By Robert W. Colby, Senior Analyst TraderPlanet.com
Continuing directional uncertainty–momentum decelerating.
Stock price momentum still appears to be grinding slowly to a halt.
World markets have been consolidating or correcting over the past 3 weeks.
Preexisting Major Trends tend to resume after short-term corrections run their course.
The “reports” of the day were cheerful: The Wall Street Journal suggested that a private equity firm was close to a deal to invest $5 billion in Washington Mutual, which might help to avert a liquidity crisis.
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
29.40% , WM , WASHINGTON MUT
9.83% , TIN , TEMPLE INLAND
6.65% , KLAC , KLA TENCOR
5.53% , CAR , Avis Budget Group, Inc. (CAR)
6.50% , WYE , WYETH
3.20% , EMN , EASTMAN CHEM
3.22% , DISCA , Discovery Holding Co.
2.46% , WPI , WATSON PHARM
1.12% , FDL , Dividend Leaders, FDL
0.53% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
3.83% , S , SPRINT NEXTEL
0.57% , ELV , Value Large Cap DJ, ELV
0.47% , VHT , Health Care VIPERs, VHT
1.26% , IXP , Telecommunications Global, IXP
0.60% , IYH , Healthcare DJ, IYH
2.63% , ITT , ITT INDS
0.37% , IOO , Global 100, IOO
2.08% , X , US STEEL CORP
0.63% , VDE , Energy VIPERs, VDE
0.87% , PEY , Dividend High Yield Equity PS, PEY
0.49% , PTE , Telecommunications & Wireless, PTE
1.81% , PLL , PALL
2.01% , CVS , CVS
1.94% , GM , GENERAL MOTORS
1.77% , EOG , EOG RESOURCES
1.55% , XL , XL CAPITAL STK A
0.80% , VOX , Telecom Services VIPERs, VOX
1.28% , IVGN , Invitrogen Corporation
3.42% , STLD , Steel Dynamics, STLD
4.39% , VC , VISTEON
1.79% , EWO , Austria Index, EWO
0.79% , IAU , Gold COMEX iS, IAU
2.25% , AAPL , APPLE COMPUTER
1.90% , SLV , Silver Trust iS, SLV
0.81% , SEE , SEALED AIR
0.13% , PZJ , SmallCap PS Zacks, PZJ
0.75% , EWS , Singapore Index, EWS
0.71% , ETFC.O , E*TRADE FINANCIAL
1.08% , DBC , Commodity Tracking, DBC
0.64% , CB , CHUBB
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-4.60% , PDCO , Patterson Dental Company
-4.98% , IGT , INTL GAME TECH
-0.82% , IGW , Semiconductor iS GS, IGW
-5.41% , BMC , BMC SOFTWARE
-1.18% , PXQ , Networking, PXQ
-1.09% , IGN , Networking, IGN
-5.00% , BHH , Internet B2B H, BHH
-3.03% , HIG , HARTFORD FINL
-0.59% , PHW , Hardware & Electronics, PHW
-0.73% , PEJ , Leisure & Entertainment, PEJ
-3.11% , AMAT , APPLIED MATERIAL
-1.31% , RHI , ROBERT HALF
-3.15% , LXK , LEXMARK INTL STK A
-1.76% , CTB , COOPER TIRE
-1.99% , CHKP , Check Point Software Technologies Ltd
-1.97% , GNTX , Gentex Corporation
-0.56% , TBH , Telebras HOLDRS, TBH*
-0.58% , IGM , Technology GS, IGM
-2.61% , KSS , KOHLS
-0.95% , ATVI , Activision Inc.
-0.66% , IBB , Biotechnology, IBB
-0.85% , BBH , Biotech H, BBH
-0.90% , BMY , BRISTOL MYERS
-0.86% , HHH , Internet H, HHH
-0.23% , VCR , Consumer D. VIPERs, VCR
-1.13% , UPS , UNITED PARCEL STK B
-0.78% , AZO , AUTOZONE
-1.10% , IFF , INTL FLAV & FRAG
-0.49% , EWL , Switzerland Index, EWL
-0.55% , PSI , Semiconductors, PSI
-0.22% , IYW , Technology DJ US, IYW
-1.34% , XRX , XEROX
-0.27% , SLB , SCHLUMBERGER
-1.24% , LLTC , LINEAR TECH
-0.58% , PWT , Growth SmallCap Dynamic PS, PWT
-3.87% , FII , FED INVESTORS STK B
-0.58% , WLP , WELLPOINT HEALTH
-3.62% , AA , ALCOA
-0.47% , MTK , Technology MS sT, MTK
-0.32% , XLB , Materials SPDR, XLB
Sectors: among the 9 major U.S. sectors, 5 rose and 4 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.04% Health Care SPDR, XLV
0.66% Utilities SPDR, XLU
0.62% Energy SPDR, XLE
0.57% Financial SPDR, XLF
0.09% Technology SPDR, XLK
-0.22% Consumer Discretionary SPDR, XLY
-0.32% Materials SPDR, XLB
-0.39% Industrial SPDR, XLI
-0.53% Consumer Staples SPDR, XLP
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.
Health Care (XLV) Bearish, Underweight. On 4/3/08, the XLV/SPY Relative Strength Ratio made another new 8-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 since 11/7/07. The minor Ripple trend has improved only slightly since 3/3/08 and appears questionable at best. 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 rose again within the context of their short-term sideways consolidation pattern over the past 15 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 further within the context of their steep 15-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 turned back down again, within the context of their 11-day downside correction. The short-term trend is corrective. 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 bonds have been weak.
The U.S. dollar appears to have entered a sideways consolidation pattern over the past 14 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 22.39, 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 26.16, 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 0.74, 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 1.11, 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 (1,370.21):
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:
2.71% Oil, Crude, U.S. Oil Fund, USO
2.56% South Africa Index, EZA
2.18% China 25 iS, FXI
1.90% Silver Trust iS, SLV
1.79% Austria Index, EWO
1.44% IPOs, First Tr IPOX-100, FPX
1.34% Dividend Growth PS, PHJ
1.34% Sweden Index, EWD
1.27% Value MidCap S&P 400, RFV
1.26% Telecommunications Global, IXP
1.18% Emerging VIPERs, VWO
1.14% Pharmaceutical H, PPH
1.12% Dividend Leaders, FDL
1.11% Telecom DJ US, IYZ
1.08% Broadband H, BDH
1.08% Commodity Tracking, DBC
1.08% Insurance, PIC
1.04% Health Care SPDR, XLV
1.04% Asia 50 BLDRS, ADRA
1.00% Telecom H, TTH
0.95% Value S&P 500, RPV
0.94% Pharmaceuticals, PJP
0.91% Emerging Markets, EEM
0.90% Gold Shares S.T., GLD
0.89% Emerging 50 BLDRS, ADRE
0.87% Dividend High Yield Equity PS, PEY
0.87% Belgium Index, EWK
0.80% Telecom Services VIPERs, VOX
0.78% Financial Services DJ, IYG
0.78% Energy Global, IXC
0.75% Growth EAFE MSCI, EFG
0.75% Singapore Index, EWS
0.71% Financials VIPERs, VFH
0.69% Short 200% Dow 30 PS, DXD
0.67% Capital Markets KWB ST, KCE
0.66% Utilities SPDR, XLU
0.66% Value 1000 Russell, IWD
0.65% Energy DJ, IYE
0.63% Energy VIPERs, VDE
0.63% Japan Index, EWJ
0.63% Financial DJ US, IYF
0.62% Energy SPDR, XLE
0.62% Utilities VIPERs, VPU
0.61% Global Titans, DGT
0.60% Healthcare DJ, IYH
0.60% Technology Global, IXN
0.59% Energy Exploration & Prod, PXE
0.58% Dividend DJ Select, DVY
0.58% Euro STOXX 50, FEZ
0.57% Financial SPDR, XLF
0.57% Value Large Cap DJ, ELV
0.56% Germany Index, EWG
0.56% European VIPERs, VGK
0.55% Italy Index, EWI
0.53% Short 200% QQQ PS, QID
0.53% Value LargeCap Euro STOXX 50 DJ, FEU
0.50% Value EAFE MSCI, EFV
0.50% Japan LargeCap Blend TOPIX 150, ITF
0.50% Oil Services H, OIH
0.49% Telecommunications & Wireless, PTE
0.47% Health Care VIPERs, VHT
0.47% EAFE Index, EFA
0.47% Value VIPERs, VTV
0.46% Financials Global LargeCap Value, IXG
0.44% France Index, EWQ
0.44% Short 100% QQQ, PSQ
0.44% EMU Europe Index, EZU
0.43% Bank Regional H, RKH
0.42% Dividend International, PID
0.42% Value MidCap iS M, JKI
0.42% Value MidCap Dynamic PS, PWP
0.41% Biotech SPDR, XBI
0.40% Australia Index, EWA
0.40% United Kingdom Index, EWU
0.39% LargeCap Rydex Rus Top 50, XLG
0.38% LargeCap Blend S&P 100, OEF
0.38% Developed 100 BLDRS, ADRD
0.37% Value MidCap Russell, IWS
0.37% Global 100, IOO
0.36% Utilities DJ, IDU
0.35% Spain Index, EWP
0.35% Biotech & Genome, PBE
0.34% Value LargeCap iS M, JKF
0.34% Europe 350 S&P Index, IEV
0.33% Value LargeCap Russell 3000, IWW
0.33% Dividend Achievers PS, PFM
0.32% Value LargeCap NYSE 100 iS, NY
0.31% LargeCap Blend NYSE Composite iS, NYC
0.30% Dividend SPDR, SDY
0.30% LargeCap Blend S&P 1500 iS, ISI
0.29% Value LargeCap Fundamental RAFI 1000, PRF
0.29% Oil & Gas, PXJ
0.28% LargeCap 1000 R, IWB
0.27% Utilities, PUI
0.26% Value S&P 500 B, IVE
0.26% LargeCap VIPERs, VV
0.24% MidCap S&P 400 SPDRs, MDY
0.24% Europe 100 BLDRS, ADRU
0.23% Blend Total Market VIPERs, VTI
0.23% LargeCap Blend Russell 3000, IWV
0.21% Mexico Index, EWW
0.21% Value LargeCap Dynamic PS, PWV
0.20% Transportation Av DJ, IYT
0.20% Pacific VIPERs, VPL
0.20% Ultra S&P500 Double, SSO
0.19% S&P 500 iS LargeCap Blend, IVV
0.19% Taiwan Index, EWT
0.18% China LargeCap Growth G D H USX PS, PGJ
0.17% Growth MidCap S&P 400, RFG
0.16% S&P 500 SPDRs LargeCap Blend, SPY
0.16% Growth 1000 Russell, IWF
0.16% Ultra MidCap400 Double, MVV
0.13% LargeCap Blend Socially Responsible iS, KLD
0.13% SmallCap PS Zacks, PZJ
0.12% Growth S&P 500/BARRA, IVW
0.12% Value MidCap S&P 400 B, IJJ
0.11% Value SmallCap S&P 600, RZV
0.11% LargeCap Blend Core iS M, JKD
0.11% Healthcare Global, IXJ
0.10% Extended Mkt VIPERs, VXF
0.10% Short 100% Dow 30, DOG
0.09% Dividend Appreciation Vipers, VIG
0.09% Technology SPDR, XLK
0.08% South Korea Index, EWY
0.08% Pacific ex-Japan, EPP
0.08% MidCap Russell, IWR
0.07% LargeCap Blend Total Market DJ, IYY
0.07% Netherlands Index, EWN
0.06% Value Line Timeliness MidCap Gr, PIV
0.06% Growth VIPERs, VUG
0.05% Ultra Dow30 Double, DDM
0.04% Value 40 Large Low P/E FT DB, FDV
0.04% MidCap Growth iS M, JKH
0.04% Short 100% MidCap 400, MYY
0.04% Basic Materials DJ US, IYM
0.03% Consumer Staples VIPERs, VDC
0.02% Short 200% MidCap 400 PS, MZZ
0.02% Growth LargeCap iS M, JKE
0.02% Value SmallCap VIPERS, VBR
0.00% MidCap VIPERs, VO
-0.02% Consumer Non-Cyclical, IYK
-0.02% Latin Am 40, ILF
-0.02% LargeCap Blend S&P=Weight R, RSP
-0.03% Bond, Aggregate, AGG
-0.03% DIAMONDS (DJIA), DIA
-0.04% Homebuilders SPDR, XHB
-0.04% MidCap S&P 400 iS, IJH
-0.04% Growth LargeCap Russell 3000, IWZ
-0.06% Value SmallCap iS M, JKL
-0.06% Canada Index, EWC
-0.07% Bond, Corp, LQD
-0.07% Consumer Cyclical DJ, IYC
-0.07% Nanotech Lux, PXN
-0.07% Micro Cap Zachs, PZI
-0.08% Growth Small Cap DJ, DSG
-0.08% Natural Resource iS GS, IGE
-0.08% Microcap Russell, IWC
-0.09% Small Cap VIPERs, VB
-0.10% SmallCap Russell 2000, IWM
-0.11% Growth MidCap 400 B, IJK
-0.11% LargeCap Blend Dynamic PS, PWC
-0.11% Growth SmallCap VIPERs, VBK
-0.15% Value SmallCap Russell 2000, IWN
-0.15% Industrials VIPERs, VIS
-0.16% Growth LargeCap NASDAQ Fidelity, ONEQ
-0.17% Value Small Cap DJ, DSV
-0.17% Aerospace & Defense, PPA
-0.17% Utilities H, UTH
-0.17% Short 100% S&P 500, SH
-0.18% Malaysia Index, EWM
-0.18% Lg Cap Growth PSD, PWB
-0.19% Info Tech VIPERs, VGT
-0.20% Value SmallCap S&P 600 B, IJS
-0.20% Growth S&P 500, RPG
-0.20% Bond, 1-3 Year Treasury, SHY
-0.21% MidCap Blend Core iS M, JKG
-0.22% Consumer Discretionary SPDR, XLY
-0.22% Technology DJ US, IYW
-0.22% Retail H, RTH
-0.22% Software H, SWH
-0.23% Consumer D. VIPERs, VCR
-0.24% Materials VIPERs, VAW
-0.26% Bond, TIPS, TIP
-0.26% Wilshire 5000 ST TM, TMW
-0.26% Brazil Index, EWZ
-0.28% Industrial LargeCap Blend DJ US, IYJ
-0.30% Growth Mid Cap Dynamic PS, PWJ
-0.30% Growth SmallCap R 2000, IWO
-0.32% Materials SPDR, XLB
-0.33% Growth LargeCap NASDAQ 100, QQQQ
-0.33% Growth BARRA Small Cap 600, IJT
-0.33% Growth MidCap Russell, IWP
-0.33% Food & Beverage, PBJ
-0.36% Growth SmallCap iS M, JKK
-0.37% Hong Kong Index, EWH
-0.39% Industrial SPDR, XLI
-0.41% Metals & Mining SPDR, XME
-0.42% Retail, PMR
-0.43% Software, IGV
-0.46% Building & Construction, PKB
-0.46% SmallCap S&P 600, IJR
-0.47% Technology MS sT, MTK
-0.49% Switzerland Index, EWL
-0.49% Short 200% S&P 500 PS, SDS
-0.49% Internet Architecture H, IAH
-0.50% SmallCap Core iS M, JKJ
-0.51% REIT VIPERs, VNQ
-0.52% OTC Dynamic PS, PWO
-0.52% Growth Large Cap, ELG
-0.53% Consumer Staples SPDR, XLP
-0.54% Water Resources, PHO
-0.55% Semiconductors, PSI
-0.57% Value SmallCap Dynamic PS, PWY
-0.58% Technology GS, IGM
-0.58% Growth SmallCap Dynamic PS, PWT
-0.59% Hardware & Electronics, PHW
-0.60% Real Estate US DJ, IYR
-0.60% Ultra QQQ Double, QLD
-0.62% REIT Wilshire, RWR
-0.62% Realty Cohen & Steers, ICF
-0.63% Bond, 20+ Years Treasury, TLT
-0.65% Bond, 10 Year Treasury, IEF
-0.66% Biotechnology, IBB
-0.73% Leisure & Entertainment, PEJ
-0.76% Semiconductor H, SMH
-0.81% Software, PSJ
-0.82% Semiconductor iS GS, IGW
-0.85% Semiconductor SPDR, XSD
-0.85% Biotech H, BBH
-0.86% Internet H, HHH
-1.08% Internet Infrastructure H, IIH
-1.09% Networking, IGN
-1.18% Networking, PXQ
-2.12% WilderHill Clean Energy PS, PBW
-5.00% Internet B2B H, BHH
