Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped to 53.1% in August, up from previous peaks at 47.0% in July and 42.1% in May. “Watch out for a correction — or worse. The odds of a stock market correction are now quite elevated,” according to Mark Hulbert.
Investors Intelligence Sentiment shows that stock market newsletter advisors are more bullish. As of 8/22/12, there were 47.3% Bulls and 24.7% Bears. This 47.3% Bulls is the largest percentage of Bulls since 4/11/12, a few days after the SPX high close for the year.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) MDY/SPY whipsawed back down below its 50-day SMA again on 8/22/12, thereby turning systematically bearish.
The S&P 500 (SPX: 1,413.49) rose 0.32 points or 0.02% on Wednesday.
Stocks opened lower and added to losses, with SPX trading below its lows of the previous 3 trading days at 12:38 p.m. ET. After 2:00 p.m. ET, however, prices bounced in typical up-down-up fashion in reaction to news of the FOMC minutes. Stocks settled down somewhat in the final hour. Still, the SPX managed to hold onto a very slight gain into the close. The Dow-Jones Industrials and Transports, as well as the Cumulative Daily Advance-Decline Line, closed modestly lower, however.
The Federal Open Market Committee minutes revealed discussion of a new large-scale asset purchase program to support economic recovery by further depressing longer-term interest rates. That the FMOC stands ready to provide additional easing IF general economic conditions deteriorate further is nothing new. Since that FMOC meeting concluded on 8/1/12, however, new data suggests that general economic conditions have NOT deteriorated further. So, QE3 may be delayed further, although HOPE for QE3 someday lives on in the hearts and minds of the bullish majority.
Momentum oscillators have turned downward, after many of them demonstrated bearish divergences. Daily MACD (12,26,9) appears likely to cross below its signal line in a day or two.
The number of stocks making new highs is a fraction of July’s peak numbers.
NYSE volume fell 7% and was 21% below its 200-day SMA. Volume has been running near the lowest levels of the year since 8/8/12, possibly reflecting diminishing enthusiasm for stocks, as well as summer vacations. On-Balance Volume for the SPX remains in a downtrend with bearish divergence. NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price. Volume has not been confirming the price up move.
It takes volume to push prices up. After the shorts have been forced to cover and the longs have had their fill of buying, in the absence of a fresh source of demand, stocks fall of their own weight.
With the stock price indexes far above their 4-year lows and still very close to the top end of their 4-year price range, downside risk may exceed upside potential for the stock market. Choosing safety over risk appears to be the most reasonable approach for conservative traders and investors.
For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.
Meanwhile, one money manager made gains for 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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VIX Fear Index fell to 13.30 intraday on 8/17/12, its lowest level in more than 5 years, since 6/20/07. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a shift from worried concern to 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
1426.68, high of 8/21/2012
1422.38, high of 4/2/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
The S&P 500 Composite Potential Support
1391.04, low of 8/6/2012
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
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.58, high of 5/2/2011
1366.95, 50-day SMA
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
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
1332.67, 200-day SMA
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1306.62, low of 6/12/2012
1303.47, Fibonacci 23.6% of April-June 2012 range
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
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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Tangible Assets, Commodities
U.S. dollar ETF (UUP) fell below its 50-day SMA on 8/3/12, turning systematically neutral. UUP remains above its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.14, 23.52, 25.84, 27.19, 28.97.
CRB Commodity Price Index remains systematically neutral: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 8/18/11.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) broke out to the upside of a triangle consolidation pattern on 8/21/12. DBA remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA rose above its 200-day SMA on 8/13/12. High food prices could bring trouble for the general economy because more consumer spending for food means less consumer spending available for other goods and services.
Crude Oil, United States Oil ETF (USO) rose above its highs of the previous 3 months on 8/21/12. USO turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 34.34, 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above its 200-day SMA on 8/22/12 but remains systematically neutral. GLD remains above its 50-day SMA, but its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) rose above its 50-day SMA on 8/16/12, thereby turning systematically neutral again. GDX/GLD remains below its 200-day SMA, and its 50-day SMA has remained bearishly below its 200-day SMA every day since 2/22/11.
Silver, iShares Silver Trust ETF (SLV) price whipsawed back above its 50-day SMA on 8/3/12, thereby turning systematically neutral again for the short term. SLV remains below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.48, 27.60, 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) turned systematically neutral when it whipsawed above its 50-day SMA again on 8/17/12. SLV/GLD remains below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price whipsawed back above its 50-day SMA on 8/21/12, thereby turning systematically neutral again for the short term. Longer term, JJC fell to its lowest level in 8 months on 8/2/12, thereby confirming its major bearish trend. JJC price remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since 12/31/10. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this relative weakness may be suggesting rising doubts about prospects going forward.
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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
0.44% , BWX , Bond Ex-US Treas, BWX
2.92% , FITB , FIFTH THIRD BANC
4.11% , DHI , D.R. HORTON, DHI
0.45% , MZZ , Short 200% MidCap 400 PS, MZZ
1.27% , IGT , INTL GAME TECH
3.91% , PHM , PULTE HOMES
2.20% , ECL , ECOLAB
0.12% , ISI , LargeCap Blend S&P 1500 iS, ISI
1.94% , JWN , NORDSTROM
2.51% , EBAY , EBAY
0.32% , IYC , Consumer Cyclical DJ, IYC
2.78% , KBH , KB HOME
1.68% , PFG , PRINCIPAL FINL
1.19% , INTU , INTUIT
1.57% , XHB , Homebuilders SPDR, XHB
2.44% , MRO , MARATHON OIL
3.33% , PPG , PPG INDUSTRIES
3.75% , LEN , Lennar Corp. (LEN)
1.14% , AIV , APT INV MNGMT
0.70% , PBE , Biotech & Genome, PBE
1.01% , EQR , EQUITY RESIDENT BEN INT
3.06% , LOW , LOWES
2.27% , WLP , WELLPOINT HEALTH
1.41% , PX , PRAXAIR
1.21% , TUR , Turkey MSCI iS, TUR
0.83% , XLB , Materials SPDR, XLB
1.13% , PLL , PALL
0.56% , SIAL , SIGMA ALDRICH
0.78% , IYM , Basic Materials DJ US, IYM
0.18% , MYY , Short 100% MidCap 400, MYY
0.86% , WAT , WATERS
0.42% , JKE , Growth LargeCap iS M, JKE
0.97% , SEE , SEALED AIR
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.41% , DGT , Global Titans, DGT
-5.35% , DELL , DELL
-0.29% , ADRA , Asia 50 BLDRS, ADRA
-2.86% , JNY , JONES APPAREL
-4.24% , LXK , LEXMARK INTL STK A
-3.66% , HPQ , HEWLETT PACKARD
-2.54% , RHI , ROBERT HALF
-3.94% , S , SPRINT NEXTEL
-0.31% , VDC , Consumer Staples VIPERs, VDC
-4.00% , SVU , SUPERVALU
-0.92% , PUI , Utilities, PUI
-1.54% , PST , 200% Short Bond 7-10 Yr T, PST
-0.68% , EPU , Peru MSCI iS, EPU
-1.84% , R , RYDER SYSTEM
-0.52% , PEY , Dividend High Yield Equity PS, PEY
-1.39% , HAL , HALLIBURTON
-0.61% , TMW , Wilshire 5000 ST TM, TMW
-1.25% , KO , COCA COLA
-1.13% , EWD , Sweden Index, EWD
-0.39% , FPX , IPOs, First Tr IPOX-100, FPX
-0.86% , XSD , Semiconductor SPDR, XSD
-0.73% , SOXX , Semiconductor iS IGW, SOXX
-0.70% , EWH , Hong Kong Index, EWH
-0.71% , EIS , Israel MSCI iS, EIS
-1.30% , COL , ROCKWELL COLLINS
-1.10% , GCI , GANNETT
-0.74% , PTEN , Patterson-UTI Energy Inc
-1.58% , PCAR , PACCAR
-0.83% , DGX , QUEST DIAG
-1.74% , CAT , CATERPILLAR
-0.61% , ERIC.O , LM Ericsson Telephone Company
-1.24% , EMR , EMERSON ELECTRIC
-1.45% , MO , ALTRIA, MO
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.94% Silver Trust iS, SLV
1.65% Bond, 20+ Years Treasury, TLT
1.57% Homebuilders SPDR, XHB
1.33% Russia MV, RSX
1.21% Turkey MSCI iS, TUR
1.14% Biotech SPDR, XBI
1.08% Gold Shares S.T., GLD
0.83% Materials SPDR, XLB
0.82% Bond, TIPS U.S. Treasury iS, TIP
0.78% Bond, 10 Year Treasury, IEF
0.78% Basic Materials DJ US, IYM
0.71% China LargeCap Growth G D H USX PS, PGJ
0.67% Oil, Crude, U.S. Oil Fund, USO
0.58% Metals & Mining SPDR, XME
0.57% Bond, Long-Term Corp iBoxx iS, LQD
0.57% Bond, Emerg Mkt JPM iS, EMB
0.55% Malaysia Index, EWM
0.52% Commodity Tracking, DBC
0.48% Oil Fund PowerShares, DBO
0.48% Austria Index, EWO
0.46% Thailand MSCI iS, THD
0.44% Bond Ex-US Treas, BWX
0.43% Bond, Intermediate US Aggregate iS, AGG
0.42% Belgium Index, EWK
0.41% QQQ Nasdaq 100 Trust, QQQ
0.39% Energy & Nat Res iS GS, IGE
0.38% South Africa Index, EZA
0.37% Energy SPDR, XLE
0.36% Brazil Index, EWZ
0.34% Italy Index, EWI
0.33% Switzerland Index, EWL
0.29% Consumer Discretionary SPDR, XLY
0.29% Energy VIPERs, VDE
0.24% Energy DJ, IYE
0.23% Germany Index, EWG
0.21% Technology DJ US, IYW
0.21% Frontier Markets Guggenheim , FRN
0.20% Growth VIPERs, VUG
0.17% Australia Index, EWA
0.16% Technology SPDR, XLK
0.16% LargeCap Growth S&P 500 iS, IVW
0.14% Mexico Index, EWW
0.12% LargeCap Growth Russell 1000 iS, IWF
0.11% India PS, PIN
0.11% Value EAFE MSCI, EFV
0.11% Info Tech VIPERs, VGT
0.11% SmallCap Blend EAFE MSCI iS, SCZ
0.10% Energy Global, IXC
0.08% Growth MidCap Russell, IWP
0.08% Health Care SPDR, XLV
0.08% LargeCap Blend S&P 100, OEF
0.08% Singapore Index, EWS
0.07% Emerging VIPERs, VWO
0.06% Bond, 1-3 Year Treasury, SHY
0.05% Emerging Markets MSCI iS, EEM
0.05% LargeCap VIPERs, VV
0.04% S&P 500 SPDRs LargeCap Blend, SPY
0.04% Bond, Muni S&P ATM-Free iS, MUB
0.03% Financial Preferred, PGF
0.03% LargeCap Blend Russell 1000 iS, IWB
0.02% LargeCap Blend S&P 500 iS, IVV
0.00% Taiwan Index, EWT
0.00% Preferred Stock iS, PFF
0.00% Pacific VIPERs, VPL
0.00% Pacific ex-Japan, EPP
0.00% Netherlands Index, EWN
0.00% Bond, High-Yield Junk, JNK
0.00% Bond Treasury Short-Term iS, SHV
-0.01% LargeCap Blend Russell 3000 iS, IWV
-0.01% Realty Cohen & Steers, ICF
-0.02% Global LargeCap Blend MSCI iS, ACWI
-0.03% Emerging 50 BLDRS, ADRE
-0.03% REIT Wilshire, RWR
-0.03% China 25 iS, FXI
-0.04% Bear, Short S&P 500, SH
-0.05% Dividend ex-U.S. DJ iS, IDV
-0.05% France Index, EWQ
-0.05% Growth SmallCap VIPERs, VBK
-0.06% REIT VIPERs, VNQ
-0.07% EMU Europe Index, EZU
-0.07% Indonesia MV, IDX
-0.07% Latin Am 40, ILF
-0.08% Global ex U.S. LargeCap Blend, ACWX
-0.09% European VIPERs, VGK
-0.09% Real Estate US DJ iS, IYR
-0.10% Bond, High Yield Corp iBoxx iS, HYG
-0.10% Dividend Appreciation Vipers, VIG
-0.11% Japan Index, EWJ
-0.11% MidCap Growth S&P 400 iS, IJK
-0.11% Foreign LargeCap EAFE MSCI iS, EFA
-0.12% India Earnings WTree, EPI
-0.12% United Kingdom Index, EWU
-0.12% Blend Total Market VIPERs, VTI
-0.13% Growth EAFE MSCI, EFG
-0.13% Financial SPDR, XLF
-0.14% LargeCap Blend S&P=Weight R, RSP
-0.14% MidCap Russell, IWR
-0.14% Value LargeCap Dynamic PS, PWV
-0.15% Financial Services DJ, IYG
-0.16% South Korea Index, EWY
-0.16% Dividend SPDR, SDY
-0.16% Utilities SPDR, XLU
-0.17% LargeCap Value S&P 500 iS, IVE
-0.17% Value VIPERs, VTV
-0.18% Financial DJ US, IYF
-0.20% LargeCap Value Russell 1000 iS, IWD
-0.21% MidCap S&P 400 SPDRs, MDY
-0.22% Canada Index, EWC
-0.23% DIAMONDS (DJIA), DIA
-0.23% Utilities VIPERs, VPU
-0.24% SmallCap Growth S&P 600 iS, IJT
-0.25% Value MidCap Russell, IWS
-0.25% Financials VIPERs, VFH
-0.25% Europe 350 S&P Index, IEV
-0.25% Capital Markets KWB ST, KCE
-0.26% MidCap Blend S&P 400 iS, IJH
-0.26% Global 100, IOO
-0.26% Dividend International, PID
-0.29% SmallCap Growth Russell 2000 iS, IWO
-0.31% Consumer Staples SPDR, XLP
-0.31% Water Resources, PHO
-0.32% MidCap Value S&P 400 iS, IJJ
-0.33% Dividend U.S. DJ iS, DVY
-0.37% Small Cap VIPERs, VB
-0.40% SmallCap Blend S&P 600 iS, IJR
-0.44% Microcap Russell, IWC
-0.45% SmallCap Value S&P 600 iS, IJS
-0.47% Value SmallCap VIPERS, VBR
-0.48% SmallCap Blend Russell 2000 iS, IWM
-0.49% Industrial SPDR, XLI
-0.52% Dividend High Yield Equity PS, PEY
-0.53% Transportation Av DJ, IYT
-0.56% Networking, IGN
-0.63% Agriculture DB PS, DBA
-0.63% SmallCap Value Russell 2000 iS, IWN
-0.69% WilderHill Clean Energy PS, PBW
-0.69% Spain Index, EWP
-0.70% Hong Kong Index, EWH
-0.73% Semiconductor iS IGW, SOXX
-0.75% Chile MSCI iS, ECH
-0.86% Semiconductor SPDR, XSD
