By Robert W. Colby, Senior Analyst TraderPlanet.com
World markets have been consolidating or correcting over the past 2-3 weeks.
Health Care Stock Sector Relative Strength Ratio broke down to a new 8-month low.
The “reports” of the day were sobering. Fed Chairman Ben Bernanke cut his estimates for the economy: real GDP probably will not grow in the first half of 2008 and possibly could contract slightly. In addition, the International Monetary Fund cut its global GDP growth forecast to 3.7% from 4.1%.
The main technical trend still may be 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
0.97% , PEJ , Leisure & Entertainment, PEJ
14.50% , DDS , DILLARD STK A
0.40% , IOO , Global 100, IOO
4.83% , MOLX , MOLEX
4.07% , PBW , WilderHill Clean Energy PS, PBW
0.99% , RFV , Value MidCap S&P 400, RFV
4.40% , TBH , Telebras HOLDRS, TBH*
1.08% , PSQ , Short 100% QQQ, PSQ
6.21% , CAR , Avis Budget Group, Inc. (CAR)
1.72% , PHO , Water Resources, PHO
9.15% , LPX , LOUISIANA PAC
1.31% , AEP , AM ELEC POWER
3.62% , KEY , KEYCORP
5.68% , CC , CIRCUIT CITY STR
1.98% , AMD , ADV MICRO DEV
3.49% , NTAP , NETWK APPLIANCE
9.10% , CIT , CIT GROUP
2.12% , TNB , THOMAS & BETTS
4.26% , CTXS , CITRIX SYSTEMS
1.08% , BBY , BEST BUY
4.93% , TLAB , TELLABS
0.55% , ADRD , Developed 100 BLDRS, ADRD
0.60% , PPA , Aerospace & Defense, PPA
1.15% , OMC , OMNICOM
0.72% , IGW , Semiconductor iS GS, IGW
1.61% , MCHP , Microchip Technology Incorporated
3.34% , EDS , ELECTR DATA
0.45% , PTE , Telecommunications & Wireless, PTE
2.52% , AN , AUTONATION
0.89% , JKH , MidCap Growth iS M, JKH
0.60% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
1.52% , RIG , TRANSOCEAN
1.31% , UNP , UNION PACIFIC
0.40% , IJR , SmallCap S&P 600, IJR
3.23% , DLTR , Dollar Tree Stores Inc
1.97% , TUP , TUPPERWARE
2.53% , AOC , AON
0.09% , FEZ , Euro STOXX 50, FEZ
0.69% , DSV , Value Small Cap DJ, DSV
0.87% , DISH , EchoStar Communications Corporation
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-4.83% , BK , BANK OF NEW YORK
-2.80% , UST , UST
-4.10% , WPI , WATSON PHARM
-4.73% , JNPR , Juniper Networks Inc
-3.26% , ABC , AMERISOURCEBERGN
-3.57% , MHS , MEDCO HEALTH
-2.17% , KG , KING PHARM
-2.08% , PMTC.O , PARAMETRIC
-7.71% , NCC , NATIONAL CITY
-2.39% , YHOO , YAHOO
-1.44% , RIMM , RESEARCH IN MOTION LTD
-2.67% , AET , AETNA
-1.69% , WWY , WM WRIGLEY JR
-0.58% , PJP , Pharmaceuticals, PJP
-5.08% , UIS , UNISYS
-1.93% , SAF , SAFECO
-3.04% , BRCM , BROADCOM STK A
-2.04% , SYY , SYSCO
-0.81% , XBI , Biotech SPDR, XBI
-0.91% , RKH , Bank Regional H, RKH
-0.91% , LNCR , Lincare Holdings Inc
-1.17% , AFL , AFLAC
-0.82% , EWS , Singapore Index, EWS
-1.81% , CTL , CENTURYTEL
-1.11% , LMT , LOCKHEED MARTIN
-0.90% , RAI , RJR TOBACCO HLDS
-1.24% , MCK , MCKESSON CORP
-0.63% , IXJ , Healthcare Global, IXJ
-1.96% , CHKP , Check Point Software Technologies Ltd
-1.33% , IR , INGER RAND
-1.26% , TTH , Telecom H, TTH
-1.18% , EWT , Taiwan Index, EWT
-0.61% , GNTX , Gentex Corporation
-0.91% , CCU , CLEAR CHANNEL
-0.84% , SVU , SUPERVALU
-1.04% , CEG , CONSTELL ENERGY
-1.20% , CZN , CITIZENS COMMS STK B
-0.80% , CL , COLGATE
-1.00% , MON , MONSANTO
-0.84% , MV , METAVANTE TECHNOLOGIES, MV
Sectors: among the 9 major U.S. sectors, 6 rose and 2 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.39% Energy SPDR, XLE
1.28% Utilities SPDR, XLU
1.21% Technology SPDR, XLK
0.68% Materials SPDR, XLB
0.44% Industrial SPDR, XLI
0.04% Consumer Staples SPDR, XLP
0.00% Consumer Discretionary SPDR, XLY
-0.08% Financial SPDR, XLF
-0.69% 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.
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 3/28/08, the XLP/SPY Relative Strength Ratio rose to new 5-year high.
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.
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 4/2/08, the XLV/SPY Relative Strength Ratio made a new 8-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 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 since 11/7/07. 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 1/11/08. It has been trending down since 4/19/06. The main long-term trend is Relatively Bearish for Small Caps.
Crude Oil futures appear to have entered a short-term sideways consolidation pattern over the past 12 trading days. Crude Oil appears to have support near the low of 98.65 and resistance near the high of 110.35. 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 recovered modestly within their steep 12-day downside correction. The short-term trend is down, and the intermediate-term trend appears to be broken as well. The long-term trend still could be Bullish.
Silver sharply underperformed Gold since 3/5/08. 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 slightly, as part of their 8-day downside correction. The short-term trend is still down. 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 appears to have entered a sideways consolidation pattern over the past 11 trading days. The minor trend may seem questionable, but 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. 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 36.4% Bulls versus 37.5% Bears as of 4/2/08, according to the weekly Investors Intelligence survey of newsletter advisors. The Bull/Bear ratio rose to 0.97, up from 0.89 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 23.43, 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 27.27, 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 0.78, 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 0.98, 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 (1,367.53):
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:
4.07% WilderHill Clean Energy PS, PBW
3.89% Silver Trust iS, SLV
3.70% Growth MidCap S&P 400, RFG
3.36% Oil, Crude, U.S. Oil Fund, USO
2.98% Commodity Tracking, DBC
2.77% Gold Shares S.T., GLD
2.60% South Africa Index, EZA
1.92% Oil Services H, OIH
1.90% Brazil Index, EWZ
1.87% Oil & Gas, PXJ
1.84% Energy Exploration & Prod, PXE
1.72% Water Resources, PHO
1.69% Metals & Mining SPDR, XME
1.60% Natural Resource iS GS, IGE
1.44% Energy Global, IXC
1.39% Energy SPDR, XLE
1.39% Energy DJ, IYE
1.38% Energy VIPERs, VDE
1.37% Canada Index, EWC
1.28% Utilities SPDR, XLU
1.27% Internet B2B H, BHH
1.21% Technology SPDR, XLK
1.20% Basic Materials DJ US, IYM
1.17% Australia Index, EWA
1.08% Short 100% QQQ, PSQ
1.02% Homebuilders SPDR, XHB
1.02% Italy Index, EWI
1.02% Value SmallCap Dynamic PS, PWY
1.00% Sweden Index, EWD
1.00% Value S&P 500, RPV
0.99% Value MidCap S&P 400, RFV
0.98% Nanotech Lux, PXN
0.97% Leisure & Entertainment, PEJ
0.94% Growth Mid Cap Dynamic PS, PWJ
0.94% Dividend International, PID
0.94% IPOs, First Tr IPOX-100, FPX
0.91% Growth SmallCap Dynamic PS, PWT
0.89% MidCap Growth iS M, JKH
0.86% Value SmallCap S&P 600 B, IJS
0.85% Utilities VIPERs, VPU
0.82% Latin Am 40, ILF
0.81% Semiconductor H, SMH
0.80% Capital Markets KWB ST, KCE
0.80% Dividend High Yield Equity PS, PEY
0.78% Materials VIPERs, VAW
0.74% Utilities DJ, IDU
0.74% Ultra MidCap400 Double, MVV
0.72% Growth Small Cap DJ, DSG
0.72% Semiconductor iS GS, IGW
0.71% Utilities, PUI
0.69% Value Small Cap DJ, DSV
0.69% Ultra QQQ Double, QLD
0.68% Materials SPDR, XLB
0.67% Financials Global LargeCap Value, IXG
0.64% Utilities H, UTH
0.62% Short 200% Dow 30 PS, DXD
0.62% Europe 100 BLDRS, ADRU
0.61% MidCap S&P 400 iS, IJH
0.60% Value LargeCap Euro STOXX 50 DJ, FEU
0.60% Aerospace & Defense, PPA
0.60% Ultra S&P500 Double, SSO
0.59% Microcap Russell, IWC
0.58% Dividend SPDR, SDY
0.57% MidCap Russell, IWR
0.57% South Korea Index, EWY
0.56% Retail, PMR
0.56% Growth MidCap 400 B, IJK
0.55% Developed 100 BLDRS, ADRD
0.55% Growth BARRA Small Cap 600, IJT
0.55% MidCap Blend Core iS M, JKG
0.54% MidCap VIPERs, VO
0.53% Growth MidCap Russell, IWP
0.52% Small Cap VIPERs, VB
0.51% Japan LargeCap Blend TOPIX 150, ITF
0.51% Telecommunications Global, IXP
0.46% Growth SmallCap VIPERs, VBK
0.45% SmallCap PS Zacks, PZJ
0.45% Telecommunications & Wireless, PTE
0.45% MidCap S&P 400 SPDRs, MDY
0.44% Industrial SPDR, XLI
0.44% Transportation Av DJ, IYT
0.43% Networking, IGN
0.42% Real Estate US DJ, IYR
0.42% Growth SmallCap iS M, JKK
0.42% Value SmallCap iS M, JKL
0.41% Semiconductor SPDR, XSD
0.41% Consumer D. VIPERs, VCR
0.41% Growth S&P 500, RPG
0.40% Global 100, IOO
0.40% SmallCap S&P 600, IJR
0.40% SmallCap Core iS M, JKJ
0.39% Value MidCap S&P 400 B, IJJ
0.38% Pacific VIPERs, VPL
0.38% Value MidCap Russell, IWS
0.37% Value MidCap iS M, JKI
0.35% Extended Mkt VIPERs, VXF
0.34% Emerging 50 BLDRS, ADRE
0.33% Value EAFE MSCI, EFV
0.32% Semiconductors, PSI
0.31% Switzerland Index, EWL
0.31% Value Line Timeliness MidCap Gr, PIV
0.29% Growth SmallCap R 2000, IWO
0.29% OTC Dynamic PS, PWO
0.26% LargeCap Blend S&P=Weight R, RSP
0.26% Pacific ex-Japan, EPP
0.25% Insurance, PIC
0.24% Internet H, HHH
0.24% European VIPERs, VGK
0.24% Value SmallCap VIPERS, VBR
0.24% SmallCap Russell 2000, IWM
0.24% Value MidCap Dynamic PS, PWP
0.23% Building & Construction, PKB
0.23% Biotech & Genome, PBE
0.22% Spain Index, EWP
0.22% EAFE Index, EFA
0.21% Bond, 20+ Years Treasury, TLT
0.20% Growth Large Cap, ELG
0.18% United Kingdom Index, EWU
0.17% Asia 50 BLDRS, ADRA
0.17% Bond, Corp, LQD
0.16% Dividend Leaders, FDL
0.14% Netherlands Index, EWN
0.13% Hardware & Electronics, PHW
0.12% Short 100% S&P 500, SH
0.12% Belgium Index, EWK
0.10% Value SmallCap Russell 2000, IWN
0.10% Wilshire 5000 ST TM, TMW
0.10% DIAMONDS (DJIA), DIA
0.09% Global Titans, DGT
0.09% Value LargeCap Russell 3000, IWW
0.09% Growth LargeCap NASDAQ Fidelity, ONEQ
0.09% Euro STOXX 50, FEZ
0.08% France Index, EWQ
0.08% EMU Europe Index, EZU
0.08% Micro Cap Zachs, PZI
0.08% Emerging Markets, EEM
0.07% LargeCap Blend NYSE Composite iS, NYC
0.07% Blend Total Market VIPERs, VTI
0.07% Networking, PXQ
0.07% S&P 500 SPDRs LargeCap Blend, SPY
0.06% Software, PSJ
0.06% Info Tech VIPERs, VGT
0.05% LargeCap 1000 R, IWB
0.05% Bond, Aggregate, AGG
0.04% Europe 350 S&P Index, IEV
0.04% Consumer Staples SPDR, XLP
0.03% Austria Index, EWO
0.03% Value 40 Large Low P/E FT DB, FDV
0.00% Bond, TIPS, TIP
0.00% Broadband H, BDH
0.00% Consumer Discretionary SPDR, XLY
0.00% Dividend Growth PS, PHJ
0.00% Internet Infrastructure H, IIH
-0.01% LargeCap Blend Russell 3000, IWV
-0.01% Value Large Cap DJ, ELV
-0.02% Short 100% Dow 30, DOG
-0.02% Consumer Cyclical DJ, IYC
-0.02% Emerging VIPERs, VWO
-0.02% Growth LargeCap Russell 3000, IWZ
-0.03% Industrial LargeCap Blend DJ US, IYJ
-0.06% Growth LargeCap iS M, JKE
-0.07% Value LargeCap iS M, JKF
-0.07% Industrials VIPERs, VIS
-0.07% LargeCap Blend Total Market DJ, IYY
-0.08% Financial SPDR, XLF
-0.08% LargeCap Blend S&P 1500 iS, ISI
-0.08% LargeCap VIPERs, VV
-0.08% Bond, 1-3 Year Treasury, SHY
-0.09% Value 1000 Russell, IWD
-0.10% Software, IGV
-0.10% Value LargeCap Dynamic PS, PWV
-0.11% Growth S&P 500/BARRA, IVW
-0.11% Value LargeCap Fundamental RAFI 1000, PRF
-0.11% China LargeCap Growth G D H USX PS, PGJ
-0.12% Dividend DJ Select, DVY
-0.14% LargeCap Blend Socially Responsible iS, KLD
-0.14% Growth 1000 Russell, IWF
-0.16% Retail H, RTH
-0.16% Japan Index, EWJ
-0.16% Technology MS sT, MTK
-0.17% Technology DJ US, IYW
-0.17% LargeCap Blend Dynamic PS, PWC
-0.17% Technology Global, IXN
-0.19% Germany Index, EWG
-0.19% LargeCap Rydex Rus Top 50, XLG
-0.20% S&P 500 iS LargeCap Blend, IVV
-0.20% Financials VIPERs, VFH
-0.22% Growth VIPERs, VUG
-0.22% Growth LargeCap NASDAQ 100, QQQQ
-0.24% Value SmallCap S&P 600, RZV
-0.28% LargeCap Blend S&P 100, OEF
-0.29% Dividend Appreciation Vipers, VIG
-0.30% Value VIPERs, VTV
-0.31% Financial DJ US, IYF
-0.32% Value S&P 500 B, IVE
-0.32% Biotechnology, IBB
-0.33% Bond, 10 Year Treasury, IEF
-0.36% Technology GS, IGM
-0.38% Growth EAFE MSCI, EFG
-0.41% Value LargeCap NYSE 100 iS, NY
-0.42% Ultra Dow30 Double, DDM
-0.43% Short 200% S&P 500 PS, SDS
-0.44% REIT Wilshire, RWR
-0.45% Financial Services DJ, IYG
-0.46% Lg Cap Growth PSD, PWB
-0.47% Telecom Services VIPERs, VOX
-0.49% REIT VIPERs, VNQ
-0.51% Short 100% MidCap 400, MYY
-0.52% Realty Cohen & Steers, ICF
-0.52% LargeCap Blend Core iS M, JKD
-0.56% Healthcare DJ, IYH
-0.58% Pharmaceuticals, PJP
-0.58% Consumer Non-Cyclical, IYK
-0.61% Dividend Achievers PS, PFM
-0.62% Health Care VIPERs, VHT
-0.63% Consumer Staples VIPERs, VDC
-0.63% Healthcare Global, IXJ
-0.66% Food & Beverage, PBJ
-0.69% Health Care SPDR, XLV
-0.72% Short 200% QQQ PS, QID
-0.73% Software H, SWH
-0.81% Biotech SPDR, XBI
-0.82% Singapore Index, EWS
-0.83% Mexico Index, EWW
-0.91% Bank Regional H, RKH
-0.98% Short 200% MidCap 400 PS, MZZ
-0.99% Telecom DJ US, IYZ
-1.00% Pharmaceutical H, PPH
-1.18% Taiwan Index, EWT
-1.26% Telecom H, TTH
-1.28% Hong Kong Index, EWH
-1.41% Biotech H, BBH
-1.84% Malaysia Index, EWM
-1.97% Internet Architecture H, IAH
-2.11% China 25 iS, FXI
