By Robert W. Colby, Senior Analyst TraderPlanet.com
Stock Price Indexes Hit Resistance.
Investment Advisors are Bullish and are growing more Bullish.
VIX indicates that fear has decreased substantially.
Stock Price Oscillators have been losing Bullish Momentum.
At about 1:45 p.m., Standard & Poor’s 500 cash index (1,408.66) approached but stopped short of Potential Resistance at 1,422.72, which was the high of 5/2/2008.
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 and is falling, 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
9.73% , SSCC , Smurfit-Stone Container Corporation
9.17% , FRE , FREDDIE MAC
0.57% , UTH , Utilities H, UTH
0.81% , KCE , Capital Markets KWB ST, KCE
6.40% , NVLS , NOVELLUS SYS
4.59% , SPLS , STAPLES
1.05% , RPG , Growth S&P 500, RPG
4.38% , EMC , EMC
1.46% , PSI , Semiconductors, PSI
0.42% , PIC , Insurance, PIC
3.37% , PKI , PERKINELMER
3.69% , KLAC , KLA TENCOR
2.43% , PDCO , Patterson Dental Company
6.41% , LEN , Lennar Corp. (LEN)
1.90% , PHW , Hardware & Electronics, PHW
1.12% , PJP , Pharmaceuticals, PJP
2.50% , SVU , SUPERVALU
3.59% , SWY , SAFEWAY
3.17% , EMN , EASTMAN CHEM
0.71% , RWR , REIT Wilshire, RWR
2.95% , PMCS , PMC SIERRA
1.17% , RPV , Value S&P 500, RPV
6.17% , ETFC.O , E*TRADE FINANCIAL
4.27% , LRCX , LAM RESEARCH CORP
1.32% , ROH , ROHM & HAAS
3.98% , CIEN.O , CIENA
2.92% , XHB , Homebuilders SPDR, XHB
1.12% , SMH , Semiconductor H, SMH
1.02% , PUI , Utilities, PUI
2.61% , VRSN , VeriSign Inc
2.61% , RTH , Retail H, RTH
2.60% , IIH , Internet Infrastructure H, IIH
6.83% , PHM , PULTE HOMES
5.14% , COH , COACH
2.34% , PBW , WilderHill Clean Energy PS, PBW
0.14% , HHH , Internet H, HHH
3.43% , SGP , SCHERING PLOUGH
0.62% , PTE , Telecommunications & Wireless, PTE
2.20% , VZ , VERIZON COMMS
2.49% , GRMN , GARMIN LTD
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-9.91% , DE , DEERE & CO
-13.91% , WFMI , Whole Foods Market Inc
-3.51% , STJ , ST JUDE MEDICAL
-3.01% , BHH , Internet B2B H, BHH
-1.75% , PXJ , Oil & Gas, PXJ
-0.75% , DGT , Global Titans, DGT
-1.57% , EZA , South Africa Index, EZA
-0.66% , PKB , Building & Construction, PKB
-2.65% , CIT , CIT GROUP
-1.63% , UNH , UNITEDHEALTH GRP
-0.96% , AEP , AM ELEC POWER
-2.01% , ATI , ALLEGHENY TECH
-2.42% , FISV , FISERV
-1.46% , Q , QWEST COMMUNICAT
-2.88% , DLX , DELUXE
-1.57% , CAT , CATERPILLAR
-0.32% , LVLT , LEVEL 3 COMMUNICATIONS
-0.58% , PIV , Value Line Timeliness MidCap Gr, PIV
-2.34% , MRO , MARATHON OIL
-0.62% , MCHP , Microchip Technology Incorporated
-3.50% , STLD , Steel Dynamics, STLD
-3.28% , ERTS , ELECTRONIC ARTS
-3.06% , APA , APACHE
-1.21% , RF , REGIONS FINAN
-0.73% , CCL , CARNIVAL STK A
-1.13% , TUP , TUPPERWARE
-0.36% , DOG , Short 100% Dow 30, DOG
-1.20% , HSP , HOSPIRA
-0.09% , RZV , Value SmallCap S&P 600, RZV
-0.44% , EWU , United Kingdom Index, EWU
-1.18% , ISIL , INTERSIL CORP
-0.84% , FMCN , Focus Media, FMCN
-1.19% , MCD , MCDONALDS
-1.53% , XME , Metals & Mining SPDR, XME
-1.30% , BMC , BMC SOFTWARE
-0.82% , X , US STEEL CORP
-1.53% , HOLX , Hologic, Inc., HOLX
-0.49% , WLP , WELLPOINT HEALTH
-2.07% , APC , ANADARKO PETRO
-1.14% , XLE , Energy SPDR, XLE
Sectors: among the 9 major U.S. sectors, 8 rose and 1 fell.
Major Sectors Ranked for the Day
% Price Change Sector
1.12% Consumer Discretionary SPDR, XLY
0.83% Health Care SPDR, XLV
0.69% Financial SPDR, XLF
0.56% Materials SPDR, XLB
0.39% Consumer Staples SPDR, XLP
0.37% Utilities SPDR, XLU
0.20% Technology SPDR, XLK
0.10% Industrial SPDR, XLI
-1.14% Energy SPDR, XLE
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.
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.
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.
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 5/13/08, 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 outperformed since 3/3/08. Therefore, one might argue that the 2-month Relative Strength trend has been improving. But longer term, the relative trends in larger time frames appear to be contradicting. The NASDAQ underperformed since 11/7/07 and, on 3/3/08, Relative Strength fell to a new 9-month low, confirming downtrends in larger time frames.
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 has been rising since 3/10/08. But the Relative Strength Ratio is still in a downtrend since the peak on 4/19/06, so the main long-term trend is Relatively Bearish for Small Caps.
Crude Oil June futures eased moderately lower. On 5/13/08, Oil rose to a new all-time high, confirming uptrends in all time frames. 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 fell again, breaking below the lows of the previous 6-days. The very short-term trend appears Bearish. In addition, price remains below the falling trendline from the 3/17/08 top, so Gold still may 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 tested February-May price lows but reversed to close higher. This reversal might provide some hope for the short-term outlook. Bonds have traced out Secondary Reaction, intermediate-term downside correction phase since the price peak on 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 rose above the previous 3-day highs intraday, but surrendered most of that gain by the close. The minor uptrend since the low on 4/22/08 seems questionable. 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 46.0% Bulls versus 29.9% Bears as of 5/14/08, according to the weekly Investors Intelligence survey of newsletter advisors. The Bull/Bear ratio rose to 1.54, up from 1.37 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 17.66 and falling, is in a downtrend, meaning that Fear has been 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 21.47 and falling, is in a downtrend, meaning that 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 0.60, 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 0.94, which indicates 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 (1,408.66):
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
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:
2.92% Homebuilders SPDR, XHB
2.61% Retail H, RTH
2.60% Internet Infrastructure H, IIH
2.34% WilderHill Clean Energy PS, PBW
1.90% Hardware & Electronics, PHW
1.50% Mexico Index, EWW
1.46% Semiconductors, PSI
1.33% China LargeCap Growth G D H USX PS, PGJ
1.32% Asia 50 BLDRS, ADRA
1.28% Semiconductor iS GS, IGW
1.18% Retail, PMR
1.17% Telecommunications Global, IXP
1.17% Telecom Services VIPERs, VOX
1.17% Value S&P 500, RPV
1.13% Realty Cohen & Steers, ICF
1.12% Consumer Discretionary SPDR, XLY
1.12% Semiconductor H, SMH
1.12% Pharmaceuticals, PJP
1.05% Growth S&P 500, RPG
1.03% Telecom DJ US, IYZ
1.02% Utilities, PUI
1.01% Transportation Av DJ, IYT
1.01% Ultra Dow30 Double, DDM
1.01% Semiconductor SPDR, XSD
0.99% Consumer D. VIPERs, VCR
0.96% Short 200% QQQ PS, QID
0.94% Pharmaceutical H, PPH
0.93% Consumer Cyclical DJ, IYC
0.91% Japan Index, EWJ
0.88% Value MidCap iS M, JKI
0.85% Growth MidCap S&P 400, RFG
0.83% Health Care SPDR, XLV
0.81% Capital Markets KWB ST, KCE
0.81% Bank Regional H, RKH
0.80% Financial DJ US, IYF
0.80% Value Small Cap DJ, DSV
0.78% Value Large Cap DJ, ELV
0.78% OTC Dynamic PS, PWO
0.77% Dividend Leaders, FDL
0.77% Internet Architecture H, IAH
0.75% Value MidCap Dynamic PS, PWP
0.74% LargeCap Blend Dynamic PS, PWC
0.72% China 25 iS, FXI
0.71% REIT Wilshire, RWR
0.70% Dividend SPDR, SDY
0.70% Financial Services DJ, IYG
0.69% Financial SPDR, XLF
0.69% Financials VIPERs, VFH
0.69% Utilities VIPERs, VPU
0.68% Dividend Growth PS, PHJ
0.67% Wilshire 5000 ST TM, TMW
0.67% Real Estate US DJ, IYR
0.66% LargeCap Blend Core iS M, JKD
0.65% Value S&P 500 B, IVE
0.64% Telecom H, TTH
0.62% REIT VIPERs, VNQ
0.62% Telecommunications & Wireless, PTE
0.61% Value LargeCap Fundamental RAFI 1000, PRF
0.61% Technology Global, IXN
0.60% Value VIPERs, VTV
0.60% Value 40 Large Low P/E FT DB, FDV
0.60% Value MidCap Russell, IWS
0.58% Australia Index, EWA
0.58% Value LargeCap NYSE 100 iS, NY
0.58% Italy Index, EWI
0.57% Utilities H, UTH
0.57% Value LargeCap iS M, JKF
0.56% Materials SPDR, XLB
0.55% South Korea Index, EWY
0.55% Value MidCap S&P 400, RFV
0.54% Pacific VIPERs, VPL
0.53% Dividend Achievers PS, PFM
0.53% Euro STOXX 50, FEZ
0.52% Ultra S&P500 Double, SSO
0.52% MidCap Blend Core iS M, JKG
0.52% LargeCap Blend S&P=Weight R, RSP
0.51% LargeCap Blend Socially Responsible iS, KLD
0.51% Japan LargeCap Blend TOPIX 150, ITF
0.51% Netherlands Index, EWN
0.51% Value 1000 Russell, IWD
0.50% Utilities DJ, IDU
0.49% Dividend Appreciation Vipers, VIG
0.49% France Index, EWQ
0.46% Aerospace & Defense, PPA
0.46% Water Resources, PHO
0.46% Value LargeCap Dynamic PS, PWV
0.46% Technology GS, IGM
0.46% DIAMONDS (DJIA), DIA
0.43% Materials VIPERs, VAW
0.42% Insurance, PIC
0.42% Consumer Staples VIPERs, VDC
0.40% Health Care VIPERs, VHT
0.40% S&P 500 iS LargeCap Blend, IVV
0.39% Consumer Staples SPDR, XLP
0.38% Austria Index, EWO
0.37% Utilities SPDR, XLU
0.36% LargeCap Blend Total Market DJ, IYY
0.36% MidCap VIPERs, VO
0.35% Info Tech VIPERs, VGT
0.35% Technology MS sT, MTK
0.35% Nanotech Lux, PXN
0.35% LargeCap 1000 R, IWB
0.34% LargeCap Blend S&P 100, OEF
0.34% Growth 1000 Russell, IWF
0.34% LargeCap Rydex Rus Top 50, XLG
0.34% Software H, SWH
0.33% Consumer Non-Cyclical, IYK
0.32% Value MidCap S&P 400 B, IJJ
0.31% Blend Total Market VIPERs, VTI
0.31% MidCap Russell, IWR
0.31% Value SmallCap VIPERS, VBR
0.31% Technology DJ US, IYW
0.30% Healthcare DJ, IYH
0.30% Spain Index, EWP
0.29% LargeCap Blend Russell 3000, IWV
0.29% LargeCap Blend NYSE Composite iS, NYC
0.28% Biotech H, BBH
0.28% Pacific ex-Japan, EPP
0.27% LargeCap Blend S&P 1500 iS, ISI
0.27% Value LargeCap Russell 3000, IWW
0.27% LargeCap VIPERs, VV
0.24% Taiwan Index, EWT
0.24% Emerging Markets, EEM
0.23% Growth EAFE MSCI, EFG
0.22% Networking, IGN
0.22% Industrials VIPERs, VIS
0.22% Dividend DJ Select, DVY
0.21% Emerging VIPERs, VWO
0.21% S&P 500 SPDRs LargeCap Blend, SPY
0.21% Hong Kong Index, EWH
0.20% Technology SPDR, XLK
0.20% Software, IGV
0.19% EMU Europe Index, EZU
0.18% Biotechnology, IBB
0.18% Growth Small Cap DJ, DSG
0.18% Europe 100 BLDRS, ADRU
0.17% Value EAFE MSCI, EFV
0.17% SmallCap Core iS M, JKJ
0.17% Growth VIPERs, VUG
0.17% Biotech & Genome, PBE
0.16% Short 100% QQQ, PSQ
0.16% Latin Am 40, ILF
0.15% Ultra MidCap400 Double, MVV
0.15% Bond, Aggregate, AGG
0.15% Growth LargeCap Russell 3000, IWZ
0.14% Micro Cap Zachs, PZI
0.14% Global 100, IOO
0.14% Internet H, HHH
0.14% MidCap S&P 400 iS, IJH
0.13% Healthcare Global, IXJ
0.12% Industrial LargeCap Blend DJ US, IYJ
0.12% Value LargeCap Euro STOXX 50 DJ, FEU
0.12% Growth SmallCap VIPERs, VBK
0.11% Software, PSJ
0.11% Growth MidCap Russell, IWP
0.10% Small Cap VIPERs, VB
0.10% Growth S&P 500/BARRA, IVW
0.10% Industrial SPDR, XLI
0.09% Growth LargeCap NASDAQ Fidelity, ONEQ
0.09% Bond, TIPS, TIP
0.09% Dividend High Yield Equity PS, PEY
0.07% Growth Large Cap, ELG
0.07% MidCap S&P 400 SPDRs, MDY
0.07% Extended Mkt VIPERs, VXF
0.06% Growth SmallCap Dynamic PS, PWT
0.06% Bond, Corp, LQD
0.05% Dividend International, PID
0.04% Bond, 20+ Years Treasury, TLT
0.04% Value SmallCap iS M, JKL
0.04% IPOs, First Tr IPOX-100, FPX
0.04% Developed 100 BLDRS, ADRD
0.03% Growth BARRA Small Cap 600, IJT
0.02% Growth MidCap 400 B, IJK
0.01% MidCap Growth iS M, JKH
0.00% EAFE Index, EFA
0.00% Networking, PXQ
0.00% SmallCap S&P 600, IJR
0.00% Value SmallCap Dynamic PS, PWY
0.00% Value SmallCap S&P 600 B, IJS
-0.01% Growth LargeCap iS M, JKE
-0.03% Canada Index, EWC
-0.03% Germany Index, EWG
-0.03% Bond, 10 Year Treasury, IEF
-0.05% Biotech SPDR, XBI
-0.06% Basic Materials DJ US, IYM
-0.07% Growth SmallCap iS M, JKK
-0.07% Bond, 1-3 Year Treasury, SHY
-0.09% Growth Mid Cap Dynamic PS, PWJ
-0.09% Value SmallCap S&P 600, RZV
-0.11% Emerging 50 BLDRS, ADRE
-0.11% Lg Cap Growth PSD, PWB
-0.12% SmallCap Russell 2000, IWM
-0.12% European VIPERs, VGK
-0.14% Value SmallCap Russell 2000, IWN
-0.16% Growth SmallCap R 2000, IWO
-0.18% Energy Global, IXC
-0.20% Short 200% MidCap 400 PS, MZZ
-0.21% Leisure & Entertainment, PEJ
-0.21% SmallCap PS Zacks, PZJ
-0.22% Europe 350 S&P Index, IEV
-0.22% Gold Shares S.T., GLD
-0.22% Growth LargeCap NASDAQ 100, QQQQ
-0.27% Financials Global LargeCap Value, IXG
-0.33% Belgium Index, EWK
-0.33% Short 100% S&P 500, SH
-0.36% Food & Beverage, PBJ
-0.36% Short 100% Dow 30, DOG
-0.41% Short 100% MidCap 400, MYY
-0.44% United Kingdom Index, EWU
-0.44% Broadband H, BDH
-0.46% Short 200% S&P 500 PS, SDS
-0.50% Switzerland Index, EWL
-0.51% Malaysia Index, EWM
-0.54% Microcap Russell, IWC
-0.58% Value Line Timeliness MidCap Gr, PIV
-0.66% Building & Construction, PKB
-0.70% Short 200% Dow 30 PS, DXD
-0.75% Global Titans, DGT
-0.78% Energy VIPERs, VDE
-0.80% Energy Exploration & Prod, PXE
-0.80% Sweden Index, EWD
-0.81% Brazil Index, EWZ
-0.83% Ultra QQQ Double, QLD
-1.07% Energy DJ, IYE
-1.10% Singapore Index, EWS
-1.12% Natural Resource iS GS, IGE
-1.13% Silver Trust iS, SLV
-1.14% Energy SPDR, XLE
-1.46% Oil, Crude, U.S. Oil Fund, USO
-1.53% Metals & Mining SPDR, XME
-1.57% South Africa Index, EZA
-1.62% Commodity Tracking, DBC
-1.75% Oil & Gas, PXJ
-2.01% Oil Services H, OIH
-3.01% Internet B2B H, BHH
