Monday was a day of hope, and stocks recovered what they lost on Thursday and Friday last week, when fear dominated the headlines.
The S&P 500 (SPX: 1,430.36) rose 16.78 points or 1.19% on Monday. The S&P 500 whipsawed back above its declining 50-day SMA now standing at 1414.67, but SPX remains below a steeply rising 4-week uptrend line, which it violated last Thursday.
NYSE trading volume rose 8% on Monday to a level that was 4% below its 200-day SMA. Low volume indicates tepid demand for stocks.
Any deal on the fiscal cliff probably could be expected include increased taxes and reduced government spending, which would be a drag on economic growth and company earnings. Perhaps reflecting this, the U.S. stock market has been churning up and down making no net progress since April, 2012. As news reports about the fiscal cliff cycle from hope to fear and back again, as they have recently, we can expect more choppy volatility in reaction to the headlines of the moment. A complete no-deal collapse in negotiations, which looked more likely last week after both parties played an ugly blame game to the story-hungry media, could produce a downside stock market gap that might prevent investors from limiting losses. So, it seems prudent to take protective measures in advance to limit risk.
After all the monetary easing around the world in recent months, SPX is only slightly above its close on the first trading day of April, 2012. There has been little progress in more than 8 months. Still, speculators have faith in the Fed, and they appear to be hoping for some kind of deal on the fiscal cliff. Bullish sentiment has been high for months, and the bullish majority has grown increasingly confident about a year-end rally. The Art of Contrary Thinking calls for questioning this popular optimism.
I have been skeptical that SPX would be able to overcome technical congestion (resistance) in its September-November trading range. The technical condition of the stock market has not supported the excessive optimism that the bullish majority of stock investors and traders clearly exhibited over the past several months. Low volume has revealed a lack of big buying power. Long-term momentum has been showing bearish divergence and has weakened considerably since the SPX price peak on 9/14/12. And the bull phase of the 4-year cycle is long in tooth. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
Our clients’ separately managed accounts preserved capital over the past 9 weeks while the S&P 500 fell 8.9%, based on intraday highs and lows from 9/14/12 to 11/16/12. In addition, our clients’ accounts made gains every quarter for the past 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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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 outperform in bearish general market trends as investors seek the perceived relative stability and safety of large size. On the other side of the coin, 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.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) rose above its 50-day SMA on 11/29/12, thereby turning systematically neutral again. IWM/SPY 50-day SMA has remained below its 200-day SMA consistently every day since 4/20/12.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) turned systematically bullish on 12/14/12, when the 50-day SMA crossed above the 200-day SMA.
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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
1523.57, high of 12/11/2007
1498.85, high of 12/26/2007
1474.51, high of 9/14/2012
1464.02, high of 10/18/2012
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
1430.53, low of 9/26/2012
The S&P 500 Composite Potential Support
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
1422.38, 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
1414.67, 50-day SMA
1409.16, high of 11/23/2012
1403.28, low of 10/26/12
1398.23, low of 12/5/2012
1397.68, low of 11/26/2012
1396.56, low of 9/4/2012
1395.14, Fibonacci 38.2% of June-Sept 2012 range
1391.04, low of 8/6/2012
1388.71, low of 5/3/2012
1387.77, 200-day SMA
1385.43, low of 11/28/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.62, Fibonacci 50.0% of June-Sept 2012 range
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1346.11, Fibonacci 61.8% of June-Sept 2012 range
1343.35, low of 11/16/2012
1340.03, low of 3/6/2012
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1325.41, low of 7/12/2012
1311.20, Fibonacci 78.6% of June-Sept 2012 range
1306.62, low of 6/12/2012
1291.98, low of 5/18/2012
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
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
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
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) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. TLT fell below its 200-day SMA on 12/17/12. TLT’s 50-day SMA has remained above the 200-day SMA every day since 6/24/11. Support 119.87, 118.05, 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: 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. IEF remains above its 200-day SMA, and IEF’s 50-day SMA has remained above the 200-day SMA every day since 6/21/11. Support 107.25, 106.59, 106.42, 105.84, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) rose above its 50-day SMA on 11/28/12, thereby turning systematically neutral again. JNK/LQD 50-day SMA has remained consistently below the 200-day SMA every day since 6/1/12.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) turned systematically bullish again on 12/6/12 when it rose above its 50-day SMA. TIP/IEF rose above its 200-day SMA on 9/27/12, and the 50-day SMA rose above the 200-day SMA on 10/10/12.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) turned systematically bearish again on 12/11/12 when it fell below its 50-day SMA. UUP fell below its 200-day SMA on 8/31/12, and the 50-day SMA fell below the 200-day SMA on 10/2/12. Support 21.57, 21.07, and 20.84. Resistance 22.05, 22.30, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) turned systematically neutral again on 11/30/12 when price crossed back down below its 50-day SMA. DBA has been whipsawing around its 200-day SMA in recent days. The 50-day SMA remains above the 200-day SMA, although the 50-200 spread has been narrowing gradually.
Crude Oil, United States Oil ETF (USO) turned systematically bearish on 9/19/12, when price fell below its 50-day SMA. USO price fell below its 200-day SMA on 9/17/12, and the 50-day SMA has remained below its 200-day SMA consistently every day since 6/7/12. Support 31.00, 29.02, 26.28, and 22.74. Resistance 32.93, 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) turned systematically neutral on 11/27/12, when price fell below its 50-day SMA. GLD price rose above its 200-day SMA on 8/22/12. GLD 50-day SMA rose above the 200-day SMA on 9/20/12. Support: 163.20, 162.30, 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 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 neutral on 11/5/12 when it fell below its 50-day SMA. The 50-day SMA has been above the 200-day SMA since 10/19/12–but the 50-200 spread has been narrowing and a bearish crossover appears probable in weeks ahead.
Silver, iShares Silver Trust ETF (SLV) turned systematically neutral again on 12/13/12 when it whipsawed below its 50-day SMA. The 50-day SMA crossed above the 200-day SMA on 10/1/12. Support 31.00, 29.84, 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 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) turned systematically neutral on 12/14/12 when it fell below its 50-day SMA. Longer term, SLV/GLD 50-day SMA crossed above the 200-day SMA on 10/9/12.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) rose above both its 50-day SMA and 200-day SMA on 11/30/12. Long term, JJC has been consolidating losses in Triangle chart pattern trading range between 38.99 and 51.41 for more than a year since October 2011. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
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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
1.53% , IDU , Utilities DJ, IDU
12.91% , CPWR , COMPUWARE
2.54% , IYG , Financial Services DJ, IYG
5.25% , PHM , PULTE HOMES
0.95% , IYJ , Industrial LargeCap Blend DJ US, IYJ
1.10% , XLG , LargeCap Rydex Rus Top 50, XLG
1.78% , IYF , Financial DJ US, IYF
5.18% , KBH , KB HOME
4.12% , C , CITIGROUP
3.71% , WFC , WELLS FARGO
0.83% , EWD , Sweden Index, EWD
3.58% , EFX , EQUIFAX
0.87% , VIS , Industrials VIPERs, VIS
3.70% , WYN , Wyndham Worldwide
2.33% , CCL , CARNIVAL STK A
1.72% , VCR , Consumer D. VIPERs, VCR
3.57% , HIG , HARTFORD FINL
2.83% , STI , SUNTRUST BANKS
3.97% , BAC , BANK OF AMERICA
1.92% , VFH , Financials VIPERs, VFH
2.24% , BMC.O , BMC SOFTWARE
2.93% , TBT , 200% Short US T Bond, TBT
1.06% , FMCN , Focus Media, FMCN
2.42% , MKC , MCCORMICK
3.13% , ETFC , E*TRADE FINANCIAL
2.19% , LBTYA , Liberty Global Inc. (LBTYA)
1.86% , TYC , TYCO INTL
2.06% , XLF , Financial SPDR, XLF
0.58% , ECH , Chile MSCI iS, ECH
2.56% , PETM , PETsMART Inc
2.47% , CSC , COMPUTER SCIENCE
2.21% , PCL , PLUM CREEK TIMB
1.53% , DDM , Ultra Dow30 Double, DDM
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.00% , MZZ , Short 200% MidCap 400 PS, MZZ
-3.58% , MU.O , MICRON TECH
-1.50% , TLT , Bond, 20+ Years Treasury, TLT
-0.38% , IXJ , Healthcare Global, IXJ
-0.81% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.33% , PIN , India PS, PIN
-0.39% , EWH , Hong Kong Index, EWH
-0.71% , KMX , CarMax
-0.51% , MO , ALTRIA, MO
-0.54% , LO , Lorillard, Inc. LO
-0.42% , KO , COCA COLA
-0.92% , JNY , JONES APPAREL
-0.52% , CMI , CUMMINS
-0.86% , SYMC , SYMANTEC
-0.25% , LRCX , LAM RESEARCH CORP
-0.26% , TUP , TUPPERWARE
-0.45% , IOO , Global 100, IOO
-0.43% , XRX , XEROX
-0.41% , PM , Philip Morris, PM
-0.25% , ISIL , INTERSIL CORP
-0.12% , TER , TERADYNE
-0.23% , ABT , ABBOTT LABS
-0.64% , AVP , AVON
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.89% Homebuilders SPDR, XHB
2.54% Financial Services DJ, IYG
2.18% Capital Markets KWB ST, KCE
2.06% Financial SPDR, XLF
1.92% Financials VIPERs, VFH
1.79% Consumer Discretionary SPDR, XLY
1.78% Financial DJ US, IYF
1.68% Turkey MSCI iS, TUR
1.53% Utilities SPDR, XLU
1.53% Utilities VIPERs, VPU
1.47% Microcap Russell, IWC
1.42% SmallCap Value S&P 600 iS, IJS
1.41% SmallCap Blend Russell 2000 iS, IWM
1.39% SmallCap Value Russell 2000 iS, IWN
1.39% Italy Index, EWI
1.35% LargeCap Value S&P 500 iS, IVE
1.33% QQQ Nasdaq 100 Trust, QQQ
1.29% Info Tech VIPERs, VGT
1.28% Telecom DJ US, IYZ
1.25% Blend Total Market VIPERs, VTI
1.23% Value SmallCap VIPERS, VBR
1.22% Technology SPDR, XLK
1.22% Technology DJ US, IYW
1.22% SmallCap Blend S&P 600 iS, IJR
1.21% Indonesia MV, IDX
1.21% LargeCap Blend Russell 3000 iS, IWV
1.21% SmallCap Growth Russell 2000 iS, IWO
1.21% Small Cap VIPERs, VB
1.20% Growth VIPERs, VUG
1.19% LargeCap Blend S&P=Weight R, RSP
1.19% LargeCap VIPERs, VV
1.18% Dividend High Yield Equity PS, PEY
1.17% SmallCap Growth S&P 600 iS, IJT
1.17% LargeCap Value Russell 1000 iS, IWD
1.17% S&P 500 SPDRs LargeCap Blend, SPY
1.16% LargeCap Blend S&P 100, OEF
1.14% South Africa Index, EZA
1.14% LargeCap Blend Russell 1000 iS, IWB
1.13% LargeCap Growth Russell 1000 iS, IWF
1.13% Value VIPERs, VTV
1.12% MidCap Value S&P 400 iS, IJJ
1.11% Growth SmallCap VIPERs, VBK
1.11% LargeCap Blend S&P 500 iS, IVV
1.09% Growth MidCap Russell, IWP
1.09% Networking, IGN
1.07% Dividend U.S. DJ iS, DVY
1.06% LargeCap Growth S&P 500 iS, IVW
1.05% Value LargeCap Dynamic PS, PWV
1.03% Water Resources, PHO
1.01% Materials SPDR, XLB
1.00% MidCap Russell, IWR
0.99% Mexico Index, EWW
0.98% Value MidCap Russell, IWS
0.97% Dividend Appreciation Vipers, VIG
0.96% Dividend SPDR, SDY
0.94% Biotech SPDR, XBI
0.93% Industrial SPDR, XLI
0.93% MidCap Blend S&P 400 iS, IJH
0.91% Energy SPDR, XLE
0.91% MidCap S&P 400 SPDRs, MDY
0.91% Japan Index, EWJ
0.88% Energy DJ, IYE
0.87% Energy VIPERs, VDE
0.85% Thailand MSCI iS, THD
0.83% Sweden Index, EWD
0.81% Spain Index, EWP
0.79% Health Care SPDR, XLV
0.77% Energy & Nat Res iS GS, IGE
0.76% MidCap Growth S&P 400 iS, IJK
0.75% DIAMONDS (DJIA), DIA
0.74% WilderHill Clean Energy PS, PBW
0.74% Transportation Av DJ, IYT
0.73% Global LargeCap Blend MSCI iS, ACWI
0.69% Pacific VIPERs, VPL
0.65% China LargeCap Growth G D H USX PS, PGJ
0.64% Value EAFE MSCI, EFV
0.63% Basic Materials DJ US, IYM
0.63% Real Estate US DJ iS, IYR
0.61% Oil, Crude, U.S. Oil Fund, USO
0.60% South Korea Index, EWY
0.59% REIT Wilshire, RWR
0.58% Chile MSCI iS, ECH
0.55% Realty Cohen & Steers, ICF
0.53% Russia MV, RSX
0.53% REIT VIPERs, VNQ
0.51% Dividend International, PID
0.51% Austria Index, EWO
0.45% SmallCap Blend EAFE MSCI iS, SCZ
0.44% Bond, High-Yield Junk, JNK
0.43% Australia Index, EWA
0.43% Foreign LargeCap EAFE MSCI iS, EFA
0.42% Semiconductor iS IGW, SOXX
0.42% Canada Index, EWC
0.41% Germany Index, EWG
0.40% Pacific ex-Japan, EPP
0.39% United Kingdom Index, EWU
0.39% Growth EAFE MSCI, EFG
0.39% Bond, High Yield Corp iBoxx iS, HYG
0.39% Global ex U.S. LargeCap Blend, ACWX
0.35% European VIPERs, VGK
0.32% India Earnings WTree, EPI
0.29% Semiconductor SPDR, XSD
0.27% Emerging Markets MSCI iS, EEM
0.26% Switzerland Index, EWL
0.24% Emerging VIPERs, VWO
0.22% Consumer Staples SPDR, XLP
0.22% Belgium Index, EWK
0.22% France Index, EWQ
0.21% Agriculture DB PS, DBA
0.19% Gold Shares S.T., GLD
0.18% EMU Europe Index, EZU
0.18% Oil Fund PowerShares, DBO
0.12% Dividend ex-U.S. DJ iS, IDV
0.10% Silver Trust iS, SLV
0.08% Emerging 50 BLDRS, ADRE
0.07% Singapore Index, EWS
0.07% Malaysia Index, EWM
0.05% Financial Preferred, PGF
0.04% China 25 iS, FXI
0.00% Frontier Markets Guggenheim , FRN
0.00% Bond Treasury Short-Term iS, SHV
-0.02% Bond, 1-3 Year Treasury, SHY
-0.03% Bond Ex-US Treas, BWX
-0.04% Metals & Mining SPDR, XME
-0.05% Netherlands Index, EWN
-0.07% Commodity Tracking, DBC
-0.11% Bond, Emerg Mkt JPM iS, EMB
-0.13% Preferred Stock iS, PFF
-0.18% Europe 350 S&P Index, IEV
-0.18% Brazil Index, EWZ
-0.24% Bond, Intermediate US Aggregate iS, AGG
-0.32% Bond, Long-Term Corp iBoxx iS, LQD
-0.33% India PS, PIN
-0.38% Bond, TIPS U.S. Treasury iS, TIP
-0.39% Hong Kong Index, EWH
-0.45% Global 100, IOO
-0.53% Bond, 10 Year Treasury, IEF
-0.58% Taiwan Index, EWT
-0.60% Latin Am 40, ILF
-0.75% Energy Global, IXC
-0.81% Bond, Muni S&P ATM-Free iS, MUB
-1.22% Bear, Short S&P 500, SH
-1.50% Bond, 20+ Years Treasury, TLT
