% Micro Cap Zachs, PZI
0.60% Industrials VIPERs, VIS
0.60% Technology GS, IGM
0.59% Ultra S&P500 Double, SSO
0.59% Emerging Markets, EEM
0.59% Emerging VIPERs, VWO
0.59% Value LargeCap iS M, JKF
0.58% Energy VIPERs, VDE
0.58% Value S&P 500 B, IVE
0.58% Growth SmallCap iS M, JKK
0.55% LargeCap Blend Russell 3000, IWV
0.55% LargeCap Blend Core iS M, JKD
0.55% Internet H, HHH
0.55% REIT Wilshire, RWR
0.55% Building & Construction, PKB
0.54% Dividend International, PID
0.54% LargeCap Blend Total Market DJ, IYY
0.54% LargeCap Blend S&P 1500 iS, ISI
0.54% Software, PSJ
0.54% Growth VIPERs, VUG
0.53% Growth LargeCap NASDAQ 100, QQQQ
0.52% Growth LargeCap Russell 3000, IWZ
0.52% Value EAFE MSCI, EFV
0.52% Value VIPERs, VTV
0.52% Value LargeCap Euro STOXX 50 DJ, FEU
0.51% United Kingdom Index, EWU
0.51% Blend Total Market VIPERs, VTI
0.51% Dividend Leaders, FDL
0.50% Technology DJ US, IYW
0.49% Food & Beverage, PBJ
0.48% Euro STOXX 50, FEZ
0.48% Growth S&P 500/BARRA, IVW
0.47% Energy Global, IXC
0.47% Global 100, IOO
0.46% Telecommunications Global, IXP
0.46% S&P 500 iS LargeCap Blend, IVV
0.45% Value SmallCap VIPERS, VBR
0.44% Financials VIPERs, VFH
0.43% Ultra QQQ Double, QLD
0.42% Transportation Av DJ, IYT
0.42% Internet Architecture H, IAH
0.42% Growth SmallCap VIPERs, VBK
0.40% MidCap VIPERs, VO
0.39% Emerging 50 BLDRS, ADRE
0.39% LargeCap Rydex Rus Top 50, XLG
0.39% REIT VIPERs, VNQ
0.39% SmallCap S&P 600, IJR
0.38% LargeCap Blend S&P 100, OEF
0.36% EAFE Index, EFA
0.36% Bond, 20+ Years Treasury, TLT
0.35% Value Large Cap DJ, ELV
0.35% S&P 500 SPDRs LargeCap Blend, SPY
0.35% Dividend DJ Select, DVY
0.34% Networking, PXQ
0.33% Energy Exploration & Prod, PXE
0.33% Consumer Non-Cyclical, IYK
0.33% Wilshire 5000 ST TM, TMW
0.32% Value LargeCap NYSE 100 iS, NY
0.31% LargeCap Blend NYSE Composite iS, NYC
0.31% Value Small Cap DJ, DSV
0.30% MidCap S&P 400 SPDRs, MDY
0.29% Networking, IGN
0.29% Growth Mid Cap Dynamic PS, PWJ
0.28% Small Cap VIPERs, VB
0.27% Bond, Corp, LQD
0.26% Financials Global LargeCap Value, IXG
0.26% Value Line Timeliness MidCap Gr, PIV
0.25% Dividend High Yield Equity PS, PEY
0.24% Bond, TIPS, TIP
0.24% Info Tech VIPERs, VGT
0.21% Value SmallCap Russell 2000, IWN
0.21% Water Resources, PHO
0.21% Brazil Index, EWZ
0.20% Hardware & Electronics, PHW
0.20% Telecommunications & Wireless, PTE
0.19% LargeCap Blend S&P=Weight R, RSP
0.19% Growth Small Cap DJ, DSG
0.18% Pacific ex-Japan, EPP
0.17% Bond, 10 Year Treasury, IEF
0.17% Consumer Staples VIPERs, VDC
0.17% Canada Index, EWC
0.15% Ultra Dow30 Double, DDM
0.15% Natural Resource iS GS, IGE
0.15% SmallCap Russell 2000, IWM
0.14% DIAMONDS (DJIA), DIA
0.13% Short 100% Dow 30, DOG
0.12% Short 200% Dow 30 PS, DXD
0.11% Developed 100 BLDRS, ADRD
0.09% Value 40 Large Low P/E FT DB, FDV
0.06% Growth 1000 Russell, IWF
0.04% South Africa Index, EZA
0.02% Software, IGV
0.02% Bond, 1-3 Year Treasury, SHY
0.00% Singapore Index, EWS
0.00% Aerospace & Defense, PPA
-0.02% Short 200% S&P 500 PS, SDS
-0.07% Spain Index, EWP
-0.07% Nanotech Lux, PXN
-0.07% Consumer Staples SPDR, XLP
-0.07% Short 100% S&P 500, SH
-0.08% Australia Index, EWA
-0.12% Materials SPDR, XLB
-0.13% Bank Regional H, RKH
-0.13% Technology SPDR, XLK
-0.16% Bond, Aggregate, AGG
-0.19% Internet Infrastructure H, IIH
-0.20% Basic Materials DJ US, IYM
-0.25% Taiwan Index, EWT
-0.25% Healthcare DJ, IYH
-0.27% Austria Index, EWO
-0.35% Growth MidCap S&P 400, RFG
-0.39% Hong Kong Index, EWH
-0.40% Materials VIPERs, VAW
-0.51% Health Care SPDR, XLV
-0.52% Health Care VIPERs, VHT
-0.52% Short 200% QQQ PS, QID
-0.58% Pacific VIPERs, VPL
-0.59% Healthcare Global, IXJ
-0.72% Japan Index, EWJ
-0.86% WilderHill Clean Energy PS, PBW
-0.93% Asia 50 BLDRS, ADRA
-0.93% Japan LargeCap Blend TOPIX 150, ITF
-0.99% Short 100% MidCap 400, MYY
-1.18% Metals & Mining SPDR, XME
-1.19% Short 200% MidCap 400 PS, MZZ
-1.21% Short 100% QQQ, PSQ
-1.28% China 25 iS, FXI
-1.35% Global Titans, DGT
-1.40% Growth SmallCap R 2000, IWO
-1.58% China LargeCap Growth G D H USX PS, PGJ
-1.60% Gold Shares S.T., GLD
-1.93% Pharmaceutical H, PPH
-2.34% Value MidCap S&P 400, RFV
-2.39% Retail, PMR
-2.40% Commodity Tracking, DBC
-3.57% Oil, Crude, U.S. Oil Fund, USO
-3.99% Silver Trust iS, SLV
