Did the 12-Day Rally Price In New QE Already?

Highlights based on trading on Tuesday, June 19, 2012:

Tuesday was a big news day. Eurozone members of the Group of 20 leading economies reportedly agreed to drive down borrowing costs, and the media was full of hope for Fed easing. It seemed almost as if all the world’s problems could be solved if only the monetary authorities would fire up their printing presses and just pump out more and more Quantitative Easing. But did the12-day rally price in new QE already? And what will stocks do if there is no new QE?

The S&P 500 (SPX: 1,357.98) rose 13.20 points or 0.98% on Tuesday. SPX crossed above its 50-day SMA (simple moving average), thereby turning systematically bullish. (Note that whipsaws are common.)

NYSE volume rose 17%, suggesting somewhat greater demand for stocks. Volume patterns generally have been bearish for months, however, with a tendency toward lower volume on rallies and higher volume on declines, indicating the dominance of selling pressure over buying pressure.

Short term, over the past 12 trading days, stock price indexes have recovered a Fibonacci 61.8% of their losses from April highs to June lows. That is a relatively large retracement for a counter-trend minor correction.

In Dow Theory, Minor Ripple price fluctuations typically last only one day to three weeks. The Minor Ripple fluctuation is ignored as insignificant noise by the Dow Theory.

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Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.
Hedge funds lost 5%, according to COO Connect.
Hedge funds suffered their second-worst year on record in 2011, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data. Some of the world’s largest and best-known hedge funds suffered huge losses, down 20% to 50%.

But not all money managers were down in 2011; see:
Robert W. Colby Asset Management, Inc. (click here).

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The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) rose above its 50-day SMA on 6/19/12, thereby turning systematically neutral. IWM/SPY remains below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA since 4/20/12. Longer term, IWM/SPY has been relatively weak for more than a year, since 4/5/11.
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Sentiment for Contrary Thinking

VIX Fear Index fell steeply to 17.36 intraday on 6/19/12, down from an intraday peak of 27.73 on 6/4/12. This suggests a rapid shift from concern toward bullish complacency. 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.

The S&P 500 Composite Potential Resistance
1576.09, high of 10/11/2007
1552.76, high of 10/31/2007
1523.57, high of 12/11/2007
1498.85, high of 12/26/2007
1440.24, high of 5/19/2008
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1389.07, Fibonacci 78.6% of April-June 2012 range
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1362.93, Fibonacci 61.8% of April-June 2012 range

The S&P 500 Composite Potential Support
1346.92, 50-day SMA
1344.56, Fibonacci 50% of April-June 2012 range
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1303.47, Fibonacci 23.6% of April-June 2012 range
1306.62, low of 6/12/2012
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
1293.22, 200-day SMA
1266.74, low of 6/4/2012
1265.26, low of 1/5/2012
1262.30, low of 12/27/2011
1257.58, Fibonacci 61.8% of 2011 range
1248.58, Fibonacci 50.0% of 2011-12 range
1244.80, low of 12/7/2011
1239.73, low of 12/1/2011
1238.81, Fibonacci 78.6% of 1,576.09 high
1234.81, low of 11/3/2011
1231.04, high of 12/16/2011
1228.74, Fibonacci 61.8% of 2007-2009 range
1226.64, low of 11/9/2011
1224.57, high of 12/19/2011
1215.20, low of 12/16/2011
1207.56, Fibonacci 61.8% of 2011-12 range
1202.37, low of 12/19/2011
1158.66, low of 11/25/2011
1121.44, Fibonacci 50% of 2007-2009 range
1074.77, low of 10/4/2011
1149.16, Fibonacci 78.6% R of 2011-12 range
1014.14, Fibonacci 38.2% of 2007-2009 range
1010.91, low of 7/1/2010
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
881.38, Fibonacci 23.6% of 2007-2009 range
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
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Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price has had a normal, minor correction and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/24/11. Support 124.39, 122.06, 120.60, 117.44, 115.69, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance. 127.34 and 130.38.

Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price has had a normal, minor correction and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/21/11. Support 107.51, 107.43, 105.85, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance 108.53 and 109.37.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its lows of the previous 7 months on 6/1/12. Systematically, JNK/LQD remains bearish: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA fell below the 200-day SMA on 6/1/12.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below its lows of the previous 5 months on 6/1/12. Systematically, TIP/IEF remains neutral: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA remains above the 200-day SMA–although that 50-200 SMA spread is narrowing and could cross in weeks ahead, thereby turning bearish.
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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
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
2.07% , EWK , Belgium Index, EWK
2.32% , ININ , Interactive Intelligence ININ
6.89% , LPX , LOUISIANA PAC
6.73% , NVDA , NVIDIA
1.23% , JKL , Value SmallCap iS M, JKL
2.69% , EWO , Austria Index, EWO
1.90% , EWU , United Kingdom Index, EWU
2.57% , ADRU , Europe 100 BLDRS, ADRU
2.23% , RZV , Value SmallCap S&P 600, RZV
6.70% , OMX , OFFICEMAX INC., OMX
1.45% , NYC , LargeCap Blend NYSE Composite iS, NYC
9.45% , X , US STEEL CORP
5.01% , ZEUS , Olympic Steel, ZEUS
5.38% , SHLD , SEARS HOLDINGS
1.46% , IOO , Global 100, IOO
1.48% , IYG , Financial Services DJ, IYG
1.26% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
5.69% , VLO , VALERO ENERGY
4.29% , PTEN , Patterson-UTI Energy Inc
3.65% , EWZ , Brazil Index, EWZ
1.86% , IWN , Value SmallCap Russell 2000, IWN
2.42% , PXE , Energy Exploration & Prod, PXE
1.77% , PWC , LargeCap Blend Dynamic PS, PWC
0.37% , OEF , LargeCap Blend S&P 100, OEF
5.74% , ODP , OFFICE DEPOT
2.53% , VGK , European VIPERs, VGK
4.21% , GWW , WW GRAINGER
1.49% , ADRA , Asia 50 BLDRS, ADRA
2.25% , EWD , Sweden Index, EWD
1.59% , PBE , Biotech & Genome, PBE
1.63% , AM , AMER GREETINGS STK A
4.61% , HMA , HEALTH MGMT STK A
4.51% , BAC , BANK OF AMERICA

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-5.85% , WAG , WALGREEN
-8.55% , JCP , JC PENNEY
-3.64% , ADM , ARCHER DANIELS
-1.93% , DELL , DELL
-2.02% , AMD , ADV MICRO DEV
-2.28% , MZZ , Short 200% MidCap 400 PS, MZZ
-0.90% , DYN , DYNEGY
-0.58% , CNP , CENTERPNT ENERGY
-0.57% , TLH , Bond 10-20 Year US Treas, TLH
-1.07% , NI , NISOURCE
-0.48% , PNW , PINNACLE WEST
-0.79% , IDU , Utilities DJ, IDU
-1.99% , SDS , Short 200% S&P 500 PS, SDS
-0.65% , NWL , NEWELL RUBBER
-0.85% , CLX , CLOROX
-1.22% , SO , SOUTHERN
-1.00% , SH , Short 100% S&P 500, SH
-0.34% , IEF , Bond, 10 Year Treasury, IEF
-1.09% , ED , CON ED
-0.69% , DOG , Short 100% Dow 30, DOG
-1.11% , PSQ , Short 100% QQQ, PSQ
-0.50% , CMS , CMS ENERGY
-0.60% , IGT , INTL GAME TECH
-1.31% , TLT , Bond, 20+ Years Treasury, TLT
-0.09% , XLP , Consumer Staples SPDR, XLP
-0.33% , SHW , SHERWIN WILLIAMS
-0.59% , RFMD , RF Micro Devices Inc
-0.71% , MCD , MCDONALDS
-0.26% , HRB , H&R BLOCK
-0.09% , LQD , Bond, Corp, LQD
-0.33% , LO , Lorillard, Inc. LO
-0.41% , FDO , FAMILY DLR STRS
-0.42% , PEP , PEPSICO
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.82% Italy Index, EWI
3.65% Brazil Index, EWZ
3.35% Metals & Mining SPDR, XME
3.29% Spain Index, EWP
2.84% Latin Am 40, ILF
2.69% Germany Index, EWG
2.69% Austria Index, EWO
2.61% Turkey MSCI iS, TUR
2.54% EMU Europe Index, EZU
2.53% European VIPERs, VGK
2.46% Mexico Index, EWW
2.32% Switzerland Index, EWL
2.32% Agriculture DB PS, DBA
2.31% Europe 350 S&P Index, IEV
2.30% France Index, EWQ
2.25% Sweden Index, EWD
2.23% Emerging 50 BLDRS, ADRE
2.22% Netherlands Index, EWN
2.13% Canada Index, EWC
2.07% Belgium Index, EWK
2.05% China LargeCap Growth G D H USX PS, PGJ
2.01% Value EAFE MSCI, EFV
1.95% Basic Materials DJ US, IYM
1.95% Microcap Russell, IWC
1.92% Capital Markets KWB ST, KCE
1.92% Dividend International, PID
1.90% Materials SPDR, XLB
1.90% United Kingdom Index, EWU
1.86% Value SmallCap Russell 2000, IWN
1.86% WilderHill Clean Energy PS, PBW
1.79% Thailand MSCI iS, THD
1.77% Growth SmallCap R 2000, IWO
1.75% Energy Global, IXC
1.73% SmallCap Russell 2000, IWM
1.73% Australia Index, EWA
1.70% Water Resources, PHO
1.68% Financial SPDR, XLF
1.67% Growth EAFE MSCI, EFG
1.66% Energy VIPERs, VDE
1.66% EAFE Index, EFA
1.66% Global ex US ACWI iS, ACWX
1.63% South Korea Index, EWY
1.61% Growth SmallCap VIPERs, VBK
1.61% Emerging Markets, EEM
1.61% Financials VIPERs, VFH
1.60% Small Cap VIPERs, VB
1.54% Emerging VIPERs, VWO
1.53% India PS, PIN
1.50% Value SmallCap VIPERS, VBR
1.48% Financial Services DJ, IYG
1.47% Pacific ex-Japan, EPP
1.46% Global 100, IOO
1.46% Indonesia MV, IDX
1.45% Energy SPDR, XLE
1.35% Value SmallCap S&P 600 B, IJS
1.34% Industrial SPDR, XLI
1.34% SmallCap S&P 600, IJR
1.33% South Africa Index, EZA
1.30% Oil Fund PowerShares, DBO
1.29% Small Cap EAFE MSCI iS, SCZ
1.29% Growth BARRA Small Cap 600, IJT
1.28% Malaysia Index, EWM
1.26% Semiconductor SPDR, XSD
1.25% Growth MidCap Russell, IWP
1.21% LargeCap Blend S&P=Weight R, RSP
1.20% Frontier Markets Guggenheim , FRN
1.17% Biotech SPDR, XBI
1.15% Oil, Crude, U.S. Oil Fund, USO
1.12% Value MidCap Russell, IWS
1.12% MidCap Russell, IWR
1.12% Taiwan Index, EWT
1.12% Russia MV, RSX
1.11% Growth 1000 Russell, IWF
1.11% LargeCap Blend Russell 3000, IWV
1.10% Energy & Nat Res iS GS, IGE
1.10% India Earnings WTree, EPI
1.08% Semiconductor iS IGW, SOXX
1.07% Singapore Index, EWS
1.07% Value VIPERs, VTV
1.07% Homebuilders SPDR, XHB
1.06% Blend Total Market VIPERs, VTI
1.04% MidCap S&P 400 SPDRs, MDY
1.04% Info Tech VIPERs, VGT
1.04% QQQ Nasdaq 100 Trust, QQQ
1.04% Financial DJ US, IYF
1.04% Hong Kong Index, EWH
1.03% Pacific VIPERs, VPL
1.02% Growth VIPERs, VUG
1.01% LargeCap VIPERs, VV
0.97% S&P 500 SPDRs LargeCap Blend, SPY
0.95% China 25 iS, FXI
0.95% Energy DJ, IYE
0.94% Value 1000 Russell, IWD
0.93% LargeCap 1000 R, IWB
0.91% Consumer Discretionary SPDR, XLY
0.91% Health Care SPDR, XLV
0.88% Bond, High-Yield Junk, JNK
0.86% Transportation Av DJ, IYT
0.84% Commodity Tracking, DBC
0.84% Value MidCap S&P 400 B, IJJ
0.83% Technology DJ US, IYW
0.77% Technology SPDR, XLK
0.76% Value LargeCap Dynamic PS, PWV
0.75% MidCap S&P 400 iS, IJH
0.74% Growth MidCap 400 B, IJK
0.73% DIAMONDS (DJIA), DIA
0.71% Bond, High-Yield Corporate, HYG
0.70% Dividend Appreciation Vipers, VIG
0.64% Dividend High Yield Equity PS, PEY
0.58% Dividend SPDR, SDY
0.56% Financial Preferred, PGF
0.56% S&P 500 iS LargeCap Blend, IVV
0.54% Value S&P 500 B, IVE
0.51% Growth S&P 500/BARRA, IVW
0.50% Japan Index, EWJ
0.48% Bond Ex-US Treas, BWX
0.45% Chile MSCI iS, ECH
0.44% REIT Wilshire, RWR
0.40% REIT VIPERs, VNQ
0.37% LargeCap Blend S&P 100, OEF
0.33% Bond EmrgMkt JPM iS, EMB
0.25% Realty Cohen & Steers, ICF
0.23% Preferred Stock iS, PFF
0.01% Bond Treasury Short-Term iS, SHV
0.00% Bond Muni ATM-Free S&P iS, MUB
-0.01% Bond, 1-3 Year Treasury, SHY
-0.06% Utilities VIPERs, VPU
-0.08% Networking, IGN
-0.09% Consumer Staples SPDR, XLP
-0.09% Bond, Corp, LQD
-0.11% Bond, TIPS, TIP
-0.12% Bond, Aggregate, AGG
-0.13% Telecom DJ US, IYZ
-0.22% Utilities SPDR, XLU
-0.34% Bond, 10 Year Treasury, IEF
-0.41% Real Estate US DJ, IYR
-0.43% Dividend DJ Select, DVY
-0.49% Gold Shares S.T., GLD
-0.83% Silver Trust iS, SLV
-1.00% Bear, Short S&P 500, SH
-1.31% Bond, 20+ Years Treasury, TLT