By Robert W. Colby, Senior Analyst TraderPlanet.com

Stocks broke out above 2-day highs.

VIX indicates that fear is decreasing.

Stock Price Momentum turned upward, but only modestly.

Volume fell, and there were more New Lows than New Highs on the NYSE.

Crude Oil and Commodity price indexes settled down modestly, providing temporary relief from last week’s worries.

On Monday, major stock price indexes reversed to the upside, rising above the highest highs of the previous 2 trading sessions and closing near the highs of the day. Total NYSE volume fell 3%, however, indicating waning demand for stocks. Volume failed to confirm the price trend. There were more New Lows than New Highs on the NYSE.

Monday’s upmove may prove to be unsustainable. The Dow Industrials, S&P 500, and the NASDAQ Composite all remain below their falling 200-day simple moving averages. MACD remains below its Signal Line, based on the end-of-day SPY. I still am assuming that the March-May rally was nothing more than a counter-trend rally and Secondary Reaction Continuation Pattern within the context of a Primary Bearish Trend.

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
27.94% , EDS , ELECTR DATA
9.57% , CCU , CLEAR CHANNEL
8.96% , CSC , COMPUTER SCIENCE
1.87% , IYC , Consumer Cyclical DJ, IYC
1.58% , RSP , LargeCap Blend S&P=Weight R, RSP
5.78% , VC , VISTEON
2.23% , RPV , Value S&P 500, RPV
2.14% , RFV , Value MidCap S&P 400, RFV
6.93% , RIMM , RESEARCH IN MOTION LTD
5.13% , SIRI , Sirius Satellite
2.66% , RZV , Value SmallCap S&P 600, RZV
3.91% , IPG , INTERPUBLIC GRP
1.51% , PBE , Biotech & Genome, PBE
1.25% , DSG , Growth Small Cap DJ, DSG
1.27% , RFG , Growth MidCap S&P 400, RFG
3.43% , FLEX , Flextronics International Ltd
1.50% , MTK , Technology MS sT, MTK
3.16% , ERTS , ELECTRONIC ARTS
2.60% , ACS , AFFILIATED COMPUTER
6.58% , AA , ALCOA
2.18% , IYT , Transportation Av DJ, IYT
4.49% , JBL , JABIL CIRCUIT
1.09% , JKE , Growth LargeCap iS M, JKE
6.35% , VMC , VULCAN MATERIALS
0.66% , NY , Value LargeCap NYSE 100 iS, NY
1.14% , IYW , Technology DJ US, IYW
1.01% , ISI , LargeCap Blend S&P 1500 iS, ISI
1.93% , JKI , Value MidCap iS M, JKI
4.70% , SCHW.O , CHARLES SCHWAB
0.79% , ADRU , Europe 100 BLDRS, ADRU
1.02% , TMW , Wilshire 5000 ST TM, TMW
3.93% , MCO , MOODYS CORP
4.24% , XMSR , XM Satellite R
3.73% , EBAY , EBAY
4.21% , UIS , UNISYS
1.01% , TTH , Telecom H, TTH
2.03% , GNTX , Gentex Corporation
3.44% , SVU , SUPERVALU
2.96% , WFMI , Whole Foods Market Inc
4.45% , MBI , MBIA

Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-4.68% , HPQ , HEWLETT PACKARD
-1.17% , TEVA , Teva Pharmaceutical Industries Limited
-2.58% , YHOO , YAHOO
-2.47% , NTAP , NETWK APPLIANCE
-1.79% , PTEN , Patterson-UTI Energy Inc
-1.04% , PBI , PITNEY BOWES
-0.04% , IAH , Internet Architecture H, IAH
-2.00% , RDC , ROWAN COMPANIES
-0.56% , CZN , CITIZENS COMMS STK B
-1.26% , FMCN , Focus Media, FMCN
-1.49% , SLB , SCHLUMBERGER
-0.36% , AVP , AVON
-1.19% , APA , APACHE
-0.36% , CVS , CVS
-0.80% , NCR , NCR
-1.81% , EOG , EOG RESOURCES
-0.27% , ECL , ECOLAB
-0.81% , GENZ , GENZYME GEN
-1.20% , SH , Short 100% S&P 500, SH
-3.13% , DISCA , Discovery Holding Co.
-1.86% , CTB , COOPER TIRE
-0.18% , AGG , Bond, Aggregate, AGG
-3.41% , RIG , TRANSOCEAN
-0.87% , WM , WASHINGTON MUT
-0.03% , IVGN , Invitrogen Corporation
-0.34% , NSM , NATL SEMICONDUCT
-0.90% , CI , CIGNA
-0.08% , AYE , ALLEGHENY ENERGY

Sectors: among the 9 major U.S. sectors, 8 rose and 1 fell.
Major Sectors Ranked for the Day
% Price Change Sector

2.05% Consumer Discretionary SPDR, XLY
2.05% Materials SPDR, XLB
1.63% Technology SPDR, XLK
1.60% Industrial SPDR, XLI
1.19% Financial SPDR, XLF
1.11% Consumer Staples SPDR, XLP
0.97% Utilities SPDR, XLU
0.76% Health Care SPDR, XLV
-0.55% Energy SPDR, XLE

Looking beyond the daily fluctuation to the major trends (listed in order of long-term relative strength):

Energy (XLE) Neutral, Market Weight. On 4/22/08, both the XLE price close and the XLE/SPY Relative Strength Ratio rose to new all-time highs, again confirming a major uptrend.

Materials (XLB) Neutral, Market Weight. On 4/16/08, both the XLB price and the XLB/SPY Relative Strength Ratio rose to new all-time highs, confirming a major uptrend.

Industrial (XLI) Neutral, Market Weight. On 5/1/08, the XLI/SPY Relative Strength Ratio rose to a new 3-month high, confirming an improving intermediate-term trend.

Consumer Staples (XLP) Neutral, Market Weight. On 5/6/08, the XLP/SPY Relative Strength Ratio fell to a new 3-month low, confirming a corrective intermediate-term trend.

Technology (XLK) Neutral, Market Weight. On 5/12/08, the XLK/SPY Relative Strength Ratio rose to a new 3-month high, signaling an improving intermediate-term trend.

Utilities (XLU) Neutral, Market Weight. The XLU/SPY Relative Strength Ratio has been in a moderately rising trend since 3/25/08, and so Utilities have improved somewhat in these rankings.

Consumer Discretionary (XLY) Bearish, Underweight. On 4/30/08, the XLY/SPY Relative Strength Ratio fell to a new 3-month low, suggesting renewed 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 5/6/08, the XLV/SPY Relative Strength Ratio fell to a new 6-year low, again confirming the existing Primary Bearish trend.

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 outperformed since 2/8/08. In addition, from the major bottom on 3/12/03, the EFA outperformed, so the major trend is up. EFA is the ETF representing the EAFE, the international developed country stock markets, ex the U.S. and Canada.

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 has been in an uptrend for the intermediate term, since 2/1/08. Long term, the Growth/Value ratio (IWF/IWD) has been in an uptrend since 8/8/06.

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 June futures gave back part of Friday’s gain. On 5/9/08, Oil rose to a new all-time high, confirming uptrends in all time frames. Profit taking happens once in a while, even in the strongest trending markets. 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 June futures gave back part of Friday’s gain. The very short-term trend appears uncertain. Price is still below the falling trendline from the 3/17/08 top, so Gold may still be in an intermediate-term Secondary Reaction, downside correction. Longer term, the 7-year trend is still 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) / Gold Bullion Relative Strength Ratio fell to another new low on 4/29/08. Longer-term, GDX significantly underperformed Gold since 10/31/07. Therefore, GDX trends are Bearish relative to Gold itself.

U.S. Treasury Bond prices gave back part of Friday’s gain. Bonds have traced out Secondary Reaction, intermediate-term downside correction phase in force since 3/20/08. Bond prices benefit from fears of financial crisis, and they correct to the downside when financial crisis takes a back seat to some other news of the day.

The U.S. dollar fell below Thursday’s low, calling into question a minor uptrend since its low on 4/22/08. The major trend of the dollar remains 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 44.4% Bulls versus 32.3% Bears as of 5/7/08, according to the weekly Investors Intelligence survey of newsletter advisors. The Bull/Bear ratio rose to 1.37, up from 1.29 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 17.79 and falling, appears to be in a downtrend. Fear is decreasing. VIX has been falling since its peak of 32.64 on 3/17/08. The all-time high was 45.74 on 10/8/98. The all-time low was 9.89 on 1/24/07. 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 22.46 and falling, appears to be in a downtrend. Fear is decreasing. VXN has been falling since its peak of 35.63 on 1/22/08. The all-time high was 114.23 on 10/8/98. The all-time low was 12.61 on 7/29/05. VXN measures NASDAQ Volatility using a method comparable to that used for VIX.

CBOE Put/Call Ratio is 0.66, which indicates relatively neutral 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 1.23, which indicates somewhat Bearish sentiment. The ratio’s 4-year simple moving average is 1.50, 4-year median is 1.47, and 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.

A Secondary Reaction was signaled on 4/18/28, when the Dow-Jones Industrials and Transports both closed at 3-month highs. But the Primary Tide Major Trend still may be Bearish. 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.

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 (1,403.58):

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
1,435.65, low of 12/18/2007
1,430.28, high of 1/8/08
1,422.72, high of 5/2/2008

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 (1,403.58):

Potential Support
1,383.07, low of 5/1/2008
1,324.35, low of 4/15/2008
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:

6.95% Internet B2B H, BHH
3.74% Ultra QQQ Double, QLD
3.19% Retail, PMR
2.66% Value SmallCap S&P 600, RZV
2.54% Australia Index, EWA
2.46% Ultra S&P500 Double, SSO
2.42% REIT Wilshire, RWR
2.40% REIT VIPERs, VNQ
2.37% Realty Cohen & Steers, ICF
2.32% Ultra MidCap400 Double, MVV
2.28% Retail H, RTH
2.23% Value S&P 500, RPV
2.20% SmallCap Russell 2000, IWM
2.18% Transportation Av DJ, IYT
2.14% Value MidCap S&P 400, RFV
2.13% Real Estate US DJ, IYR
2.07% Bank Regional H, RKH
2.06% Latin Am 40, ILF
2.06% Networking, IGN
2.06% Capital Markets KWB ST, KCE
2.05% Consumer Discretionary SPDR, XLY
2.05% Materials SPDR, XLB
2.05% Pacific ex-Japan, EPP
2.01% Ultra Dow30 Double, DDM
2.00% South Africa Index, EZA
1.99% Silver Trust iS, SLV
1.97% SmallCap Core iS M, JKJ
1.97% Brazil Index, EWZ
1.96% Software H, SWH
1.96% Financial Services DJ, IYG
1.95% Consumer D. VIPERs, VCR
1.93% Value MidCap iS M, JKI
1.93% Water Resources, PHO
1.92% Value SmallCap iS M, JKL
1.88% Building & Construction, PKB
1.88% Financials Global LargeCap Value, IXG
1.87% Consumer Cyclical DJ, IYC
1.85% Value Small Cap DJ, DSV
1.83% Growth LargeCap NASDAQ 100, QQQQ
1.80% Dividend High Yield Equity PS, PEY
1.76% Value SmallCap Dynamic PS, PWY
1.76% Value MidCap Dynamic PS, PWP
1.76% Growth LargeCap NASDAQ Fidelity, ONEQ
1.76% Dividend DJ Select, DVY
1.73% Dividend SPDR, SDY
1.72% Spain Index, EWP
1.71% Malaysia Index, EWM
1.69% Micro Cap Zachs, PZI
1.69% Leisure & Entertainment, PEJ
1.68% Value SmallCap VIPERS, VBR
1.66% Materials VIPERs, VAW
1.65% Growth SmallCap Dynamic PS, PWT
1.64% Financials VIPERs, VFH
1.63% Technology SPDR, XLK
1.62% Microcap Russell, IWC
1.62% South Korea Index, EWY
1.61% Software, PSJ
1.61% Financial DJ US, IYF
1.60% Value SmallCap S&P 600 B, IJS
1.60% Industrial SPDR, XLI
1.59% SmallCap PS Zacks, PZJ
1.58% LargeCap Blend S&P=Weight R, RSP
1.55% Singapore Index, EWS
1.55% Small Cap VIPERs, VB
1.54% Broadband H, BDH
1.54% Value SmallCap Russell 2000, IWN
1.53% Canada Index, EWC
1.51% Biotech & Genome, PBE
1.50% Dividend Leaders, FDL
1.50% Technology MS sT, MTK
1.50% Sweden Index, EWD
1.47% Belgium Index, EWK
1.45% Emerging 50 BLDRS, ADRE
1.45% Growth SmallCap R 2000, IWO
1.44% Value MidCap S&P 400 B, IJJ
1.43% Growth SmallCap iS M, JKK
1.42% Semiconductors, PSI
1.39% Industrials VIPERs, VIS
1.38% Industrial LargeCap Blend DJ US, IYJ
1.37% Growth SmallCap VIPERs, VBK
1.36% Growth S&P 500, RPG
1.34% Dividend Achievers PS, PFM
1.33% Technology GS, IGM
1.33% Value MidCap Russell, IWS
1.32% Value S&P 500 B, IVE
1.31% Biotech SPDR, XBI
1.31% Software, IGV
1.30% Growth BARRA Small Cap 600, IJT
1.30% Extended Mkt VIPERs, VXF
1.29% Italy Index, EWI
1.29% Emerging Markets, EEM
1.28% Aerospace & Defense, PPA
1.28% Value LargeCap Euro STOXX 50 DJ, FEU
1.27% Germany Index, EWG
1.27% Growth MidCap S&P 400, RFG
1.26% Netherlands Index, EWN
1.25% Growth Small Cap DJ, DSG
1.25% Basic Materials DJ US, IYM
1.24% Value LargeCap Fundamental RAFI 1000, PRF
1.23% Value LargeCap Russell 3000, IWW
1.23% Semiconductor iS GS, IGW
1.22% Info Tech VIPERs, VGT
1.21% Euro STOXX 50, FEZ
1.21% Food & Beverage, PBJ
1.20% MidCap Russell, IWR
1.20% Nanotech Lux, PXN
1.20% MidCap S&P 400 iS, IJH
1.19% Financial SPDR, XLF
1.19% MidCap Blend Core iS M, JKG
1.19% Value LargeCap Dynamic PS, PWV
1.18% Value Line Timeliness MidCap Gr, PIV
1.18% Taiwan Index, EWT
1.17% EMU Europe Index, EZU
1.17% Internet H, HHH
1.17% MidCap S&P 400 SPDRs, MDY
1.16% France Index, EWQ
1.16% Value VIPERs, VTV
1.14% Telecommunications & Wireless, PTE
1.14% Technology DJ US, IYW
1.14% Utilities, PUI
1.14% Europe 350 S&P Index, IEV
1.13% LargeCap Blend Russell 3000, IWV
1.13% MidCap VIPERs, VO
1.12% S&P 500 SPDRs LargeCap Blend, SPY
1.12% S&P 500 iS LargeCap Blend, IVV
1.12% LargeCap VIPERs, VV
1.11% Consumer Staples SPDR, XLP
1.11% Value 40 Large Low P/E FT DB, FDV
1.10% Technology Global, IXN
1.10% Dividend Growth PS, PHJ
1.09% Growth LargeCap iS M, JKE
1.08% Growth MidCap Russell, IWP
1.07% Semiconductor H, SMH
1.06% Growth LargeCap Russell 3000, IWZ
1.05% Value Large Cap DJ, ELV
1.05% LargeCap Blend Core iS M, JKD
1.05% Austria Index, EWO
1.04% Value EAFE MSCI, EFV
1.03% Blend Total Market VIPERs, VTI
1.02% Wilshire 5000 ST TM, TMW
1.02% LargeCap Blend Socially Responsible iS, KLD
1.02% SmallCap S&P 600, IJR
1.01% LargeCap 1000 R, IWB
1.01% Telecom H, TTH
1.01% LargeCap Blend S&P 1500 iS, ISI
1.00% Growth S&P 500/BARRA, IVW
1.00% EAFE Index, EFA
1.00% Growth EAFE MSCI, EFG
1.00% LargeCap Blend Total Market DJ, IYY
1.00% Internet Infrastructure H, IIH
0.99% Developed 100 BLDRS, ADRD
0.99% Value 1000 Russell, IWD
0.99% Hong Kong Index, EWH
0.99% DIAMONDS (DJIA), DIA
0.99% European VIPERs, VGK
0.98% Utilities H, UTH
0.97% Utilities SPDR, XLU
0.97% Lg Cap Growth PSD, PWB
0.96% Dividend Appreciation Vipers, VIG
0.95% Consumer Staples VIPERs, VDC
0.95% Telecommunications Global, IXP
0.95% Utilities VIPERs, VPU
0.95% WilderHill Clean Energy PS, PBW
0.93% Growth VIPERs, VUG
0.89% IPOs, First Tr IPOX-100, FPX
0.87% LargeCap Blend S&P 100, OEF
0.87% United Kingdom Index, EWU
0.87% Health Care VIPERs, VHT
0.86% Value LargeCap iS M, JKF
0.86% Mexico Index, EWW
0.86% Insurance, PIC
0.85% LargeCap Blend NYSE Composite iS, NYC
0.83% Growth MidCap 400 B, IJK
0.83% Pacific VIPERs, VPL
0.83% Growth 1000 Russell, IWF
0.82% Growth Large Cap, ELG
0.81% Biotechnology, IBB
0.81% Dividend International, PID
0.81% Utilities DJ, IDU
0.80% Hardware & Electronics, PHW
0.80% Consumer Non-Cyclical, IYK
0.79% Europe 100 BLDRS, ADRU
0.78% LargeCap Blend Dynamic PS, PWC
0.77% Emerging VIPERs, VWO
0.76% Telecom Services VIPERs, VOX
0.76% Health Care SPDR, XLV
0.76% Healthcare Global, IXJ
0.75% Global 100, IOO
0.75% Pharmaceutical H, PPH
0.74% Growth Mid Cap Dynamic PS, PWJ
0.74% Biotech H, BBH
0.74% Switzerland Index, EWL
0.73% OTC Dynamic PS, PWO
0.69% LargeCap Rydex Rus Top 50, XLG
0.66% Value LargeCap NYSE 100 iS, NY
0.65% Semiconductor SPDR, XSD
0.64% Healthcare DJ, IYH
0.63% MidCap Growth iS M, JKH
0.62% Telecom DJ US, IYZ
0.59% Metals & Mining SPDR, XME
0.53% Pharmaceuticals, PJP
0.52% Japan LargeCap Blend TOPIX 150, ITF
0.49% China 25 iS, FXI
0.39% Energy Global, IXC
0.38% Japan Index, EWJ
0.38% Homebuilders SPDR, XHB
0.24% Global Titans, DGT
0.17% China LargeCap Growth G D H USX PS, PGJ
0.12% Networking, PXQ
0.09% Natural Resource iS GS, IGE
0.00% Asia 50 BLDRS, ADRA
-0.04% Internet Architecture H, IAH
-0.09% Bond, Corp, LQD
-0.14% Energy Exploration & Prod, PXE
-0.15% Bond, 20+ Years Treasury, TLT
-0.16% Bond, TIPS, TIP
-0.17% Bond, 10 Year Treasury, IEF
-0.18% Bond, Aggregate, AGG
-0.19% Bond, 1-3 Year Treasury, SHY
-0.20% Energy DJ, IYE
-0.41% Energy VIPERs, VDE
-0.49% Gold Shares S.T., GLD
-0.55% Energy SPDR, XLE
-0.83% Oil & Gas, PXJ
-1.02% Short 100% Dow 30, DOG
-1.11% Short 100% MidCap 400, MYY
-1.20% Short 100% S&P 500, SH
-1.67% Oil Services H, OIH
-1.70% Commodity Tracking, DBC
-1.78% Short 200% MidCap 400 PS, MZZ
-1.81% Short 100% QQQ, PSQ
-1.97% Oil, Crude, U.S. Oil Fund, USO
-2.05% Short 200% Dow 30 PS, DXD
-2.08% Short 200% S&P 500 PS, SDS
-3.52% Short 200% QQQ PS, QID