By Robert W. Colby, Senior Analyst TraderPlanet.com
Split Market Requires Care with Stock Selection
Financial, Consumer Staples, and Health Care sectors are sharply underperforming. Value beats Growth. Large Cap beats Small Cap. U.S. dollar rising. Japanese yen falling. Foreign stocks lagging. Inflation expectations rising.
Stocks rallied strongly from Wednesday afternoon into Thursday morning. But then prices turned choppy, fluctuating more or less sideways, after 10:40 a.m.
Trading volume declined moderately, on both on the NYSE and NASDAQ, suggesting somewhat less enthusiasm for chasing stocks higher.
The Advance-Decline balance was Bullish on the NYSE, but breadth was less impressive on the NASDAQ, where it has been lagging for years. On 6/12/07, the Cumulative Daily Advance-Decline Lines broke down to the lowest level in two months for the NYSE and to the lowest level in three months for the NASDAQ. Wednesday’s rally did not break these A-D downtrends, which now we should watch closely.
The most sensitive short-term momentum oscillators now show a rising trend, but the pace of improvement is slowing. That is only natural, a normal progression. Not every day can be a sizzler.
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
0.49% , NY , Value LargeCap NYSE 100 iS, NY
6.24% , PGR , PROGRESSIVE OHIO
7.99% , EK , EASTMAN KODAK
1.70% , PHW , Hardware & Electronics, PHW
6.30% , ISIL , INTERSIL CORP
0.93% , PXQ , Networking, PXQ
4.67% , GM , GENERAL MOTORS
0.88% , PHJ , Dividend Growth PS, PHJ
0.64% , PEY , Dividend High Yield Equity PS, PEY
0.97% , PTE , Telecommunications & Wireless, PTE
1.85% , IYE , Energy DJ, IYE
4.15% , ATVI , Activision Inc.
1.54% , IYT , Transportation Av DJ, IYT
1.55% , VWO , Emerging VIPERs, VWO
0.80% , IJK , Growth MidCap 400 B, IJK
0.04% , VDC , Consumer Staples VIPERs, VDC
2.51% , UPS , UNITED PARCEL STK B
1.55% , PXE , Energy Exploration & Prod, PXE
1.70% , IGE , Natural Resource iS GS, IGE
0.32% , ADRA , Asia 50 BLDRS, ADRA
0.61% , IWR , MidCap Russell, IWR
0.84% , VAW , Materials VIPERs, VAW
0.42% , PEJ , Leisure & Entertainment, PEJ
2.00% , IXC , Energy Global, IXC
3.31% , EOG , EOG RESOURCES
1.91% , VDE , Energy VIPERs, VDE
1.51% , LLL , L-3 COMMS HLDGS
1.80% , FDX , FEDEX
1.26% , BLL , BALL
2.27% , EWY , South Korea Index, EWY
1.63% , EWG , Germany Index, EWG
1.94% , MVV , Ultra MidCap400 Double, MVV
1.50% , EWO , Austria Index, EWO
0.72% , JKI , Value MidCap iS M, JKI
1.84% , PGJ , China LargeCap Growth G D H USX PS, PGJ
2.05% , PMTC.O , PARAMETRIC
2.42% , CMCSA , COMCAST HOLDINGS STK A
2.02% , USO , Oil, Crude, U.S. Oil Fund, USO
1.11% , IIH , Internet Infrastructure H, IIH
1.74% , CR , CRANE
1.33% , JCI , JOHNSON CONTROLS
1.55% , TUP , TUPPERWARE
1.06% , IAH , Internet Architecture H, IAH
0.81% , IWV , LargeCap Blend Russell 3000, IWV
0.39% , PFM , Dividend Achievers PS, PFM
1.79% , OXY , OCCIDENTAL
1.76% , ORCL , ORACLE
1.03% , GR , GOODRICH CORP
1.11% , EWC , Canada Index, EWC
0.84% , TTH , Telecom H, TTH
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-2.10% , DJ , DOW JONES
-3.38% , GS , GOLDMAN SACHS
-2.19% , AMCC , APPLD MICRO CIRC
-0.58% , IXJ , Healthcare Global, IXJ
-1.89% , MZZ , Short 200% MidCap 400 PS, MZZ
-2.12% , NYT , NY TIMES STK A
-2.70% , SYMC , SYMANTEC
-3.72% , ADSK , AUTODESK
-2.01% , TRB , TRIBUNE
-0.72% , SIRI , Sirius Satellite
-1.69% , FRE , FREDDIE MAC
-0.42% , EWM , Malaysia Index, EWM
-1.38% , NWL , NEWELL RUBBER
-1.19% , THC , TENET HEALTHCARE
-0.80% , TEVA , Teva Pharmaceutical Industries Limited
-0.76% , TYC , TYCO INTL
-0.75% , AM , AMER GREETINGS STK A
-0.44% , AN , AUTONATION
-1.33% , RYAAY , Ryanair Holdings plc
-1.57% , WYNN , Wynn Resorts L
-1.19% , LNCR , Lincare Holdings Inc
-0.67% , MTB , M&T BANK
-0.78% , XRX , XEROX
-0.34% , ADBE , ADOBE SYS
-0.65% , R , RYDER SYSTEM
-0.37% , MKC , MCCORMICK
-0.33% , OMX , OFFICEMAX INC., OMX
-0.26% , CHKP , Check Point Software Technologies Ltd
-1.65% , AET , AETNA
-0.30% , BEAS , BEA Systems Inc
-0.26% , CEPH , Cephalon Inc
-0.82% , NCC , NATIONAL CITY
-0.88% , HLT , HILTON HOTELS
-0.12% , CIEN.O , CIENA
-1.20% , JNY , JONES APPAREL
-1.29% , AMD , ADV MICRO DEV
-0.93% , BDK , BLACK & DECKER
-0.21% , ZION , ZIONS
-0.97% , MNST , MONSTER WORLDWID
-0.23% , ADM , ARCHER DANIELS
-0.31% , GNW , GENWORTH FINANCIAL (NYSE:GNW)
-0.97% , MYL , MYLAN LABS
-0.06% , IWS , Value MidCap Russell, IWS
-0.24% , RSH , RADIOSHACK
-0.32% , TIF , TIFFANY
-0.33% , WWY , WM WRIGLEY JR
-0.61% , USB , US BANCORP
-0.51% , DTE , DTE ENERGY
-0.35% , BBY , BEST BUY
-0.37% , CVS , CVS
Sectors: among the nine major U.S. sectors, eight rose and Financials fell.
Energy (XLE) outperformed again, and XLE’s major trend is Bullish. XLE has been relatively strong compared to the S&P since 3/12/03. Overweight.
Materials (XLB) outperformed again, and XLB’s major trend is Bullish. XLB has been relatively strong compared to the S&P since 9/27/00. Overweight for the long term.
Industrial (XLI) slightly underperformed, but XLI’s major trend is Bullish. XLI has been relatively strong compared to the S&P since 8/9/06. Overweight.
Technology (XLK) slightly outperformed, but XLK’s major trend appears uncertain. XLK has been relatively strong compared to the S&P most of the time since 4/20/07, but XLK has been relatively weak compared to the S&P since 3/10/00. Marketweight until XLK makes up its mind.
Financial (XLF) sharply underperformed, confirming XLF’s major trend as Bearish. XLF has been relatively weak compared to the S&P since 3/23/04. Underweight.
Consumer Staples (XLP) sharply underperformed again, and XLP’s major trend is Bearish. XLP has been relatively weak compared to the S&P since 10/9/02. Underweight.
Utilities (XLU) slightly underperformed, and XLU’s major trend is Bearish. XLU has been relatively weak compared to the S&P since 9/20/01. Underweight.
Health Care (XLV) sharply underperformed again, and XLV’s major trend is Bearish. XLV has been relatively weak compared to the S&P since 10/9/02. Underweight.
Consumer Discretionary (XLY) slightly outperformed, but XLY’s major trend is Bearish. XLY has been relatively weak compared to the S&P since 1/5/05. Underweight.
Foreign Stocks outperformed slightly but have been underperforming since 4/12/07. The EAFE (international developed country stock markets, ex the U.S. and Canada) has been underperforming the S&P 500. This relative decline appears to be developing into a serious correction.
NASDAQ outperformed slightly, but NASDAQ’s major trend is Bearish. The NASDAQ Composite has been relatively weak compared to the S&P since 3/10/00. Underweight.
Growth underperformend Value again. The trend of the ratio of Growth stocks relative to Value stocks has been choppy and sideways this year, 2007. The major trend of Growth/Value has been mostly Bearish for seven years.
Small Caps outperformed slightly but still have Bearish minor and major relative strength trends. The ratio of Small Cap stocks relative to Large Caps (Russell 2000/Russell 1000) has fallen most days since 6/4/07. From a longer-term perspective, the ratio has been heading down since 4/19/06, so the major trend is Bearish for Small Caps relative to Large Caps.
Semiconductors have outperformed in June but appear uncertain longer term. The Semiconductor HOLDERS (SMH) have been underperforming the S&P 500 for more than seven years.
Crude Oil rose to new six-week highs on high volume. But from a longer perspective, USO has been chopping up and down in a trading range since February, and it is still stuck in that range. Previous lows at 47.30-47.39 appear to be offering technical support. Resistance appears in the 51-52 zone. The USO cyclical trend has been Bearish since USO peaked at 73.29 on 7/13/06. The U.S. OIL FUND ETF (AMEX: USO) is a good indicator for the market price of crude oil futures.
Energy Stocks rose more than SPY but less than USO. Generally, since 3/2/07, the stocks of the oil companies have been much stronger than oil as a commodity, not every day but most of the time, and that still looks like an important continuing trend. XLE is the Energy Select Sector SPDR ETF.
Gold rose in price but underperformed the S&P 500 again. On 6/8/07, GLD price broke below April-May lows, confirming again an ongoing and significant downside correction. StreetTRACKS Gold Trust ETF (NYSE: GLD), which reflects the market price of gold futures, topped out at 70.2 on 5/12/06, and so has been relatively week for 13 months.
Silver underperformed Gold slightly for the day and has been mostly underperforming for the year 2007. Most recently, iShares Silver Trust (AMEX: SLV) have been in a falling trend relative to GLD since 6/5/07. On an absolute price basis, the larger silver trend looks like a trading range since the top on 5/11/06.
Gold Mines outperformed GLD for the past week but are still underperforming longer term. The Gold Miners Index (XAU) has underperformed GLD since 5/31/1996, with no clear end in sight to that relatively Bearish trend.
Inflation expectations are in a rising trend. The ratio of the price of bond TIPS to 10-year U.S. Treasury Notes rose to another new nine-month high on 6/14/07. This ratio has been rising since 1/16/07, thereby indicating a trend toward rising inflation expectations.
Bonds eased lower within their steep downtrend. TLT hit a new three-year price low on 6/12/07, the lowest since June, 2004. That indicates a very serious price downtrend and yield uptrend. The main trend is clearly Bearish for iShares Lehman 20+ Year U.S. Treasury Bond ETF (AMEX: TLT).
U.S. dollar rose to another new two-month closing price high, again confirming its short-term uptrend. The two-month trend is rising, but the long-term, six-year trend still points down. The dollar has been falling most of the time since its peak at 121.29 on 7/5/2001.
Japanese Yen fell again to its lowest level in more than four years, confirming a Bearish trend. The yen has been weak since its peak at 12,625 on 4/19/1995.
Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:
2.31% Oil Services
2.27% South Korea
1.77% Natural Gas
1.48% Dow Transports
1.35% Gold Mining
1.19% Commodity Related
0.80% Dow Composite
0.80% Computer Tech
0.79% AMEX Composite
0.75% S&P Mid Caps
0.74% S&P Small Caps
0.71% Consumer Discretionary
0.66% Nasdaq Composite
0.64% NYSE Composite
0.58% Value Line
0.56% Nasdaq 100
0.55% Russell 2000
0.55% United Kingdom
0.54% S&P 100
0.54% Hong Kong
0.53% Dow Industrial
0.50% Russell 3000
0.49% Russell 1000
0.49% Wilshire 5000
0.48% S&P 500
0.42% Dow Utilities
0.28% Health Care
0.25% Health Care Products
0.19% Disk Drives
0.17% Broker Dealers
0.15% Consumer Staples
0.11% Euro Index
0.08% Health Care
0.07% US Dollar Index
-0.03% Canadian Dollar
-0.11% British Pound
-0.11% Swiss Franc
-0.17% 30Y T-Bond
-0.42% Japanese Yen
-0.48% Australian Dollar