By Robert W. Colby, Senior Analyst TraderPlanet.com
The general stock market has been resilient in the face of bad news.
Energy, Industrial, and Technology sectors are Bullish: both price and relative strength made new highs.
Materials are Bullish: price made a new high.
Crude Oil rose to another new 10-month high.
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
3.08% , VIA , VIACOM INC. (New)
2.58% , SWH , Software H, SWH
1.04% , IIH , Internet Infrastructure H, IIH
12.46% , JNPR , Juniper Networks Inc
5.33% , CTXS , CITRIX SYSTEMS
1.22% , XSD , Semiconductor SPDR, XSD
5.04% , BRCM , BROADCOM STK A
8.92% , SHW , SHERWIN WILLIAMS
1.16% , PWJ , Growth Mid Cap Dynamic PS, PWJ
4.36% , EXC , EXELON CORP
1.72% , TBH , Telebras H, TBH
3.38% , AGN , ALLERGAN
5.87% , TXT , TEXTRON
2.25% , IGN , Networking, IGN
2.81% , IAH , Internet Architecture H, IAH
1.68% , UTH , Utilities H, UTH
3.74% , CIEN.O , CIENA
4.57% , SBUX , STARBUCKS
2.86% , VIA.B , VIACOM STK B
4.30% , IBM , IBM
4.90% , FCX , FREEPRT MCMORAN STK B
1.05% , EFG , Growth EAFE MSCI, EFG
1.24% , IXN , Technology Global, IXN
1.59% , PXJ , Oil & Gas, PXJ
2.47% , MRVL , MARVELL TECHNOLOGY
1.69% , IGV , Software, IGV
1.93% , IGT , INTL GAME TECH
0.61% , RPG , Growth S&P 500, RPG
0.59% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
0.77% , RFV , Value MidCap S&P 400, RFV
0.53% , RSP , LargeCap Blend S&P=Weight R, RSP
3.56% , AES , AES
2.58% , NE , NOBLE
2.58% , TLAB , TELLABS
2.67% , HPQ , HEWLETT PACKARD
0.48% , RZV , Value SmallCap S&P 600, RZV
1.91% , MSFT , MICROSOFT
1.01% , PZI , Micro Cap Zachs, PZI
1.35% , AV , AVAYA
0.74% , EWO , Austria Index, EWO
1.56% , PUI , Utilities, PUI
4.09% , CPWR , COMPUWARE
4.33% , LUV , SOUTHWEST AIRLS
1.05% , IYW , Technology DJ US, IYW
0.99% , RRD , RR DONNELLEY SON
2.10% , PXQ , Networking, PXQ
1.10% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
3.92% , ERTS , ELECTRONIC ARTS
2.31% , SNPS , Synopsys Inc
0.73% , JKH , MidCap Growth iS M, JKH
Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name
-13.79% , BHH , Internet B2B H, BHH
-6.03% , RX , IMS HEALTH
-5.19% , BAX , BAXTER INTL
-5.40% , CTAS , CINTAS
-5.51% , VMC , VULCAN MATERIALS
-2.98% , HSY , HERSHEY FOODS
-3.88% , QCOM , QUALCOMM
-0.93% , HHH , Internet H, HHH
-3.94% , AA , ALCOA
-2.91% , HOG , HARLEY DAVIDSON
-3.21% , X , US STEEL CORP
-3.15% , UNH , UNITEDHEALTH GRP
-2.51% , PNC , PNC FINL SVC
-2.39% , ALL , ALLSTATE
-3.21% , VFC , VF
-1.91% , NUE , NUCOR
-0.72% , BDH , Broadband H, BDH
-0.56% , PXN , Nanotech Lux, PXN
-2.29% , CBE , COOPER INDS STK A
-2.09% , SNDK , SanDisk Corporation
-1.91% , GNW , GENWORTH FINANCIAL (NYSE:GNW)
-1.14% , CVS , CVS
-1.62% , EBAY , EBAY
-1.00% , IVGN , Invitrogen Corporation
-1.14% , COF , CAPITAL ONE FNCL
-1.62% , PTV , PACTIV
-0.44% , IYG , Financial Services DJ, IYG
-0.49% , WYE , WYETH
-1.06% , PETM , PETsMART Inc
-1.00% , PEP , PEPSICO
-1.44% , STI , SUNTRUST BANKS
-0.76% , BCR , C R BARD
-0.68% , S , SPRINT NEXTEL
-0.62% , TER , TERADYNE
-1.72% , GM , GENERAL MOTORS
-1.58% , CAH , CARDINAL HEALTH
-0.21% , LQD , Bond, Corp, LQD
-1.60% , ISIL , INTERSIL CORP
-1.74% , HBAN , HUNTINGTON
-1.43% , DHR , DANAHER
-1.00% , LVLT , LEVEL 3 COMMUNICATIONS
-0.11% , IXG , Financials Global LargeCap Value, IXG
-0.22% , HSIC , Henry Schein Inc
-0.81% , TWX , TIME WARNER INC
-0.50% , LSI , LSI LOGIC
-0.30% , DGX , QUEST DIAG
-0.34% , MTG , MGIC INVESTMENT
-0.67% , RKH , Bank Regional H, RKH
-1.08% , FII , FED INVESTORS STK B
-0.17% , GOOG , Google
Sectors: among the 9 major U.S. sectors, 7 rose and 2 fell.
Major Sectors Ranked for the Day
% Price Change, Sector
0.33% Consumer Staples
0.23% Consumer Discretionary
-0.53% Health Care
Looking beyond the daily fluctuation to the major trends:
Materials (XLB) Bullish. Price made a new high on 7/19/07 and relative strength made a new high on 7/18/07. XLB has been relatively strong compared to the S&P since 9/27/00. Overweight.
Industrial (XLI) Bullish. Both price and relative strength made new highs on 7/19/07. XLI has been relatively strong compared to the S&P since 8/9/06. Overweight.
Technology (XLK) Bullish. Price made a new 6-year high close and relative strength made a new 19-month high on 7/19/07. XLK has been relatively Bullish compared to the S&P since its low on 7/24/06.
Financial (XLF) Bearish. XLF made a new 5-year low relative to the S&P 500 on 7/19/07. Underweight.
Consumer Staples (XLP) Bearish. Relative strength made a new 7-year low on 6/19/07. XLP has been relatively weak compared to the S&P since 10/9/02. Underweight.
Utilities (XLU) Bearish. XLU has been relatively weak compared to the S&P since 9/20/01. Underweight.
Health Care (XLV) Bearish. XLV made a new 5-year relative strength low on 7/19/07 and has been relatively weak compared to the S&P since 10/9/02. Underweight.
Consumer Discretionary (XLY) Bearish. XLY made a new 9-month relative strength low on 7/16/07 and has been relatively weak compared to the S&P since 1/5/05. Underweight.
Foreign stocks outperformed, ending a four day correction. EFA made a new absolute price high on 7/12/07 and outperformed strongly since 6/13/07. The EFA’s short-term relative strength trend is still Bullish. Long term, EFA (the EAFE, international developed country stock markets, ex the U.S. and Canada) outperformed the S&P 500 since 3/19/03.
NASDAQ has outperformed since 5/17/07. The short- and intermediate- term trends look Bullish.
Growth beat Value since 5/16/07. Longer term, the major trend of Growth/Value, mostly Bearish for seven years, could be turning.
Large Caps beat Small Caps since 6/27/07. Longer term, Large Caps beat Small Caps since the Small-Cap relative strength peak on 4/19/06.
Crude Oil rose to another new 10-month high. Longer term, the U.S. OIL FUND ETF (AMEX: USO) appears to be in an uptrend since its shakeout low at 42.56 on 1/18/07.
Energy stocks outperformed both the USO and the SPY. Long term, since 3/12/03, the stocks in the Energy Select Sector SPDR ETF (XLE) have significantly outperformed crude oil as a commodity as well as the S&P 500. So, the Relative Strength major trend is Bullish for the energy stocks.
Gold made a new 10-week price high and outperformed the SPY. Short term, StreetTRACKS Gold Trust ETF (NYSE: GLD) is in an uptrend.
Silver rose since new 6-month price low on 6/26/07 but still underperformed GLD since 12/7/06. iShares Silver Trust (AMEX: SLV) broke down to a new 6-month low on 6/26/07. The main trend is questionable.
The Gold Miners Index (XAU) made a new 14-month price high. XAU has outperformed GLD since 6/26/07.
Inflation expectations eased moderately lower since 6/22/07. Still, for the longer term, the ratio of the price of bond TIPS to 10-year U.S. Treasury Notes has been rising since 1/16/07, indicating rising inflation expectations.
Bond prices appear to be consolidating within their Bearish major trends. TLT hit a new 3-year price low on 6/12/07, the lowest since June, 2004. That indicated a very serious major 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 bounced modestly. The dollar has been heading nearly straight down since 6/13/07. Longer term, the dollar has been falling most of the time since its peak at 121.29 on 7/5/2001 and remains very Bearish.
Japanese Yen appears to be consolidating within its Bearish major trend. On 6/15/07, the Yen fell to its lowest level in more than four years. The Yen has been weak since its peak at 12,625 on 4/19/1995.
2.40% Gold Mining
1.91% Oil Services
1.82% Dow Utilities
1.51% Computer Tech
1.44% Natural Gas
1.22% Disk Drives
1.02% South Korea
0.84% S&P Small Caps
0.80% United Kingdom
0.76% Nasdaq Composite
0.75% Dow Composite
0.75% Commodity Related
0.74% Nasdaq 100
0.70% Russell 2000
0.61% Hong Kong
0.59% Dow Industrial
0.57% Value Line
0.48% Russell 3000
0.48% Wilshire 5000
0.46% S&P Mid Caps
0.46% Russell 1000
0.45% NYSE Composite
0.45% S&P 500
0.45% S&P 100
0.33% Consumer Staples
0.31% Dow Transports
0.23% Consumer Discretionary
0.23% Australian Dollar
0.13% Canadian Dollar
0.05% US Dollar Index
-0.01% Health Care Products
-0.01% Euro Index
-0.03% AMEX Composite
-0.14% 30Y T-Bond
-0.23% Japanese Yen
-0.26% British Pound
-0.32% Swiss Franc
-0.40% Health Care
-0.53% Health Care
-0.75% Broker Dealers
To sum up the current position of the U.S. stock market:
Liquidity driven merger and acquisitions news has been helping to keep the old Bull alive. Both U.S. and foreign corporations hold excess cash after several years of rising profits, and so M&A speculation as well as leveraged buyouts and corporate stock buybacks have provided substantial Bullish stimulus to stock prices. In 2007, mergers and acquisitions are running about 60% ahead of 2006’s record pace, driven by rising stock prices and private-equity funds that raised more than $250 billion for takeovers since the start of 2006. Takeovers are on track to surpass 2006’s all-time high of $3.49 trillion, according to data compiled by Bloomberg.
Conservative earnings estimates also have been useful in keeping the old Bull alive. First quarter 2007 corporate earnings reflected a significant growth slowdown. Nevertheless, earnings were ahead of expectations, which had been lowered to very conservative levels in advance of actual reporting. Managements and Wall Street have learned that investors hate disappointments, so they simply don’t give them any–unless absolutely necessary.
Stocks generally are fully valued to over priced by long-term historical standards. Although that alone does not mean that stocks cannot continue to trend higher, nevertheless, it is good to remember that “no tree grows to the sky.” The cyclical nature of stock prices never really changes, although the turning points are not always easy to predict.