The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) rose above its highs of the previous 2 years on 7/31/12, reconfirming its preexisting major bullish trend. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size.
The S&P 500 (SPX: 1,379.32) fell 5.98 points or 0.43% on Tuesday following 4 consecutive rising sessions, which left the market somewhat overbought.
NYSE trading volume rose 19% to confirm the price downturn.
Stocks have appeared to be hypersensitive to the latest news headlines. Media reports have been speculating on quantitative easing expected to be announced after the Fed’s FOMC meeting on Wednesday, 8/1/12. Whatever the political “authorities” might say or do next is not predictable. To the extent that quantitative easing might be discounted in advance, however, the market reaction could be disappointing.
Looking beyond the short term, underlying market conditions suggest that downside risk still may exceed upside potential for the stock market projecting out weeks and months ahead. Choosing safety over risk appears to be the most reasonable approach for conservative 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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Stock Market Indicators
The Dow Theory signaled a Primary Tide Bear Market on 5/17/12 when both Industrials and Transports closed below their closing price lows of the previous 4 months, including the critical lows of March and April, 2012. The Averages gave an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Again on 5/1/12, the Industrials rose to a higher closing price high while the Transports failed to rise to a higher closing price high, thereby indicating a non-confirmation and bearish divergence. Currently, as of 7/27/12, the Industrials are above June-July highs but the Transports continue to lag well below June-July highs.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) fell below its lows of the previous 6 months on 7/26/12. The QQQ/SPY ratio remains systematically neutral: below its 50-day SMA, above its 200-day SMA, and its 50-day SMA has been above its 200-day SMA since 8/5/11. The 50-200 spread has been narrowing, however, and that may prove to be a caution sign.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 3 years on 7/23/12, reconfirming its bearish trend. Systematically, BKF/SPY remains bearish below its 50-day SMA, below its 200-day SMA, and with the 50-day SMA below the 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below its lows of the previous 3 years on 7/23/12, reconfirming its bearish trend. EEM/SPY remains below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained below the 200-day SMA every day since 2/3/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) reconfirmed a bearish major trend when it fell below its lows of the previous 9 years on 7/24/12. Systematically, EFA/SPY remains bearish below its 50-day and 200-day SMAs, and the 50-day SMA has remained below the 200-day SMA consistently every day since 1/14/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) rose above its highs of the previous 2 years on 7/31/12, reconfirming its preexisting major bullish trend. OEF/SPY remains systematically bullish above its 50-day SMA, above its 200-day SMA, and the 50-day SMA has been above the 200-day SMA consistently every day since 8/24/11. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative 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 prefer riskier and more volatile stocks.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below its lows of the previous 9 months on 7/31/12, thereby confirming its major downtrend. Systematically, the IWM/SPY ratio remains bearish: below its 50-day SMA, below its 200-day SMA, and its 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) fell below its lows of the previous 9 months on 7/24/12, thereby confirming its major downtrend. MDY/SPY remains systematically bearish: below its 50-day SMA, below its 200-day SMA, and its 50-day SMA has been below its 200-day SMA since 6/6/12.
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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
1440.24, high of 5/19/2008
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1391.74, high of 7/30/2012
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
The S&P 500 Composite Potential Support
1374.81, high of 7/3/2012
1370.58, high of 5/2/2011
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
1337.89, 50-day SMA
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
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1319.68, 200-day SMA
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) whipsawed back down below its 50-day SMA on 7/31/12, turning systematically neutral again. 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, below 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) remains systematically neutral: above its 50-day SMA, above its 200-day SMA, but its 50-day SMA has remained below its 200-day SMA every day since 8/8/11. The 50-200 spread has been narrowing for 5 weeks but still may be weeks away from meeting. Rising food prices could bring trouble for the economy because more consumer spending for food means less consumer spending available for other goods and services.
Crude Oil, United States Oil ETF (USO) turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains far below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 34.84, 35.19, 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 7/25/12, thereby turning systematically neutral from bearish: above its 50-day SMA, below its 200-day SMA, and with its 50-day SMA below the 200-day SMA every day since 4/17/12. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 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) whipsawed back down below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.
Silver, iShares Silver Trust ETF (SLV) rose above its 50-day SMA on 7/30/12, thereby turning systematically neutral from bearish SLV is above its 50-day SMA, below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 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) fell below its lows of the previous 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD remains systematically bearish: below its 50-day SMA, 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 is systematically neutral: above its 50-day SMA, 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
1.80% , PSI , Semiconductors, PSI
9.14% , X , US STEEL CORP
10.41% , GT , GOODYEAR TIRE
7.48% , RFMD , RF Micro Devices Inc
14.57% , RSH , RADIOSHACK
5.44% , VLO , VALERO ENERGY
3.04% , ABC , AMERISOURCEBERGN
0.68% , IXN , Technology Global, IXN
2.49% , ZEUS , Olympic Steel, ZEUS
10.27% , SVU , SUPERVALU
5.99% , CMI , CUMMINS
0.64% , EIS , Israel MSCI iS, EIS
2.31% , JBL , JABIL CIRCUIT
2.16% , TYC , TYCO INTL
1.02% , IDX , Indonesia MV, IDX
1.64% , MU.O , MICRON TECH
0.20% , FPX , IPOs, First Tr IPOX-100, FPX
0.33% , IGN , Networking, IGN
1.39% , PFE , PFIZER
1.82% , NUE , NUCOR
1.06% , CMCSA , COMCAST HOLDINGS STK A
2.40% , CTB , COOPER TIRE
2.95% , CLF , CLIFFS NATURAL RESOURCES, CLF
0.91% , PBI , PITNEY BOWES
0.48% , DOG , Short 100% Dow 30, DOG
1.57% , MDT , MEDTRONIC
1.36% , CSC , COMPUTER SCIENCE
0.12% , THD , Thailand MSCI iS, THD
2.51% , EMN , EASTMAN CHEM
2.39% , CECO , CAREER EDUCATION CORP
0.24% , TLH , Bond 10-20 Year US Treas, TLH
1.42% , HOLX , Hologic, Inc., HOLX
3.49% , ODP , OFFICE DEPOT
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-18.57% , COH , COACH
-12.69% , HUM , HUMANA
-11.04% , PMCS , PMC SIERRA
-8.31% , MAS , MASCO
-1.55% , EWK , Belgium Index, EWK
-5.55% , LOW , LOWES
-1.92% , DBO , Oil Fund PowerShares, DBO
-0.59% , EZU , EMU Europe Index, EZU
-3.96% , ECL , ECOLAB
-0.65% , JKK , Growth SmallCap iS M, JKK
-0.61% , PEJ , Leisure & Entertainment, PEJ
-5.09% , ADM , ARCHER DANIELS
-6.27% , LPX , LOUISIANA PAC
-3.79% , AGN , ALLERGAN
-3.99% , TIF , TIFFANY
-0.48% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
-2.69% , EL , Estee Lauder
-4.07% , UNH , UNITEDHEALTH GRP
-2.79% , PDCO , Patterson Dental Company
-3.22% , APC , ANADARKO PETRO
-2.83% , HOG , HARLEY DAVIDSON
-0.83% , EPU , Peru MSCI iS, EPU
-0.59% , IVW , Growth S&P 500/BARRA, IVW
-2.93% , FISV , FISERV
-2.91% , AET , AETNA
-3.50% , WLP , WELLPOINT HEALTH
-1.28% , IXC , Energy Global, IXC
-2.06% , SNI , Scripps Networks Interactive
-3.41% , SBUX , STARBUCKS
-2.50% , EZA , South Africa Index, EZA
-2.63% , CI , CIGNA
-2.24% , TGT , TARGET
-1.17% , EWC , Canada Index, EWC
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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% South Korea Index, EWY
1.38% Semiconductor SPDR, XSD
1.02% Indonesia MV, IDX
0.73% Semiconductor iS IGW, SOXX
0.66% Taiwan Index, EWT
0.62% Bear, Short S&P 500, SH
0.51% Bond, Corp, LQD
0.49% Technology DJ US, IYW
0.44% China 25 iS, FXI
0.41% Technology SPDR, XLK
0.39% Bond Ex-US Treas, BWX
0.34% Switzerland Index, EWL
0.33% Networking, IGN
0.26% Bond, TIPS, TIP
0.20% Bond, 20+ Years Treasury, TLT
0.17% Bond, 10 Year Treasury, IEF
0.16% Bond Muni ATM-Free S&P iS, MUB
0.14% Bond EmrgMkt JPM iS, EMB
0.13% Bond, High-Yield Junk, JNK
0.12% Thailand MSCI iS, THD
0.12% Info Tech VIPERs, VGT
0.10% Bond, Aggregate, AGG
0.08% Telecom DJ US, IYZ
0.05% Financial Preferred, PGF
0.05% Germany Index, EWG
0.02% Bond, 1-3 Year Treasury, SHY
0.01% Bond Treasury Short-Term iS, SHV
0.00% Malaysia Index, EWM
0.00% Metals & Mining SPDR, XME
0.00% Sweden Index, EWD
-0.03% REIT Wilshire, RWR
-0.03% QQQ Nasdaq 100 Trust, QQQ
-0.04% Australia Index, EWA
-0.05% Preferred Stock iS, PFF
-0.11% Real Estate US DJ, IYR
-0.11% Japan Index, EWJ
-0.12% Hong Kong Index, EWH
-0.14% Realty Cohen & Steers, ICF
-0.14% Pacific ex-Japan, EPP
-0.14% Pacific VIPERs, VPL
-0.14% Austria Index, EWO
-0.15% REIT VIPERs, VNQ
-0.15% Singapore Index, EWS
-0.18% China LargeCap Growth G D H USX PS, PGJ
-0.18% Global 100, IOO
-0.24% Bond, High-Yield Corporate, HYG
-0.26% Financials VIPERs, VFH
-0.28% Industrial SPDR, XLI
-0.29% Netherlands Index, EWN
-0.30% Value VIPERs, VTV
-0.31% Value EAFE MSCI, EFV
-0.32% Dividend High Yield Equity PS, PEY
-0.33% LargeCap Blend S&P 100, OEF
-0.34% Value SmallCap VIPERS, VBR
-0.34% Basic Materials DJ US, IYM
-0.35% Emerging VIPERs, VWO
-0.36% Frontier Markets Guggenheim , FRN
-0.36% Value S&P 500 B, IVE
-0.40% Financial Services DJ, IYG
-0.43% Growth BARRA Small Cap 600, IJT
-0.45% Consumer Staples SPDR, XLP
-0.45% Transportation Av DJ, IYT
-0.46% Emerging Markets, EEM
-0.46% Dividend SPDR, SDY
-0.46% Growth EAFE MSCI, EFG
-0.47% Financial DJ US, IYF
-0.48% Financial SPDR, XLF
-0.48% Value LargeCap Dynamic PS, PWV
-0.48% Global ex US ACWI iS, ACWX
-0.49% Value MidCap S&P 400 B, IJJ
-0.49% SmallCap S&P 600, IJR
-0.50% WilderHill Clean Energy PS, PBW
-0.53% LargeCap Blend Russell 3000, IWV
-0.53% Value MidCap Russell, IWS
-0.54% DIAMONDS (DJIA), DIA
-0.55% Growth VIPERs, VUG
-0.55% Blend Total Market VIPERs, VTI
-0.55% LargeCap VIPERs, VV
-0.56% Dividend DJ Select, DVY
-0.56% MidCap Russell, IWR
-0.57% Value SmallCap S&P 600 B, IJS
-0.57% S&P 500 iS LargeCap Blend, IVV
-0.58% Chile MSCI iS, ECH
-0.59% EMU Europe Index, EZU
-0.59% Growth S&P 500/BARRA, IVW
-0.59% MidCap S&P 400 SPDRs, MDY
-0.60% Gold Shares S.T., GLD
-0.61% Growth 1000 Russell, IWF
-0.61% LargeCap 1000 R, IWB
-0.62% EAFE Index, EFA
-0.62% Health Care SPDR, XLV
-0.65% Water Resources, PHO
-0.65% Value 1000 Russell, IWD
-0.66% Capital Markets KWB ST, KCE
-0.67% Small Cap EAFE MSCI iS, SCZ
-0.67% Small Cap VIPERs, VB
-0.68% MidCap S&P 400 iS, IJH
-0.68% Materials SPDR, XLB
-0.68% Growth SmallCap VIPERs, VBK
-0.69% Growth MidCap Russell, IWP
-0.70% S&P 500 SPDRs LargeCap Blend, SPY
-0.72% India Earnings WTree, EPI
-0.72% LargeCap Blend S&P=Weight R, RSP
-0.73% Value SmallCap Russell 2000, IWN
-0.73% Europe 350 S&P Index, IEV
-0.76% Growth MidCap 400 B, IJK
-0.76% Emerging 50 BLDRS, ADRE
-0.76% France Index, EWQ
-0.81% Dividend Appreciation Vipers, VIG
-0.81% Utilities SPDR, XLU
-0.83% European VIPERs, VGK
-0.84% Utilities VIPERs, VPU
-0.84% Dividend International, PID
-0.86% Agriculture DB PS, DBA
-0.87% Spain Index, EWP
-0.88% Silver Trust iS, SLV
-0.89% SmallCap Russell 2000, IWM
-0.89% Microcap Russell, IWC
-0.90% India PS, PIN
-0.91% Growth SmallCap R 2000, IWO
-1.02% United Kingdom Index, EWU
-1.09% Energy SPDR, XLE
-1.13% Italy Index, EWI
-1.17% Canada Index, EWC
-1.17% Turkey MSCI iS, TUR
-1.20% Commodity Tracking, DBC
-1.23% Energy VIPERs, VDE
-1.26% Energy DJ, IYE
-1.28% Energy Global, IXC
-1.29% Consumer Discretionary SPDR, XLY
-1.35% Energy & Nat Res iS GS, IGE
-1.52% Mexico Index, EWW
-1.52% Latin Am 40, ILF
-1.55% Belgium Index, EWK
-1.75% Russia MV, RSX
-1.92% Oil Fund PowerShares, DBO
-1.93% Brazil Index, EWZ
-2.14% Homebuilders SPDR, XHB
-2.30% Oil, Crude, U.S. Oil Fund, USO
-2.50% South Africa Index, EZA
-2.73% Biotech SPDR, XBI
