The S&P 500 (SPX: 1,359.88) rose 0.48% on Friday but still finished down 1.45% for the week. NYSE trading volume rose 4% to a level 10% above its 200-day SMA.
SPX fell below its lowest lows of the previous 16 weeks, down to its lowest level since 7/26/12. SPX has fallen 8.9% since 9/14/12, based on intraday highs and lows.
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. The old Wall Street saying, “Buy the rumor, sell the news”, marked the stock market top on 9/14/12, the day after the Fed announced its widely-anticipated latest round of Quantitative Easing.
The Bears have momentum on their side, at least for the short term and medium term–and perhaps beyond. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
On-Balance Volume for the SPX has been demonstrating bearish divergence by lagging below its March 2012 high as the SPX index made higher highs in September. On-Balance Volume remains below both its 50-day and 200-day SMAs and remains closer to its 9-month lows than to its 9-month highs.
The Cumulative Daily Advance-Decline Line fell below its lows of the previous 2 months last week after multiple up thrusts failed and turned down. The A-D Line fell further below its 50-day SMA.
NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks broke down below its lows of the previous 3 months. This Volume indicator has been lagging the SPX index for 19 months, since April, 2011, thereby demonstrating relative weakness and bearish divergence. Clearly, volume has not been confirming the price up move for many months.
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.
Market breadth indicators are in downtrends after diverging bearishly at the top for the S&P 500 Composite Stock Price Index.
Most stocks have turned down. A majority of stocks in the S&P 500 Composite Price Index are now below their own 50-day SMAs. As the chart* shows, the percentage above their own 50-day SMAs is now 23%, down from 85% in September, and down from a peak of 90% in February, 2012.
The percentage of these same S&P 500 stocks that are above their own 200-day SMAs (now below 51%, down from 82% in September, and down from a peak of 85% in March) remains in a down trend, below both 50-day and 200-day SMAs.
The percentage in bullish Point-and-Figure Chart uptrends (now at 58%, down from 79% in September, and down from a peak of 85% in February) also is trending downward, after falling below both 50-day and 200-day SMAs.
The SPX clearly shows lower highs and lower lows since its intraday peak at 1474.51 set on 9/14/12 (the day after the Fed’s QE3 generous gift to banks). That is the definition of a downtrend. Each rally attempt has been weaker than the previous one, and each decline has been deeper than the than the previous one. Failed rally attempts and lower lows may lead the bullish majority to question their assumptions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 Dow-Jones Industrial Average rose above its closing price highs of the previous 4-years on 10/5/12, but the Dow-Jones Transportation Average failed to confirm, remaining substantially below its 2012 high, thereby demonstrating non confirmation and bearish divergence. Both Averages broke down below their closing price lows of the previous 4 months again on 11/15/2012 and 11/16/2012
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY)turned systematically bearish on 11/7/11 when the 50-day SMA fell below the 200-day SMA.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) turned systematically neutral on 9/13/12, when it rose above its 50-day SMA. BKF/SPY remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) turned systematically neutral on 9/13/12, when it rose above its 50-day SMA. 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) turned systematically neutral again on 10/10/12, when it rose above its 50-day SMA. Longer term, the 50-day SMA has remained below the 200-day SMA every day since 1/14/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically neutral on 10/11/12 when it fell below its 50-day SMA. OEF/SPY fell below its 200-day SMA on 11/7/11. 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 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) fell below its 50-day SMA on 10/12/12, thereby turning systematically bearish again. IWM/SPY fell below its 200-day SMA on 9/24/12, 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) rose above its 50-day SMA on 10/23/12, thereby turning systematically neutral again. Longer term, the MDY/SPY 50-day SMA has been below the 200-day SMA since 6/6/12.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
1429.47, 50-day SMA
1434.27, high of 11/2/2012
1430.53, low of 9/26/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept 2012 range
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
1403.28, low of 10/26/12
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
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1382.17, 200-day SMA
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
The S&P 500 Composite Potential Support
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible Assets, Commodities
U.S. dollar ETF (UUP) turned systematically neutral on 11/2/12 when price rose above 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 22.14, 21.86, 21.57, 21.07, and 20.84. Resistance 22.36, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA)fell below its lows of the previous 4 months on 11/16/12. DBA turned systematically neutral on 9/17/12 when price crossed below its 50-day SMA. DBA price fell below its 200-day SMA on 11/12/12. The 50-day SMA remains above the 200-day SMA, but the 50-200 spread has been narrowing gradually.
Crude Oil, United States Oil ETF (USO) fell below its lows of the previous 4 months on 11/7/12, confirming its preexisting bearish trend. 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 29.02, 26.28, and 22.74. Resistance 32.88, 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. GLD turned systematically neutral on 10/23/12, 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: 162.30, 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 168.54, 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. GDX/GLD fell below its 200-day SMA on 11/12/12. The 50-day SMA has been above the 200-day SMA since 10/19/12, but a bearish crossover seems possible in weeks ahead.
Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. SLV fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral. SLV whipsawed back above its 200-day SMA on 11/5/12, and the 50-day SMA crossed above the 200-day SMA on 10/1/12. Support 29.84, 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 31.89, 32.23, 33.23, 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 2 months on 11/2/12, confirming its preexisting corrective trend. SLV/GLD fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral again. SLV/GLD has been trading closely around its 200-day SMA since 10/19/12. Longer term, SLV/GLD 50-day SMA crossed above the 200-day SMA on 10/9/12 and remains moderately above.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC)fell below its lows of the previous 10 weeks on 11/9/12. JJC price fell below its 50-day SMA on 10/22/12 and fell below its 200-day SMA on 10/19/12. “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, and so this price weakness may be taken as a warning about economic conditions ahead.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
12.03% , OMX , OFFICEMAX INC., OMX
0.93% , PXJ , Oil & Gas, PXJ
2.30% , DGX , QUEST DIAG
4.66% , RIMM , RESEARCH IN MOTION LTD
2.23% , L , LOEWS
4.93% , THC , TENET HEALTHCARE
2.11% , CINF , CINCINNATI FIN
2.07% , AZO , AUTOZONE
0.69% , VDC , Consumer Staples VIPERs, VDC
1.28% , TMK , TORCHMARK
3.22% , ADSK , AUTODESK
2.33% , SYMC , SYMANTEC
1.53% , EIX , EDISON INTL
2.24% , LLL , L-3 COMMS HLDGS
0.44% , PXE , Energy Exploration & Prod, PXE
2.40% , BIIB , BIOGEN IDEC
3.16% , NIHD , NII Holdings, Inc.
0.89% , IWN , Value SmallCap Russell 2000, IWN
0.72% , MDY , MidCap S&P 400 SPDRs, MDY
2.23% , CLX , CLOROX
2.35% , RAI , Reynolds American
1.99% , AN , AUTONATION
0.88% , BF.B , BROWN FORMAN STK B
0.95% , JKL , Value SmallCap iS M, JKL
1.52% , WM , WASTE MANAGEMENT
1.67% , ALL , ALLSTATE
1.96% , IP , INTL PAPER
1.94% , NKE , NIKE STK B
1.79% , SHW , SHERWIN WILLIAMS
1.19% , VPU , Utilities VIPERs, VPU
1.84% , LOW , LOWES
1.79% , AIG , AMER INTL GROUP
2.07% , GILD , Gilead Sciences Inc
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-18.79% , SHLD , SEARS HOLDINGS
-9.84% , BBY , BEST BUY
-7.33% , DELL , DELL
-5.74% , ODP , OFFICE DEPOT
-1.78% , SJM , J. M. Smucker
-0.19% , EWO , Austria Index, EWO
-1.60% , STJ , ST JUDE MEDICAL
-0.84% , CHKP , Check Point Software Technologies Ltd
-1.08% , EWN , Netherlands Index, EWN
-1.86% , CSX , CSX
-1.35% , FMCN , Focus Media, FMCN
-0.63% , VGK , European VIPERs, VGK
-2.28% , MCO , MOODYS CORP
-1.31% , FCX , FREEPRT MCMORAN STK B
-1.18% , PX , PRAXAIR
-0.79% , LH , LAB CRP OF AMER
-1.46% , AMAT , APPLIED MATERIAL
-1.04% , ZEUS , Olympic Steel, ZEUS
-1.76% , HPQ , HEWLETT PACKARD
-0.35% , XSD , Semiconductor SPDR, XSD
-0.57% , PIN , India PS, PIN
-0.72% , VZ , VERIZON COMMS
-1.81% , NVDA , NVIDIA
-1.05% , BBBY , BED BATH BEYOND
-1.36% , SLB , SCHLUMBERGER
-2.05% , PGJ , China LargeCap Growth G D H USX PS, PGJ
-0.28% , DBA , Agriculture DB PS, DBA
-0.32% , TUR , Turkey MSCI iS, TUR
-0.23% , BWX , Bond Ex-US Treas, BWX
-0.81% , MCHP , Microchip Technology Incorporated
-0.67% , EWD , Sweden Index, EWD
-1.00% , XLNX , XILINX
-1.33% , JCP , JC PENNEY