By Robert W. Colby, Senior Analyst TraderPlanet.com
Stock Price Momentum turning Bearish.
RSI (14) fell to 54, its lowest level in 3 weeks, based on the end-of-day SPY.
Just a few days ago, the SPY had been overbought with RSI (14) above 66, at its highest level since the top last October 2007.
Commodity price indexes broke out to new all-time highs.
Crude Oil jumped up to a another new high, which is not good for the economy.
Energy and Materials Stock Sectors were strong.
Financial and Health Care Stock Sectors were weak.
Energy and Materials Stock Sectors were strongest. Financial and Health Care Stock Sectors were weak. This one-day price action conforms perfectly to my long-term Relative Strength Rankings, shown below. These rankings have kept us on the winning side of the major sector trends.
The recent 7-week upward tilting stock price correction had been more persistent than any rally since the one that ended on 10/11/07, although not remarkable or unusual for a counter-trend rally in a Bear Market. I am assuming that the March-May rally was nothing more than a 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
10.00% , DISCA , Discovery Holding Co.
0.67% , IGM , Technology GS, IGM
10.30% , DLTR , Dollar Tree Stores Inc
9.09% , NOV , NATIONAL OILWELL VARC0
0.52% , FPX , IPOs, First Tr IPOX-100, FPX
4.04% , SYK , STRYKER
4.55% , TE , TECO ENERGY
0.43% , RFG , Growth MidCap S&P 400, RFG
3.10% , PMTC.O , PARAMETRIC
6.96% , RDC , ROWAN COMPANIES
4.13% , NIHD , NII Holdings, Inc.
0.20% , PHJ , Dividend Growth PS, PHJ
4.72% , PTEN , Patterson-UTI Energy Inc
2.14% , IYM , Basic Materials DJ US, IYM
2.23% , LLTC , LINEAR TECH
0.79% , JKH , MidCap Growth iS M, JKH
1.76% , PLL , PALL
2.28% , NWS.A , NEWS CORP STK A
0.37% , VPU , Utilities VIPERs, VPU
0.27% , IWV , LargeCap Blend Russell 3000, IWV
0.56% , DSG , Growth Small Cap DJ, DSG
2.92% , SGP , SCHERING PLOUGH
1.08% , CCU , CLEAR CHANNEL
0.69% , EFV , Value EAFE MSCI, EFV
0.86% , IGV , Software, IGV
0.80% , PKB , Building & Construction, PKB
1.36% , SRCL , Stericycle, SRCL
2.72% , NTAP , NETWK APPLIANCE
0.83% , PIV , Value Line Timeliness MidCap Gr, PIV
4.10% , AA , ALCOA
2.26% , IGE , Natural Resource iS GS, IGE
3.12% , BHI , BAKER HUGHES
1.52% , PWJ , Growth Mid Cap Dynamic PS, PWJ
2.22% , ROST , Ross Stores Inc
2.73% , EWA , Australia Index, EWA
0.96% , IGN , Networking, IGN
0.69% , IWP , Growth MidCap Russell, IWP
0.85% , TUP , TUPPERWARE
1.13% , GIS , GENERAL MILLS
0.81% , VIA , VIACOM INC. (New)
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol , Name
-15.34% , HANS , Hansen Natural, HANS
-3.11% , LBTYA , Liberty Global Inc. (LBTYA)
-4.49% , XHB , Homebuilders SPDR, XHB
-1.12% , PMR , Retail, PMR
-4.11% , ZION , ZIONS
-3.22% , BBY , BEST BUY
-2.36% , TJX , TJX
-5.61% , DDS , DILLARD STK A
-2.92% , NKE , NIKE STK B
-1.69% , HMA , HEALTH MGMT STK A
-2.73% , MYL , MYLAN LABS
-1.34% , RPV , Value S&P 500, RPV
-2.26% , KSS , KOHLS
-1.24% , HSY , HERSHEY FOODS
-3.96% , WM , WASHINGTON MUT
-3.21% , LOW , LOWES
-2.31% , JWN , NORDSTROM
-4.20% , CC , CIRCUIT CITY STR
-2.19% , GPS , GAP
-0.92% , AVY , AVERY DENNISON
-3.07% , WB , WACHOVIA
-2.23% , SPLS , STAPLES
-2.23% , FRE , FREDDIE MAC
-2.06% , TGT , TARGET
-4.35% , FITB , FIFTH THIRD BANC
-0.98% , IYF , Financial DJ US, IYF
-2.04% , XLF , Financial SPDR, XLF
-4.89% , FNM , FANNIE MAE
-2.24% , HD , HOME DEPOT
-2.81% , VLO , VALERO ENERGY
-1.26% , ZMH , ZIMMER HLDGS
-2.24% , FDO , FAMILY DLR STRS
-2.04% , APOL , APOLLO GROUP
-3.03% , NCC , NATIONAL CITY
-1.55% , URBN , Urban Outfitters Inc.
-1.15% , AZO , AUTOZONE
-1.32% , CCE , COCA COLA ENTER
-0.67% , CR , CRANE
-1.07% , VFC , VF
-2.53% , SNV , SYNOVUS
Sectors: among the 9 major U.S. sectors, 8 rose and 2 fell.
Major Sectors Ranked for the Day
% Price ChangeSector
2.01% Energy SPDR, XLE
1.71% Materials SPDR, XLB
0.34% Industrial SPDR, XLI
0.29% Consumer Staples SPDR, XLP
0.25% Utilities SPDR, XLU
0.16% Technology SPDR, XLK
0.15% Consumer Discretionary SPDR, XLY
-0.38% Health Care SPDR, XLV
-2.04% Financial SPDR, XLF
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 5/8/08, 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 jumped up to another new all-time high, confirming uptrends in all time frames. Oil has gone up 5 consecutive sessions. 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 reversed to the upside to close above the highest prices of the previous 7 trading days. The very short-term trend may be up, but 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 jumped up to close above the highest prices of the previous 3 trading days. It is not clear that bonds are ending their 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 stalled but is still in a minor uptrend. The U.S. dollar has been rising since its low on 4/22/08. The major trend of the dollar remains down, however.
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 19.40, is very low 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 23.18, is very 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 0.60, 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 1.33, 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 (1,397.68):
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:
3.39% Oil & Gas, PXJ
2.73% Oil Services H, OIH
2.73% Australia Index, EWA
2.40% Metals & Mining SPDR, XME
2.37% Pacific ex-Japan, EPP
2.26% Natural Resource iS GS, IGE
2.14% Basic Materials DJ US, IYM
2.01% Energy SPDR, XLE
1.98% Energy DJ, IYE
1.93% South Africa Index, EZA
1.91% WilderHill Clean Energy PS, PBW
1.90% Energy VIPERs, VDE
1.90% Materials VIPERs, VAW
1.71% Materials SPDR, XLB
1.65% Gold Shares S.T., GLD
1.63% Commodity Tracking, DBC
1.52% Growth Mid Cap Dynamic PS, PWJ
1.50% China 25 iS, FXI
1.48% Sweden Index, EWD
1.46% Energy Global, IXC
1.40% Spain Index, EWP
1.40% Hong Kong Index, EWH
1.34% Water Resources, PHO
1.33% Growth EAFE MSCI, EFG
1.28% Ultra MidCap400 Double, MVV
1.21% Pacific VIPERs, VPL
1.20% Broadband H, BDH
1.19% Silver Trust iS, SLV
1.18% China LargeCap Growth G D H USX PS, PGJ
1.07% Brazil Index, EWZ
1.05% United Kingdom Index, EWU
1.03% Emerging Markets, EEM
1.02% Europe 100 BLDRS, ADRU
1.01% Nanotech Lux, PXN
0.99% Biotech SPDR, XBI
0.99% Growth MidCap 400 B, IJK
0.96% Networking, IGN
0.95% Aerospace & Defense, PPA
0.95% Technology MS sT, MTK
0.92% European VIPERs, VGK
0.90% Bond, 20+ Years Treasury, TLT
0.89% Netherlands Index, EWN
0.89% Energy Exploration & Prod, PXE
0.87% EAFE Index, EFA
0.86% Software, IGV
0.86% Oil, Crude, U.S. Oil Fund, USO
0.86% Latin Am 40, ILF
0.86% Lg Cap Growth PSD, PWB
0.86% Growth LargeCap iS M, JKE
0.83% Value Line Timeliness MidCap Gr, PIV
0.82% Internet H, HHH
0.81% Biotech H, BBH
0.80% Building & Construction, PKB
0.79% MidCap Growth iS M, JKH
0.78% Switzerland Index, EWL
0.78% Canada Index, EWC
0.77% Semiconductors, PSI
0.76% Europe 350 S&P Index, IEV
0.76% Industrials VIPERs, VIS
0.75% Info Tech VIPERs, VGT
0.75% Growth LargeCap NASDAQ 100, QQQQ
0.75% Software H, SWH
0.75% Internet Architecture H, IAH
0.74% Bond, TIPS, TIP
0.73% Germany Index, EWG
0.71% Industrial LargeCap Blend DJ US, IYJ
0.70% LargeCap Blend NYSE Composite iS, NYC
0.70% OTC Dynamic PS, PWO
0.69% Value EAFE MSCI, EFV
0.69% Growth MidCap Russell, IWP
0.67% Technology GS, IGM
0.66% MidCap S&P 400 iS, IJH
0.66% Technology DJ US, IYW
0.65% Bond, 10 Year Treasury, IEF
0.63% Developed 100 BLDRS, ADRD
0.62% Utilities H, UTH
0.62% Growth 1000 Russell, IWF
0.62% Software, PSJ
0.61% EMU Europe Index, EZU
0.61% Dividend International, PID
0.60% France Index, EWQ
0.60% Growth SmallCap R 2000, IWO
0.59% LargeCap Blend S&P 1500 iS, ISI
0.58% Growth S&P 500/BARRA, IVW
0.58% Growth SmallCap Dynamic PS, PWT
0.57% Growth VIPERs, VUG
0.57% Healthcare Global, IXJ
0.56% Biotech & Genome, PBE
0.56% Growth Small Cap DJ, DSG
0.56% Emerging 50 BLDRS, ADRE
0.55% Technology Global, IXN
0.55% Biotechnology, IBB
0.54% MidCap Russell, IWR
0.52% IPOs, First Tr IPOX-100, FPX
0.52% MidCap Blend Core iS M, JKG
0.52% Health Care VIPERs, VHT
0.50% Asia 50 BLDRS, ADRA
0.49% MidCap VIPERs, VO
0.47% Growth SmallCap iS M, JKK
0.47% Pharmaceuticals, PJP
0.47% Growth LargeCap Russell 3000, IWZ
0.45% Growth LargeCap NASDAQ Fidelity, ONEQ
0.45% Japan Index, EWJ
0.45% Extended Mkt VIPERs, VXF
0.44% Value LargeCap Euro STOXX 50 DJ, FEU
0.44% Bond, Corp, LQD
0.44% Micro Cap Zachs, PZI
0.43% Growth MidCap S&P 400, RFG
0.43% Wilshire 5000 ST TM, TMW
0.42% Utilities, PUI
0.42% SmallCap Core iS M, JKJ
0.42% Semiconductor iS GS, IGW
0.41% LargeCap Blend Dynamic PS, PWC
0.41% Growth SmallCap VIPERs, VBK
0.41% Semiconductor H, SMH
0.41% LargeCap 1000 R, IWB
0.40% LargeCap Blend S&P 100, OEF
0.40% S&P 500 iS LargeCap Blend, IVV
0.38% Global 100, IOO
0.37% Utilities VIPERs, VPU
0.37% Emerging VIPERs, VWO
0.34% Industrial SPDR, XLI
0.33% Transportation Av DJ, IYT
0.32% LargeCap Blend Total Market DJ, IYY
0.32% Value MidCap Russell, IWS
0.32% Growth BARRA Small Cap 600, IJT
0.31% Telecommunications Global, IXP
0.30% Value MidCap S&P 400 B, IJJ
0.30% Mexico Index, EWW
0.30% Value Large Cap DJ, ELV
0.29% Small Cap VIPERs, VB
0.29% Consumer Staples SPDR, XLP
0.28% Healthcare DJ, IYH
0.28% Utilities DJ, IDU
0.27% Value 1000 Russell, IWD
0.27% LargeCap Blend Russell 3000, IWV
0.26% Euro STOXX 50, FEZ
0.26% Bond, Aggregate, AGG
0.25% Growth Large Cap, ELG
0.25% Utilities SPDR, XLU
0.25% Networking, PXQ
0.23% Telecom DJ US, IYZ
0.23% Pharmaceutical H, PPH
0.23% Japan LargeCap Blend TOPIX 150, ITF
0.22% LargeCap Blend Core iS M, JKD
0.21% SmallCap Russell 2000, IWM
0.21% Value LargeCap Dynamic PS, PWV
0.20% Dividend Growth PS, PHJ
0.19% SmallCap S&P 600, IJR
0.19% Consumer Staples VIPERs, VDC
0.18% Value MidCap Dynamic PS, PWP
0.18% Short 200% Dow 30 PS, DXD
0.16% Technology SPDR, XLK
0.16% Value LargeCap Russell 3000, IWW
0.15% Consumer Discretionary SPDR, XLY
0.15% Value S&P 500 B, IVE
0.15% Dividend Achievers PS, PFM
0.13% Ultra QQQ Double, QLD
0.13% Dividend Appreciation Vipers, VIG
0.13% LargeCap VIPERs, VV
0.12% Insurance, PIC
0.12% Belgium Index, EWK
0.12% LargeCap Blend Socially Responsible iS, KLD
0.12% Consumer Non-Cyclical, IYK
0.11% Value LargeCap NYSE 100 iS, NY
0.10% Short 200% S&P 500 PS, SDS
0.09% Telecom H, TTH
0.08% Bond, 1-3 Year Treasury, SHY
0.07% Telecom Services VIPERs, VOX
0.07% Value SmallCap S&P 600 B, IJS
0.06% Value SmallCap VIPERS, VBR
0.05% Value LargeCap Fundamental RAFI 1000, PRF
0.04% Semiconductor SPDR, XSD
0.04% Value 40 Large Low P/E FT DB, FDV
0.03% Value LargeCap iS M, JKF
0.00% LargeCap Blend S&P=Weight R, RSP
0.00% Value SmallCap Dynamic PS, PWY
-0.02% MidCap S&P 400 SPDRs, MDY
-0.04% Real Estate US DJ, IYR
-0.06% Food & Beverage, PBJ
-0.06% Italy Index, EWI
-0.07% Value SmallCap Russell 2000, IWN
-0.11% Microcap Russell, IWC
-0.12% Ultra Dow30 Double, DDM
-0.12% Value MidCap S&P 400, RFV
-0.12% DIAMONDS (DJIA), DIA
-0.14% South Korea Index, EWY
-0.16% Short 100% S&P 500, SH
-0.16% LargeCap Rydex Rus Top 50, XLG
-0.18% Consumer Cyclical DJ, IYC
-0.19% Value MidCap iS M, JKI
-0.19% REIT Wilshire, RWR
-0.19% Consumer D. VIPERs, VCR
-0.20% Blend Total Market VIPERs, VTI
-0.21% Value VIPERs, VTV
-0.22% Value Small Cap DJ, DSV
-0.24% Austria Index, EWO
-0.26% Internet Infrastructure H, IIH
-0.26% S&P 500 SPDRs LargeCap Blend, SPY
-0.26% Leisure & Entertainment, PEJ
-0.31% Ultra S&P500 Double, SSO
-0.32% Growth S&P 500, RPG
-0.33% Financials Global LargeCap Value, IXG
-0.36% Value SmallCap iS M, JKL
-0.36% Short 100% Dow 30, DOG
-0.37% Taiwan Index, EWT
-0.38% Health Care SPDR, XLV
-0.38% Dividend Leaders, FDL
-0.38% Dividend DJ Select, DVY
-0.42% Malaysia Index, EWM
-0.47% Global Titans, DGT
-0.49% Short 100% MidCap 400, MYY
-0.51% Singapore Index, EWS
-0.52% Telecommunications & Wireless, PTE
-0.60% REIT VIPERs, VNQ
-0.69% Short 200% QQQ PS, QID
-0.71% Hardware & Electronics, PHW
-0.74% Value SmallCap S&P 600, RZV
-0.79% Realty Cohen & Steers, ICF
-0.81% Short 100% QQQ, PSQ
-0.82% Dividend SPDR, SDY
-0.85% Financials VIPERs, VFH
-0.96% Retail H, RTH
-0.98% Financial DJ US, IYF
-0.98% Dividend High Yield Equity PS, PEY
-1.07% Short 200% MidCap 400 PS, MZZ
-1.12% Retail, PMR
-1.13% Financial Services DJ, IYG
-1.14% Bank Regional H, RKH
-1.17% Capital Markets KWB ST, KCE
-1.26% SmallCap PS Zacks, PZJ
-1.34% Value S&P 500, RPV
-1.54% Internet B2B H, BHH
-2.04% Financial SPDR, XLF
-4.49% Homebuilders SPDR, XHB
