By Robert W. Colby, Senior Analyst TraderPlanet.com
Small Change.
The proportion of Bears has been shrinking as the stock market has corrected upward over the most recent 12 trading sessions.
Health Care Stock Sector Relative Strength Ratio broke down to another new 8-month low.
The “reports” of the day started on a depressing note: initial jobless claims rose more than generally expected. But later, sprits were lifted by a report that claimed Merrill Lynch has no need to raise fresh capital.
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
3.85% , BHH , Internet B2B H, BHH
6.81% , NVLS , NOVELLUS SYS
7.10% , LSI , LSI LOGIC
9.71% , CECO , CAREER EDUCATION CORP
5.79% , AA , ALCOA
6.61% , TLAB , TELLABS
9.04% , NIHD , NII Holdings, Inc.
5.79% , LRCX , LAM RESEARCH CORP
4.74% , PMCS , PMC SIERRA
2.10% , EWA , Australia Index, EWA
10.97% , SGP , SCHERING PLOUGH
7.51% , SNDK , SanDisk Corporation
6.08% , LXK , LEXMARK INTL STK A
1.44% , SWH , Software H, SWH
3.94% , QLGC , QLOGIC
3.57% , NOV , NATIONAL OILWELL VARC0
3.97% , FCX , FREEPRT MCMORAN STK B
6.26% , MU , MICRON TECH
2.27% , PGJ , China LargeCap Growth G D H USX PS, PGJ
0.62% , FPX , IPOs, First Tr IPOX-100, FPX
0.20% , NY , Value LargeCap NYSE 100 iS, NY
2.94% , MRVL , MARVELL TECHNOLOGY
5.86% , RIMM , RESEARCH IN MOTION LTD
9.40% , SLM , SLM CORP
0.54% , ADRU , Europe 100 BLDRS, ADRU
1.53% , ADRE , Emerging 50 BLDRS, ADRE
3.40% , MRK , MERCK & CO
2.60% , ICF , Realty Cohen & Steers, ICF
3.43% , JNS , JANUS CAPITAL
2.04% , SMH , Semiconductor H, SMH
0.53% , PWB , Lg Cap Growth PSD, PWB
1.90% , TXT , TEXTRON
4.11% , NSM , NATL SEMICONDUCT
0.28% , PWJ , Growth Mid Cap Dynamic PS, PWJ
2.55% , EWH , Hong Kong Index, EWH
1.32% , VPL , Pacific VIPERs, VPL
1.82% , XLB , Materials SPDR, XLB
1.45% , NSC , NORFOLK SOUTHERN
3.54% , TER , TERADYNE
1.29% , Q , QWEST COMMUNICAT
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-6.38% , GRMN , GARMIN LTD
-0.18% , RZV , Value SmallCap S&P 600, RZV
-4.09% , SSCC , Smurfit-Stone Container Corporation
-2.64% , CPB , CAMPBELL SOUP
-3.48% , HUM , HUMANA
-0.74% , BBH , Biotech H, BBH
-2.79% , GPS , GAP
-2.27% , DLX , DELUXE
-4.71% , TIN , TEMPLE INLAND
-2.49% , ATI , ALLEGHENY TECH
-1.01% , LAMR , Lamar Advertising Company
-1.65% , JCI , JOHNSON CONTROLS
-0.22% , UTH , Utilities H, UTH
-2.07% , AMGN , AMGEN
-0.39% , EWQ , France Index, EWQ
-2.32% , FLEX , Flextronics International Ltd
-0.33% , IDU , Utilities DJ, IDU
-1.76% , SIRI , Sirius Satellite
-1.87% , NVDA , NVIDIA
-2.01% , CEG , CONSTELL ENERGY
-0.32% , IJS , Value SmallCap S&P 600 B, IJS
-2.92% , CSCO , CISCO SYSTEMS
-1.27% , ADM , ARCHER DANIELS
-2.74% , ABI , Applera Corp-Applied Biosystems Group (ABI)
-2.04% , EWM , Malaysia Index, EWM
-1.79% , AM , AMER GREETINGS STK A
-1.62% , PGR , PROGRESSIVE OHIO
-1.16% , HSIC , Henry Schein Inc
-1.46% , CNP , CENTERPNT ENERGY
-0.11% , IYH , Healthcare DJ, IYH
-1.18% , LMT , LOCKHEED MARTIN
-1.51% , CEPH , Cephalon Inc
-1.26% , BJS , BJ SERVICES
-0.87% , PEY , Dividend High Yield Equity PS, PEY
-0.53% , XLU , Utilities SPDR, XLU
-2.57% , LNCR , Lincare Holdings Inc
-1.05% , SHW , SHERWIN WILLIAMS
-1.14% , MCO , MOODYS CORP
-0.20% , EWO , Austria Index, EWO
Sectors: among the 9 major U.S. sectors, 4 rose and 5 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.82% Materials SPDR, XLB
0.45% Financial SPDR, XLF
0.31% Consumer Discretionary SPDR, XLY
0.24% Energy SPDR, XLE
-0.04% Technology SPDR, XLK
-0.28% Consumer Staples SPDR, XLP
-0.32% Health Care SPDR, XLV
-0.44% Industrial SPDR, XLI
-0.53% Utilities SPDR, XLU
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 4/3/08, the XLV/SPY Relative Strength Ratio made another 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 fell moderately within the context of their short-term sideways consolidation pattern over the past 13 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 13-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, within the context of their 9-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 12 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 23.21, 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 26.93, 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 0.83, 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 0.97, 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 (1,369.31):
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:
4.16% China 25 iS, FXI
3.85% Internet B2B H, BHH
2.60% Realty Cohen & Steers, ICF
2.55% Hong Kong Index, EWH
2.52% Semiconductor SPDR, XSD
2.33% REIT Wilshire, RWR
2.29% REIT VIPERs, VNQ
2.29% Metals & Mining SPDR, XME
2.27% China LargeCap Growth G D H USX PS, PGJ
2.12% Pacific ex-Japan, EPP
2.10% Australia Index, EWA
2.04% Real Estate US DJ, IYR
2.04% Semiconductor H, SMH
1.90% Homebuilders SPDR, XHB
1.88% Basic Materials DJ US, IYM
1.82% Materials SPDR, XLB
1.71% Global Titans, DGT
1.63% Materials VIPERs, VAW
1.62% Brazil Index, EWZ
1.59% Telecom DJ US, IYZ
1.57% Semiconductors, PSI
1.53% Emerging 50 BLDRS, ADRE
1.44% Software H, SWH
1.42% Semiconductor iS GS, IGW
1.35% Asia 50 BLDRS, ADRA
1.34% Telecom Services VIPERs, VOX
1.32% Pacific VIPERs, VPL
1.32% Networking, PXQ
1.32% Canada Index, EWC
1.21% Emerging Markets, EEM
1.16% South Africa Index, EZA
1.12% Internet Architecture H, IAH
1.08% South Korea Index, EWY
1.05% Emerging VIPERs, VWO
1.04% Ultra MidCap400 Double, MVV
0.92% Networking, IGN
0.90% Singapore Index, EWS
0.87% Building & Construction, PKB
0.87% Telecommunications Global, IXP
0.87% Latin Am 40, ILF
0.86% Broadband H, BDH
0.80% Growth EAFE MSCI, EFG
0.79% Telecom H, TTH
0.77% MidCap Growth iS M, JKH
0.74% Value Line Timeliness MidCap Gr, PIV
0.71% Growth SmallCap VIPERs, VBK
0.70% Mexico Index, EWW
0.69% Technology MS sT, MTK
0.64% Small Cap VIPERs, VB
0.62% Italy Index, EWI
0.62% IPOs, First Tr IPOX-100, FPX
0.61% Value S&P 500, RPV
0.61% Japan LargeCap Blend TOPIX 150, ITF
0.58% Oil Services H, OIH
0.57% MidCap S&P 400 SPDRs, MDY
0.56% Value SmallCap VIPERS, VBR
0.55% Commodity Tracking, DBC
0.54% Europe 100 BLDRS, ADRU
0.53% Lg Cap Growth PSD, PWB
0.52% Software, PSJ
0.52% Growth SmallCap Dynamic PS, PWT
0.51% Oil & Gas, PXJ
0.51% Ultra S&P500 Double, SSO
0.50% Taiwan Index, EWT
0.49% United Kingdom Index, EWU
0.47% Energy Global, IXC
0.47% Japan Index, EWJ
0.47% LargeCap Blend NYSE Composite iS, NYC
0.46% Energy VIPERs, VDE
0.45% MidCap VIPERs, VO
0.45% Financial SPDR, XLF
0.45% Extended Mkt VIPERs, VXF
0.44% Growth Small Cap DJ, DSG
0.43% Natural Resource iS GS, IGE
0.42% Value MidCap S&P 400 B, IJJ
0.42% Nanotech Lux, PXN
0.40% Growth VIPERs, VUG
0.39% Bank Regional H, RKH
0.37% Water Resources, PHO
0.37% Growth SmallCap R 2000, IWO
0.36% MidCap S&P 400 iS, IJH
0.36% Internet Infrastructure H, IIH
0.36% Ultra Dow30 Double, DDM
0.35% Financials VIPERs, VFH
0.34% LargeCap VIPERs, VV
0.33% Growth MidCap 400 B, IJK
0.32% Technology GS, IGM
0.32% Financial Services DJ, IYG
0.32% Value VIPERs, VTV
0.32% Financials Global LargeCap Value, IXG
0.32% MidCap Russell, IWR
0.32% Value 1000 Russell, IWD
0.31% Pharmaceutical H, PPH
0.31% Growth MidCap Russell, IWP
0.31% Consumer Discretionary SPDR, XLY
0.30% Value MidCap Russell, IWS
0.30% SmallCap PS Zacks, PZJ
0.30% EAFE Index, EFA
0.30% LargeCap Blend Dynamic PS, PWC
0.29% Technology Global, IXN
0.29% Global 100, IOO
0.28% Growth Mid Cap Dynamic PS, PWJ
0.28% LargeCap Blend Socially Responsible iS, KLD
0.28% Developed 100 BLDRS, ADRD
0.27% SmallCap Russell 2000, IWM
0.27% LargeCap Blend Russell 3000, IWV
0.26% Value S&P 500 B, IVE
0.26% OTC Dynamic PS, PWO
0.26% Growth BARRA Small Cap 600, IJT
0.26% Capital Markets KWB ST, KCE
0.25% S&P 500 SPDRs LargeCap Blend, SPY
0.25% Dividend Achievers PS, PFM
0.24% LargeCap Blend Total Market DJ, IYY
0.24% WilderHill Clean Energy PS, PBW
0.24% Value Small Cap DJ, DSV
0.24% Energy SPDR, XLE
0.23% Value Large Cap DJ, ELV
0.22% Bond, 20+ Years Treasury, TLT
0.22% Technology DJ US, IYW
0.22% Growth LargeCap NASDAQ 100, QQQQ
0.22% Financial DJ US, IYF
0.20% Wilshire 5000 ST TM, TMW
0.20% Growth Large Cap, ELG
0.20% Value MidCap iS M, JKI
0.20% Value LargeCap NYSE 100 iS, NY
0.20% Growth 1000 Russell, IWF
0.19% Energy DJ, IYE
0.18% European VIPERs, VGK
0.18% MidCap Blend Core iS M, JKG
0.17% Info Tech VIPERs, VGT
0.17% Ultra QQQ Double, QLD
0.17% Gold Shares S.T., GLD
0.17% Europe 350 S&P Index, IEV
0.16% LargeCap 1000 R, IWB
0.15% Euro STOXX 50, FEZ
0.15% Growth LargeCap Russell 3000, IWZ
0.15% EMU Europe Index, EZU
0.15% Growth S&P 500, RPG
0.14% S&P 500 iS LargeCap Blend, IVV
0.13% Consumer Non-Cyclical, IYK
0.13% Value LargeCap Fundamental RAFI 1000, PRF
0.13% Industrials VIPERs, VIS
0.12% Value SmallCap iS M, JKL
0.12% LargeCap Blend S&P 1500 iS, ISI
0.12% Value LargeCap iS M, JKF
0.12% Blend Total Market VIPERs, VTI
0.12% Value SmallCap Russell 2000, IWN
0.12% SmallCap Core iS M, JKJ
0.11% Industrial LargeCap Blend DJ US, IYJ
0.11% DIAMONDS (DJIA), DIA
0.10% Dividend International, PID
0.09% Growth LargeCap NASDAQ Fidelity, ONEQ
0.08% Value LargeCap Russell 3000, IWW
0.08% Growth LargeCap iS M, JKE
0.07% Growth SmallCap iS M, JKK
0.07% LargeCap Blend S&P=Weight R, RSP
0.06% Hardware & Electronics, PHW
0.06% Value MidCap Dynamic PS, PWP
0.05% Biotech SPDR, XBI
0.05% Value LargeCap Dynamic PS, PWV
0.05% Dividend Leaders, FDL
0.05% Bond, Corp, LQD
0.04% Consumer Staples VIPERs, VDC
0.03% Growth S&P 500/BARRA, IVW
0.03% Value EAFE MSCI, EFV
0.03% LargeCap Blend Core iS M, JKD
0.02% Value LargeCap Euro STOXX 50 DJ, FEU
0.02% Dividend DJ Select, DVY
0.00% Growth MidCap S&P 400, RFG
0.00% Health Care VIPERs, VHT
-0.01% Bond, 10 Year Treasury, IEF
-0.02% Bond, Aggregate, AGG
-0.02% Food & Beverage, PBJ
-0.03% Value 40 Large Low P/E FT DB, FDV
-0.04% Bond, TIPS, TIP
-0.04% Telecommunications & Wireless, PTE
-0.04% Technology SPDR, XLK
-0.04% Transportation Av DJ, IYT
-0.05% LargeCap Blend S&P 100, OEF
-0.05% Short 200% S&P 500 PS, SDS
-0.06% Short 100% Dow 30, DOG
-0.07% Bond, 1-3 Year Treasury, SHY
-0.08% Energy Exploration & Prod, PXE
-0.09% Software, IGV
-0.09% Dividend Appreciation Vipers, VIG
-0.09% Silver Trust iS, SLV
-0.09% Germany Index, EWG
-0.11% Healthcare DJ, IYH
-0.11% Spain Index, EWP
-0.13% Utilities, PUI
-0.14% Consumer D. VIPERs, VCR
-0.16% Oil, Crude, U.S. Oil Fund, USO
-0.17% Short 200% Dow 30 PS, DXD
-0.18% SmallCap S&P 600, IJR
-0.18% Value SmallCap S&P 600, RZV
-0.19% LargeCap Rydex Rus Top 50, XLG
-0.19% Value SmallCap Dynamic PS, PWY
-0.20% Leisure & Entertainment, PEJ
-0.20% Austria Index, EWO
-0.21% Healthcare Global, IXJ
-0.22% Utilities H, UTH
-0.25% Microcap Russell, IWC
-0.26% Switzerland Index, EWL
-0.28% Dividend SPDR, SDY
-0.28% Consumer Staples SPDR, XLP
-0.31% Biotechnology, IBB
-0.32% Health Care SPDR, XLV
-0.32% Value SmallCap S&P 600 B, IJS
-0.33% Utilities DJ, IDU
-0.34% Dividend Growth PS, PHJ
-0.34% Short 100% S&P 500, SH
-0.35% Pharmaceuticals, PJP
-0.39% France Index, EWQ
-0.42% Short 200% QQQ PS, QID
-0.42% Consumer Cyclical DJ, IYC
-0.43% Insurance, PIC
-0.43% Micro Cap Zachs, PZI
-0.44% Industrial SPDR, XLI
-0.45% Short 100% MidCap 400, MYY
-0.45% Retail H, RTH
-0.46% Biotech & Genome, PBE
-0.49% Internet H, HHH
-0.49% Utilities VIPERs, VPU
-0.53% Utilities SPDR, XLU
-0.54% Value MidCap S&P 400, RFV
-0.58% Netherlands Index, EWN
-0.59% Sweden Index, EWD
-0.70% Aerospace & Defense, PPA
-0.74% Biotech H, BBH
-0.87% Dividend High Yield Equity PS, PEY
-0.94% Short 200% MidCap 400 PS, MZZ
-1.31% Retail, PMR
-1.44% Belgium Index, EWK
-1.71% Short 100% QQQ, PSQ
-2.04% Malaysia Index, EWM
