Daily Stock Market Commentary – 9/26/2007

On Tuesday, major stock price indices opened lower but sprang back to close mixed. Such resilience indicates underlying demand for stocks.

Minor, short-term profit taking, such as occurred on Monday and Tuesday, is not unusual. Short-term downside momentum slowed on Tuesday. An early upturn would come as a no surprise.

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

6.82% , DISH , EchoStar Communications Corporation
1.29% , IAH , Internet Architecture H, IAH
2.20% , CAR , Avis Budget Group, Inc. (CAR)
3.16% , MOT , MOTOROLA
0.71% , IGM , Technology GS, IGM
2.49% , WAG , WALGREEN
1.18% , HHH , Internet H, HHH
2.86% , CHKP , Check Point Software Technologies Ltd
2.22% , PPA , Aerospace & Defense, PPA
1.41% , EWA , Australia Index, EWA
3.42% , RX , IMS HEALTH
1.98% , VRSN , VeriSign Inc
2.12% , CZN , CITIZENS COMMS STK B
1.66% , QLGC , QLOGIC
0.32% , EWC , Canada Index, EWC
2.65% , AM , AMER GREETINGS STK A
0.98% , BDH , Broadband H, BDH
2.50% , PMTC.O , PARAMETRIC
2.39% , GILD , Gilead Sciences Inc
2.06% , AFL , AFLAC
1.61% , NIHD , NII Holdings, Inc.
0.50% , EWG , Germany Index, EWG
0.85% , CTX , CENTEX
2.65% , ATVI , Activision Inc.
2.05% , CPB , CAMPBELL SOUP
2.56% , HIG , HARTFORD FINL
0.51% , VIS , Industrials VIPERs, VIS
0.76% , IGN , Networking, IGN
3.95% , CMI , CUMMINS
1.54% , IGV , Software, IGV
0.42% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
1.13% , JNS , JANUS CAPITAL
2.48% , CSC , COMPUTER SCIENCE
0.55% , PWT , Growth SmallCap Dynamic PS, PWT
0.96% , PSJ , Software, PSJ
1.31% , IACI , IAC/INTERACTIVCORP
3.15% , APD , AIR PRODS & CHEM
1.45% , BCR , C R BARD
2.55% , LMT , LOCKHEED MARTIN
3.13% , GD , GENERAL DYNAMICS
2.15% , MON , MONSANTO
0.83% , HNZ , HJ HEINZ
3.03% , YHOO , YAHOO
0.40% , XLI , Industrial SPDR, XLI
0.74% , TROW , T ROWE PRICE GP
1.47% , PMCS , PMC SIERRA
2.16% , LPX , LOUISIANA PAC
1.55% , EXPD , Expeditors International WA
1.48% , CL , COLGATE
0.25% , JKK , Growth SmallCap iS M, JKK

Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name

-6.68% , LOW , LOWES
-4.90% , WHR , WHIRLPOOL
-4.99% , SVU , SUPERVALU
-3.22% , SLM , SLM CORP
-3.97% , LEN , Lennar Corp. (LEN)
-2.21% , ADRD , Developed 100 BLDRS, ADRD
-4.59% , TGT , TARGET
-1.00% , PMR , Retail, PMR
-3.54% , SHLD , SEARS HOLDINGS
-2.66% , MXIM , MAXIM INTEGRATED
-3.27% , MAR , MARRIOTT INTL STK A
-2.35% , LAMR , Lamar Advertising Company
-1.91% , MYY , Short 100% MidCap 400, MYY
-1.35% , DOG , Short 100% Dow 30, DOG
-2.42% , BEN , FRANKLIN RSC
-3.66% , JCP , JC PENNEY
-1.47% , MCD , MCDONALDS
-4.48% , JWN , NORDSTROM
-2.40% , CTB , COOPER TIRE
-1.32% , MWV , MEADWESTVACO
-1.30% , XLY , Consumer Discretionary SPDR, XLY
-2.74% , PCAR , PACCAR
-4.24% , BBBY , BED BATH BEYOND
-2.53% , KBH , KB HOME
-3.56% , SPG , SIMON PROP GRP
-2.06% , DHI , D.R. HORTON, DHI
-2.09% , FRX , FOREST LABS STK A
-1.32% , LNCR , Lincare Holdings Inc
-1.58% , RTH , Retail H, RTH
-1.07% , VDE , Energy VIPERs, VDE
-2.46% , DE , DEERE & CO
-1.18% , IYE , Energy DJ, IYE
-0.55% , IJS , Value SmallCap S&P 600 B, IJS
-0.86% , EWD , Sweden Index, EWD
-2.19% , SWK , STANLEY WORKS
-2.11% , FDO , FAMILY DLR STRS
-0.96% , MIL , MILLIPORE
-2.36% , HD , HOME DEPOT
-1.21% , IWD , Value 1000 Russell, IWD
-3.81% , SPLS , STAPLES
-2.23% , PPL , PPL
-0.84% , IYC , Consumer Cyclical DJ, IYC
-2.34% , YUM , YUM BRANDS
-3.05% , PHM , PULTE HOMES
-3.21% , HPC , HERCULES
-2.34% , VFC , VF
-1.16% , DVY , Dividend DJ Select, DVY
-2.62% , CVX , CHEVRONTEXACO
-2.48% , VNQ , REIT VIPERs, VNQ
-0.85% , TNB , THOMAS & BETTS

Sectors: among the 9 major U.S. sectors, 3 rose and 6 fell.
Major Sectors Ranked for the Day
% Price Change, Sector

1.01% Technology
0.40% Industrial
0.12% Utilities
-0.14% Consumer Staples
-0.21% Financial
-0.34% Materials
-0.34% Health Care
-1.30% Consumer Discretionary
-1.64% Energy

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

Energy (XLE) Bullish. Short-term price corrections are normal. Longer term, both price and relative strength made new all-time highs on 9/21/07. XLE has been strong compared to the S&P since 3/12/03. Overweight.

Technology (XLK) Bullish. Price made a new 9-week high on 9/25/07 and relative strength made a new 2-year high. Long term, XLK has been relatively strong compared to the S&P since its low on 7/24/06. Overweight.

Materials (XLB) Bullish. The relative strength trend strongly outperformed since the price shakeout low on 8/16/07, and the long term trend has been Bullish since 9/27/2000.

Industrial (XLI) Bullish. Relative strength made a new 5-week high on 9/21/07. Price made a new 8-week high on 9/19/07. Longer term, XLI has been relatively strong compared to the S&P since 8/9/06. Overweight.

Utilities (XLU) Market Weight. Price made a new 8-week high on 9/19/07, but relative strength has lagged.

Consumer Staples (XLP) Bearish. This defensive sector’s relative strength made a new 7-week low on 9/19/07. Underweight.

Health Care (XLV) Bearish. Relative strength turned down on 4/19/07 and made a new 5-year low on 7/19/07, thereby confirming a major downtrend. Underweight.

Consumer Discretionary (XLY) Bearish. Price hit a new 10-month low on 8/16/07. Relative strength made another new 6-year low on 9/25/07. Underweight.

Financial (XLF) Bearish. Relative strength broke down to a new 7 week low, and the long-term trend of relative strength has been down since 2/20/07. Underweight.

Foreign stocks outperformed 6 days in a row, as the U.S. dollar crumbled. The EFA (the EAFE, international developed country stock markets, ex the U.S. and Canada) has substantially outperformed long term, since the Bull market started in 2002, and the secular trend is probably still Bullish.

NASDAQ relative strength turned strongly upward over the past 4 trading days. Longer term, NASDAQ has outperformed for more than a year, since 8/8/06.

NASDAQ 100 index price made a new 6-year high.

Growth stocks sharply outperformed Value stocks since 9/19/07. Also, Growth has outperformed Value since 8/8/06. The main trend is Bullish.

Small Caps substantially underperformed Large Caps since 4/19/06. The main trend is Bearish.

Cruse Oil Futuresfell steeply on a gap down. Some of the risk premium came out, supposedly because a storm blew over harmlessly in the Gulf of Mexico. It still appears to be a minor correction, following the new high on 9/20/07. The U.S. OIL FUND ETF (AMEX: USO) price also moved lower. Note that the USO fund is not a pure play on Crude Oil. The longer-term trends for both remain Bullish.

The Energy stock sector underperformed the USO and the SPY for one day. Not significant in the big picture. Longer 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.

Goldconsolidated over the past 3 days. Previously, Gold broke out to a new 28-year high on 9/20/07. The Gold Trust ETF (NYSE: GLD) confirmed by closing above its top on 5/12/06 at 72.26. These major trends remain Bullish.

Silver rose strongly since 9/13/07 but still has underperformed Gold since 12/7/06. The main trend remains relatively Bearish for iShares Silver Trust (AMEX: SLV).

The Gold Miners ETF (GDX) underperformed Gold since 9/20/07. Previously, GDX outperformed Gold from 8/16/07 to 9/20/07. Before 8/16/07, Gold Mining stocks substantially underperformed both Gold and the S&P 500 for more than 20 years. I usually give the longer term trend the benefit of the doubt in such cases.

Inflation expectations indicate a downside correction since 9/20/07.

U.S. Treasury Bond prices reversed to the downside. Yesterday, I noted that the previous 2-day recovery attempt “lacked momentum and volume and, therefore, is not impressive.” Long-term, Bonds recently recovered about a Fibonacci 61.8% ratio of their losses from the price peak at 97.66 on 6/16/03 to the low at 82.20 on 6/12/07, based on the iShares Lehman 20+ Year U.S. Treasury Bond ETF (AMEX: TLT). That would be normal for an oversold bounce in a Bearish trend. Bonds remain reactive to news about the credit crisis: the worse the credit crisis, the higher the Bond prices; the better the credit crisis, the lower the Bond prices.

U.S. dollar broke down to another new 34-year low on 9/25/07. All trends remain clearly Bearish.

Daily Rankings of Major Global Markets, Ranked from Strongest to Weakest of the Day:

1.41% Australia
1.33% DOT
1.23% Airlines
1.13% Computer Tech
1.09% Hardware
1.03% Internet
1.01% Technology
0.95% Nasdaq 100
0.82% Dow Transports
0.59% Brazil
0.59% Australian Dollar
0.58% Nasdaq Composite
0.58% Japan
0.57% Swiss Franc
0.50% Germany
0.41% Euro Index
0.40% Industrial
0.39% Semiconductors
0.38% Chemicals
0.35% Network
0.34% Japanese Yen
0.32% Canada
0.29% Dow Composite
0.16% France
0.14% Dow Industrial
0.12% Utilities
0.08% Switzerland
0.06% Italy
0.05% S&P 100
0.03% Health Care Products
0.01% Disk Drives
0.01% Canadian Dollar
0.00% Malaysia
-0.03% S&P 500
-0.03% Russell 1000
-0.04% AMEX Composite
-0.05% Russell 3000
-0.05% Hong Kong
-0.06% Wilshire 5000
-0.06% 30Y T-Bond
-0.07% Singapore
-0.08% Health Care
-0.10% Dow Utilities
-0.11% S&P Mid Caps
-0.11% Drugs
-0.13% NYSE Composite
-0.13% Netherlands
-0.13% British Pound
-0.14% Consumer Staples
-0.21% Financial
-0.22% Insurance
-0.27% US Dollar Index
-0.30% Paper
-0.34% Materials
-0.34% Health Care
-0.35% Russell 2000
-0.35% Value Line
-0.37% S&P Small Caps
-0.39% Banks
-0.39% Biotechs
-0.50% Natural Gas
-0.55% Taiwan
-0.62% Spain
-0.67% Mexico
-0.69% Commodity Related
-0.71% United Kingdom
-0.75% Oil Services
-0.86% Sweden
-1.02% Broker Dealers
-1.06% Hospitals
-1.06% South Korea
-1.30% Consumer Discretionary
-1.36% Belgium
-1.39% Austria
-1.46% Oil
-1.58% Gold Mining
-1.64% Energy
-1.64% REITs
-2.66% Retailers