Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 3 months on 3/6/13, again confirming a medium-term downtrend. JJC remains systematically neutral, below the 50-day SMA and 200-day SMA. JJC has been consolidating losses between 38.99 and 51.41 since 10/5/11. Longer term, JJC has been mostly bearish since peaking at 61.69 on 2/14/11. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, so price weakness of Copper implies a weak economic outlook.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below its lows of the previous 7 months, again confirming its major bearish trend.
U.S. major stock price indexes gapped higher on the open but the upward push ended within the first half hour on Wednesday. The indexes closed mixed: S&P 500 (SPX: 1,541.46) finished up 0.11%, the Nasdaq Composite Index fell 0.05%, the Dow Jones Industrial Average gained 0.30%, and the Dow Jones Transportation Average slumped 0.42%. Breadth was better: the number of Advances exceeded the number of Declines by more than 2 to 1.
Volume on the NYSE was nearly unchanged from the relatively subdued levels for Monday and Tuesday. Volume has been lower on price rallies and higher on price declines, which is not a good sign, technically.
Under the surface, many daily price momentum oscillators have been diverging bearishly while price indexes rose to new highs. Momentum oscillators have remained below their 2011-2012 highs and below their highs of late January. For example, RSI(14) based on the S&P 500 Index, now at 64.45, peaked at 74.46 on 1/29/13. MACD(12,26,9), now at 10.46, peaked at 17.88 on 1/29/13. Bearishly diverging momentum is a problem because momentum is a leading indicator of price.
The Art of Contrary Thinking has been calling for questioning overwhelming bullish sentiment. Objective investor sentiment data clearly has demonstrated extremely high degrees of optimism and bullish complacency, matching or exceeding extremes at past market price tops. The pendulum of emotion tends to swing too far in one direction, but the market mood always reverts to the mean–eventually. Sentiment extremes are a leading indicator of price.
Our clients’ separately managed accounts made gains in 6 of the past 7 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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Stock Market Indicators
The Dow Theory confirmed a Primary Tide Bull Market on 2/19/13, when both Dow-Jones Industrial and Transportation Averages closed above their closing price highs of the previous 5 years.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY)fell below its lows of the previous 13 months on 2/21/13. QQQ/SPY turned systematically bearish on 11/7/12, when the 50-day SMA fell below the 200-day SMA.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below the lows of the previous 5 months on 3/5/13, again confirming a medium-term downtrend. BKF/SPY fell below its 50-day SMA on 2/4/13 and fell below its 200-day SMA on 2/19/13. BKF/SPY remains systematically neutral. Price peaked on 2/1/13 and is pointing down.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below the lows of the previous 5 months on 3/4/13, again confirming a medium-term downtrend. EEM/SPY remains systematically neutral. Price peaked on 1/2/13 and is pointing down.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below the lows of the previous 3 months on 3/4/13, again confirming a medium-term downtrend. EFA/SPY remains systematically neutral. Price peaked on 2/1/13.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically bearish on 12/17/12, when the 50-day SMA fell below the 200-day SMA. Large Caps tend to underperform Mid Caps and Small Caps in bullish general market trends as investors seek greater potential returns in more volatile, smaller stocks. On the other hand, Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative stability and safety of large size.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) peaked on 2/19/13, following a 3-month rise. The IWM/SPY Ratio is currently systematically bullish, but it appears to be hovering too close to the neutral zone for comfort.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below its lows of the previous 7 weeks on 3/4/13. MDY/SPY crossed below its 50-day SMA on 3/1/13, thereby turning systematically neutral.
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The S&P 500 Composite Potential Resistance
1576.09, high of 10/11/2007
1552.76, high of 10/31/2007
The S&P 500 Composite Potential Support
1489.40, 50-day SMA
1485.01, low of 2/26/2013
1474.51, high of 9/14/2012
1463.76, low of 1/15/2013
1451.64, low on 1/8/13
1448.00, high of 12/19/2012
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1438.59, high of 12/12/2012
1434.27, high of 11/2/2012
1432.82, low of 12/20/2012
1430.53, low of 9/26/2012
1426.76, low of 12/12/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept ’12 range
1424.41, Fibonacci 61.8% of Sept-Nov ’12 range
1423.73, high of 12/3/2012
1422.58, low of 12/21/2012
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1420.34, high of 12/7/2012
1419.70, high of 11/29/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
1415.35, 200-day SMA
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price rose above its highs 6-months on 3/1/13, after closing above its 200-day SMA on 2/21/13. UUP turned systematically neutral on 2/7/13, when it rose above its 50-day SMA. Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 22.38, 22.15, 21.53, 21.07, and 20.84. Resistance 22.78, 22.96, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA)price fell below its lows of the previous 7 months on 3/6/13, again confirming its major bearish trend. Price turned systematically bearish on 1/11/13 when the 50-day SMA crossed down below the 200-day SMA.
Crude Oil, United States Oil ETF (USO) price fell to its lowest level in 10 weeks on 3/4/13, again confirming a downtrend for the medium term. Longer term, USO has been mostly bearish since peaking at 119.17 on 7/11/08. Support 31.00, 29.02, 26.28, and 22.74. Resistance 33.75, 35.53, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price fell below its lows of the previous 8 months on 2/20/13. Price turned systematically bearish on 2/22/13, when the 50-day SMA fell below the 200-day SMA. Longer term, GLD has been mostly bearish since peaking at 185.85 on 9/6/11. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 156.80, 164.40, 166.94, 170.01, 174.07, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically bearish again on 12/27/12, when the 50-day SMA crossed below the 200-day SMA. Longer term, GDX/GLD has remained mostly bearish for more than 6 years, since 9/5/06.
Silver, iShares Silver Trust ETF (SLV) price fell below its lows of the previous 6 months on 2/20/13. Price turned systematically bearish on 3/1/13, when the 50-day SMA fell below the 200-day SMA. Longer term, SLV has been mostly bearish since peaking at 48.35 on 4/28/11. Support 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 28.61, 29.73, 31.41, 32.72, 33.31, 34.08, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) fell below its lows of the previous 6 months on 2/28/13. SLV/GLD remains neutral below both its falling 50-day SMA and its falling 200-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC)fell below its lows of the previous 3 months on 3/6/13, again confirming a medium-term downtrend. JJC remains systematically neutral, below the 50-day SMA and 200-day SMA. JJC has been consolidating losses between 38.99 and 51.41 since 10/5/11. Longer term, JJC has been mostly bearish since peaking at 61.69 on 2/14/11. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, so price weakness of Copper implies a weak economic outlook.
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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 later revealed to be deal stocks 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
1.97% , JCI , JOHNSON CONTROLS
6.14% , BIG , BIG LOTS
1.78% , DELL , DELL
5.06% , MTG , MGIC INVESTMENT
3.58% , SIL , Silver Miners Global X, SIL
3.53% , XRX , XEROX
2.47% , AET , AETNA
1.90% , BBY , BEST BUY
1.04% , IYG , Financial Services DJ, IYG
2.75% , HPQ , HEWLETT PACKARD
4.12% , FCX , FREEPRT MCMORAN STK B
2.18% , SCHW.K , CHARLES SCHWAB, SCHW.O
1.02% , KMX , CarMax
2.37% , ZION , ZIONS
1.90% , BSX , BOSTON SCIENT
0.36% , EIS , Israel MSCI iS, EIS
1.25% , EWJ , Japan Index, EWJ
4.49% , MBI , MBIA
3.20% , BAC , BANK OF AMERICA
0.14% , VIS , Industrials VIPERs, VIS
2.34% , CSCO , CISCO SYSTEMS
1.52% , RF , REGIONS FINAN
0.95% , LAMR , Lamar Advertising Company
2.38% , NUE , NUCOR
1.53% , SNA , SNAP ON
0.93% , PETM , PETsMART Inc
2.36% , EMC , EMC
2.02% , STT , STATE STREET
3.52% , ATI , ALLEGHENY TECH
2.42% , TLAB , TELLABS
3.30% , XME , Metals & Mining SPDR, XME
2.44% , VRTX , Vertex Pharmaceuticals, VRTX
1.56% , RHT , Red Hat Inc.
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.15% , SPLS , STAPLES
-3.59% , NIHD , NII Holdings, Inc.
-0.54% , AM , AMER GREETINGS STK A
-0.70% , EZA , South Africa Index, EZA
-2.09% , MDP , MEREDITH
-3.06% , EBAY , EBAY
-1.48% , SWY , SAFEWAY
-0.32% , IEF , Bond, 10 Year Treasury, IEF
-1.63% , DISCA , Discovery Communications
-0.55% , STJ , ST JUDE MEDICAL
-0.29% , MZZ , Short 200% MidCap 400 PS, MZZ
-2.26% , ERIC.O , LM Ericsson Telephone Company
-3.40% , CECO , CAREER EDUCATION CORP
-0.38% , IYR , Real Estate US DJ, IYR
-0.78% , KR , KROGER
-0.35% , PEJ , Leisure & Entertainment, PEJ
-1.61% , CSX , CSX
-1.63% , GCI , GANNETT
-0.92% , MSFT , MICROSOFT
-0.31% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.63% , CAT , CATERPILLAR
-0.19% , RWR , REIT Wilshire, RWR
-0.39% , EWU , United Kingdom Index, EWU
-0.50% , GWW , WW GRAINGER
-0.32% , BK , BANK OF NEW YORK
-0.19% , MKC , MCCORMICK
-0.67% , CPB , CAMPBELL SOUP
-0.08% , VOX , Telecom Services VIPERs, VOX
-1.91% , QCOM , QUALCOMM
-0.34% , COH , COACH
-0.99% , KLAC , KLA TENCOR
-0.26% , IYC , Consumer Cyclical DJ, IYC
-0.17% , EWQ , France Index, EWQ
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.30% Metals & Mining SPDR, XME
2.43% Brazil Index, EWZ
2.24% WilderHill Clean Energy PS, PBW
1.45% Indonesia MV, IDX
1.41% Basic Materials DJ US, IYM
1.30% Emerging 50 BLDRS, ADRE
1.26% Silver Trust iS, SLV
1.25% Turkey MSCI iS, TUR
1.25% Japan Index, EWJ
1.15% Latin Am 40, ILF
1.04% Financial Services DJ, IYG
0.89% Biotech SPDR, XBI
0.88% Germany Index, EWG
0.88% Materials SPDR, XLB
0.87% India Earnings WTree, EPI
0.83% Russia MV, RSX
0.81% Pacific VIPERs, VPL
0.73% China 25 iS, FXI
0.72% Networking, IGN
0.71% Energy & Nat Res iS GS, IGE
0.67% Financial SPDR, XLF
0.59% Capital Markets KWB ST, KCE
0.56% Gold Shares S.T., GLD
0.54% Emerging VIPERs, VWO
0.52% Financial DJ US, IYF
0.51% Australia Index, EWA
0.51% Singapore Index, EWS
0.50% Financials VIPERs, VFH
0.50% Emerging Markets MSCI iS, EEM
0.44% Netherlands Index, EWN
0.39% Microcap Russell, IWC
0.38% India PS, PIN
0.38% Pacific ex-Japan, EPP
0.36% Value VIPERs, VTV
0.35% DIAMONDS (DJIA), DIA
0.35% Water Resources, PHO
0.34% SmallCap Blend EAFE MSCI iS, SCZ
0.34% SmallCap Value S&P 600 iS, IJS
0.34% Value EAFE MSCI, EFV
0.34% LargeCap Value Russell 1000 iS, IWD
0.33% Semiconductor SPDR, XSD
0.33% SmallCap Blend S&P 600 iS, IJR
0.33% SmallCap Growth S&P 600 iS, IJT
0.32% Italy Index, EWI
0.31% SmallCap Growth Russell 2000 iS, IWO
0.31% Global 100, IOO
0.29% Growth SmallCap VIPERs, VBK
0.28% Mexico Index, EWW
0.28% LargeCap Value S&P 500 iS, IVE
0.27% Small Cap VIPERs, VB
0.26% SmallCap Blend Russell 2000 iS, IWM
0.26% Global LargeCap Blend MSCI iS, ACWI
0.25% Foreign LargeCap EAFE MSCI iS, EFA
0.25% Canada Index, EWC
0.24% SmallCap Value Russell 2000 iS, IWN
0.23% Value SmallCap VIPERS, VBR
0.23% Energy VIPERs, VDE
0.21% MidCap Value S&P 400 iS, IJJ
0.21% LargeCap Blend Russell 3000 iS, IWV
0.21% LargeCap Blend S&P 500 iS, IVV
0.20% Health Care SPDR, XLV
0.20% Energy Global, IXC
0.20% Homebuilders SPDR, XHB
0.20% LargeCap Blend Russell 1000 iS, IWB
0.19% Global ex U.S. LargeCap Blend, ACWX
0.18% EMU Europe Index, EZU
0.18% MidCap S&P 400 SPDRs, MDY
0.16% Austria Index, EWO
0.16% LargeCap VIPERs, VV
0.15% MidCap Growth S&P 400 iS, IJK
0.15% Blend Total Market VIPERs, VTI
0.15% Hong Kong Index, EWH
0.15% Dividend U.S. DJ iS, DVY
0.14% LargeCap Blend S&P 100, OEF
0.14% Belgium Index, EWK
0.14% S&P 500 SPDRs LargeCap Blend, SPY
0.12% Value LargeCap Dynamic PS, PWV
0.12% Thailand MSCI iS, THD
0.12% Semiconductor iS IGW, SOXX
0.12% Energy SPDR, XLE
0.11% Value MidCap Russell, IWS
0.11% MidCap Blend S&P 400 iS, IJH
0.10% LargeCap Blend S&P=Weight R, RSP
0.09% Energy DJ, IYE
0.08% Telecom DJ US, IYZ
0.07% MidCap Russell, IWR
0.07% Malaysia Index, EWM
0.05% Technology DJ US, IYW
0.04% Growth MidCap Russell, IWP
0.04% Bond, High-Yield Junk, JNK
0.03% Dividend SPDR, SDY
0.02% Preferred Stock iS, PFF
0.02% LargeCap Growth S&P 500 iS, IVW
0.02% Dividend Appreciation Vipers, VIG
0.01% Bond Treasury Short-Term iS, SHV
0.00% Industrial SPDR, XLI
0.00% Europe 350 S&P Index, IEV
0.00% Dividend High Yield Equity PS, PEY
-0.01% Bond, 1-3 Year Treasury, SHY
-0.03% Info Tech VIPERs, VGT
-0.03% Dividend ex-U.S. DJ iS, IDV
-0.04% Growth VIPERs, VUG
-0.04% LargeCap Growth Russell 1000 iS, IWF
-0.05% Bond, Emerging Mkt JPM iS, EMB
-0.05% Utilities SPDR, XLU
-0.06% Bond, High Yield Corp iBoxx iS, HYG
-0.07% Technology SPDR, XLK
-0.07% Taiwan Index, EWT
-0.08% Consumer Discretionary SPDR, XLY
-0.10% Growth EAFE MSCI, EFG
-0.10% Utilities VIPERs, VPU
-0.10% Frontier Markets Guggenheim , FRN
-0.11% Bond, Intermediate US Aggregate iS, AGG
-0.12% Dividend International, PID
-0.16% Realty Cohen & Steers, ICF
-0.16% Bear, Short S&P 500, SH
-0.16% Financial Preferred, PGF
-0.17% France Index, EWQ
-0.19% REIT Wilshire, RWR
-0.20% European VIPERs, VGK
-0.22% Bond, TIPS U.S. Treasury iS, TIP
-0.23% Consumer Staples SPDR, XLP
-0.25% QQQ Nasdaq 100 Trust, QQQ
-0.29% Bond, Long-Term Corp iBoxx iS, LQD
-0.30% Spain Index, EWP
-0.30% REIT VIPERs, VNQ
-0.31% Bond, Muni S&P ATM-Free iS, MUB
-0.31% Oil Fund PowerShares, DBO
-0.32% Bond, 10 Year Treasury, IEF
-0.38% Real Estate US DJ iS, IYR
-0.38% Transportation Av DJ, IYT
-0.39% United Kingdom Index, EWU
-0.46% Oil, Crude, U.S. Oil Fund, USO
-0.48% Switzerland Index, EWL
-0.55% Commodity Tracking, DBC
-0.63% Sweden Index, EWD
-0.66% South Korea Index, EWY
-0.68% Bond Ex-US Treas, BWX
-0.70% South Africa Index, EZA
-0.80% Agriculture DB PS, DBA
-0.91% Bond, 20+ Years Treasury, TLT
-1.05% Chile MSCI iS, ECH
-1.61% China LargeCap Growth G D H USX PS, PGJ
