Highlights based on trading on Thursday, May 31, 2012:
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) turned bearish on 5/31/12 when price fell below its lows of the previous 5 months and the 50-day SMA crossed below the 200-day SMA. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this weakness may be suggesting rising doubts about prospects going forward.
CRB Commodity Price Index fell below its lows of the previous 19 months, for another a bearish trend confirmation.
Crude Oil, United States Oil ETF (USO) fell further below its lows of the previous 7 months and still looks bearish on the chart.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell back below its 50-day SMA, turning systematically bearish again.
U.S. dollar ETF (UUP) rose above its highs of the previous 16 months and remains systematically bullish.
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) rose to another new high and remains systematically bullish.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its lows of the previous 7 months.
Energy Stock Sector Relative Strength Ratio (XLE/SPY) fell below its lows of the previous 20 months, and absolute price fell further below its lows of the previous 7 months.
The S&P 500 (SPX: 1,310.33) fell 2.99 points or 0.23% on Thursday. SPX fell 6.27% for the month of May. The path of least resistance is still down.
NYSE volume rose 29% to confirm the stock price decline. Volume patterns have been weak, with a tendency toward lower volume on up days and higher volume on down days, indicating the dominance of selling pressure over buying pressure.
VIX Fear Index rose to an intraday peak of 25.46 on 5/31/12, the highest level since 12/14/11, confirming the continuation of a shift toward skepticism from bullish complacency.
The following ETFs, ranked by Relative Strength, with the weakest at the bottom of the list, closed below their closing price lows of the previous 4 months:
Bond, High-Yield Junk, JNK
Mexico Index, EWW
Switzerland Index, EWL
Dividend International, PID
Belgium Index, EWK
Energy DJ, IYE
Energy SPDR, XLE
Energy VIPERs, VDE
Commodity Tracking, DBC
Energy Global, IXC
Agriculture DB PS, DBA
Germany Index, EWG
Netherlands Index, EWN
Oil Fund PowerShares, DBO
Oil, Crude, U.S. Oil Fund, USO
Russia MV, RSX
Metals & Mining SPDR, XME
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.
Hedge funds lost 5%, according to COO Connect.
Hedge funds suffered their second-worst year on record in 2011, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data. Some of the world’s largest and best-known hedge funds suffered huge losses, down 20% to 50%.
But not all money managers were down in 2011; see:
Robert W. Colby Asset Management, Inc. (click here).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sentiment for Contrary Thinking
Investor sentiment data indicated alarming degrees of optimism and bullish complacency at the 2012 market highs. That is bearish because when the majority of investors has been bullish for some time, investors are already fully invested in the market. Once everyone who is going to buy has already bought, stocks are vulnerable to a downside shakeout. The pendulum of emotion tends to swing too far in one direction, but market mood always reverts to the mean. Some of the most recent data suggests that investors’ sentiment may be beginning to shift away from bullish complacency.
AAII Sentiment: There were 51.64% Bulls and 20.19% Bears, according to the AAII weekly survey reported on 2/9/12. This was the highest level of bullish sentiment in more than a year, since 52.34% Bulls on 1/13/11. As of 5/31/12, however, sentiment had reversed, with 28.02% Bulls and 42.02% Bears.
Investors Intelligence Sentiment: according to the Investors Intelligence weekly survey of stock market newsletter advisors, there were 54.8% Bulls reported on 2/15/11, the highest since the stock market top in May, 2011. On 5/9/12, there were only 20.4% Bears, the lowest level since 6/1/11. The latest reading, reported on 5/30/12, shows 39.3% Bulls versus 24.5% Bears. This is still suggesting too many bulls and too few bears to please Contrary Thinkers.
VIX Fear Index rose to an intraday peak of 25.46 on 5/31/12, the highest level since 12/14/11, confirming the continuation of a shift toward skepticism from bullish complacency. VIX fell to 13.66 intraday on 3/16/12, its lowest level since 6/20/07, and down from a peak of 48.00 on 8/8/11. That large drop indicated a shift away from fear 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
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1388.71, low of 5/3/2012
1369.51, 50-day SMA
1381.50, Fibonacci 78.6% of 2007-2009 range
1340.34, Fibonacci 23.6% R of 2011-12 range
1340.03, low of 3/6/2012
1334.93, high of 5/31/2012
The S&P 500 Composite Potential Support
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% R of 2011-12 range
1,284.11, 200-day SMA
1277.58, low of 1/13/2012
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% R 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
1226.64, low of 11/9/2011
1222.68, Fibonacci 50% of 2011 range
1224.57, high of 12/19/2011
1215.20, low of 12/16/2011
1207.56, Fibonacci 61.8% R of 2011-12 range
1204.49, Fibonacci 23.6% of 2009-11 range
1202.37, low of 12/19/2011
1187.77, Fibonacci 38.2% of 2011 range
1158.66, low of 11/25/2011
1144.38, Fibonacci 23.6% of 2011 range
1101.73, Fibonacci 38.2% of 2009-11 range
1074.77, low of 10/4/2011
1149.16, Fibonacci 78.6% R of 2011-12 range
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1018.69, Fibonacci 50% of 2009-11 range
1008.55, Fibonacci 38.2% of 2009-2010 range
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
943.29, Gann 50.0% of 2009-2010 range
935.64, Fibonacci 61.8% of 2009-11 range
878.04, Fibonacci 61.8% of 2009-2010 range
874.17, Gann 62.5% of 2009-2010 range
869.32, low of 7/8/2009
817.40, Fibonacci 78.6% of 2009-11 range
805.17, Gann 75.0% of 2009-2010 range
785.13, Fibonacci 78.6% of 2009-2010 range
666.79, intraday low of 3/6/2009
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) rose to another new high on 5/31/12 and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/24/11. Support 125.03, 120.60, 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. none.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) > rose to another new high on 5/31/12 and remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA every day since 6/21/11. Support 107.43, 105.85, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance none.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its lows of the previous 7 months on 5/31/12. Systematically, JNK/LQD remains neutral: below its 50-day SMA, below its 200-day SMA, but the 50-day SMA has been modestly above the 200-day SMA every day since 4/16/12. The 50-200 SMA spread has been narrowing, however, and a bearish crossover in days ahead appears probable, based on current trends.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below its lows of the previous 4 months on 5/30/12. Systematically, TIP/IEF remains neutral: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA has been above the 200-day SMA every day since 3/14/12.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible Assets, Commodities
U.S. dollar ETF (UUP) rose above its highs of the previous 16 months on 5/31/12. UUP remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA. Support 22.72, 22.39, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.52, 25.84, 27.19, 28.97.
CRB Commodity Price Index fell below its lows of the previous 19 months on 5/31/12, for another a bearish trend confirmation. Systematically, CRB 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 8/18/11.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below the lows of the previous 20 months on 5/30/12. Systematically, DBA remains bearish, below both its 50-day SMA and 200-day SMAs, and with the 50-day SMA consistently below the 200-day SMA every day since 8/8/11.
Crude Oil, United States Oil ETF (USO) fell further below its lows of the previous 7 months on 5/31/12. USO still looks bearish on the chart. Systematically, USO remains neutral: below its 50-day SMA, below its 200-day SMA, but the 50-day SMA has remained above the 200-day SMA consistently every day since 1/3/12. Support 33.66, 32.52, 29.10, 26.28, and 22.74. Resistance 35.19, 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) fell below its lows of the previous 4 months on 5/16/12. Systematically, GLD turned bearish on 4/17/12, when its 50-day SMA crossed below its 200-day SMA. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 155.13, 155.57, 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) fell back below its 50-day SMA on 5/31/12, 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. Absolute price remains systematically bearish.
Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 4 months on 5/16/12. Systematically, SLV remains bearish: below its 50-day and 200-day SMAs, and with the 50-day SMA below the 200-day SMA every day since 10/27/11. Support 25.65 and 24.44. Resistance: 28.09, 28.60, 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 4 months on 5/16/12, reconfirming a downtrend for the medium term. Systematically, SLV/GLD remains bearish below its 50-day SMA, below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/30/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) turned bearish on 5/31/12 when price fell below its lows of the previous 5 months and the 50-day SMA crossed below the 200-day SMA. JJC fell below its 200-day SMA on 5/3/12 and fell below its 50-day SMA on 5/2/12. JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since JJC peaked at 51.41 on 2/9/12. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this weakness may be suggesting rising doubts about prospects going forward.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 revealed to be deal stocks, sooner or later, 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
7.74% , DYN , DYNEGY
14.06% , CIEN.O , CIENA
0.52% , IYZ , Telecom DJ US, IYZ
0.85% , PIC , Insurance, PIC
6.14% , PWER , POWER ONE
1.44% , CMS , CMS ENERGY
3.25% , IGT , INTL GAME TECH
1.22% , ECH , Chile MSCI iS, ECH
1.26% , ININ , Interactive Intelligence ININ
2.73% , TJX , TJX
0.48% , ACWX , Global ex US ACWI iS, ACWX
3.98% , FRX , FOREST LABS STK A
3.68% , KSU , Kansas City Southern, KSU
0.74% , VOX , Telecom Services VIPERs, VOX
0.34% , ADRA , Asia 50 BLDRS, ADRA
1.46% , CINF , CINCINNATI FIN
1.60% , SNV , SYNOVUS
1.08% , AM , AMER GREETINGS STK A
1.03% , DTE , DTE ENERGY
0.39% , IEF , Bond, 10 Year Treasury, IEF
0.43% , SNA , SNAP ON
2.29% , AVP , AVON
0.30% , AGG , Bond, Aggregate, AGG
0.56% , EIS , Israel MSCI iS, EIS
0.46% , MZZ , Short 200% MidCap 400 PS, MZZ
1.09% , FISV , FISERV
0.71% , LQD , Bond, Corp, LQD
1.09% , PNW , PINNACLE WEST
1.67% , JNS , JANUS CAPITAL
1.16% , TLT , Bond, 20+ Years Treasury, TLT
1.85% , PHM , PULTE HOMES
0.99% , TE , TECO ENERGY
1.80% , LUV , SOUTHWEST AIRLS
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-5.79% , JWN , NORDSTROM
-4.78% , TDC , Teradata Corporation, TDC
-5.14% , X , US STEEL CORP
-4.08% , NE , NOBLE
-6.09% , CLF , CLIFFS NATURAL RESOURCES, CLF
-2.03% , EWW , Mexico Index, EWW
-3.23% , LTD , LIMITED BRANDS
-1.06% , JNK , Bond, High-Yield Junk, JNK
-1.54% , DGX , QUEST DIAG
-6.15% , KSS , KOHLS
-3.70% , HES , AMERADA HESS
-3.25% , PH , PARKER HANNIFIN
-0.73% , JKK , Growth SmallCap iS M, JKK
-5.79% , NFLX , Netflix, NFLX
-1.06% , HYG , Bond High-Yield Corporate, HYG
-0.68% , PKB , Building & Construction, PKB
-2.93% , WOR , WORTHINGTON INDS
-3.05% , MPEL , Melco Crown Entertainment, MPEL
-2.84% , CAT , CATERPILLAR
-1.26% , XBI , Biotech SPDR, XBI
-0.63% , FPX , IPOs, First Tr IPOX-100, FPX
-0.92% , PMR , Retail, PMR
-2.33% , LH , LAB CRP OF AMER
-0.50% , IYJ , Industrial LargeCap Blend DJ US, IYJ
-2.81% , IPG , INTERPUBLIC GRP
-1.58% , BMC.O , BMC SOFTWARE
-0.73% , JKG , MidCap Blend Core iS M, JKG
-1.86% , DOV , DOVER
-1.72% , SPLS , STAPLES
-1.31% , SVU , SUPERVALU
-2.10% , TER , TERADYNE
-4.85% , FMCN , Focus Media, FMCN
-1.03% , IGE , Energy & Nat Res iS GS, IGE
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.70% South Africa Index, EZA
1.22% Chile MSCI iS, ECH
1.16% Bond, 20+ Years Treasury, TLT
1.09% Austria Index, EWO
1.02% Japan Index, EWJ
0.99% Transportation Av DJ, IYT
0.98% Turkey MSCI iS, TUR
0.97% Brazil Index, EWZ
0.95% India PS, PIN
0.90% Pacific VIPERs, VPL
0.90% Italy Index, EWI
0.87% Financial SPDR, XLF
0.81% France Index, EWQ
0.77% Dividend High Yield Equity PS, PEY
0.76% REIT VIPERs, VNQ
0.75% Realty Cohen & Steers, ICF
0.75% Small Cap EAFE MSCI iS, SCZ
0.71% Bond, Corp, LQD
0.67% South Korea Index, EWY
0.65% Thailand MSCI iS, THD
0.65% REIT Wilshire, RWR
0.64% Frontier Markets Guggenheim , FRN
0.63% Utilities VIPERs, VPU
0.62% Real Estate US DJ, IYR
0.60% China 25 iS, FXI
0.58% Taiwan Index, EWT
0.58% Bond Ex-US Treas, BWX
0.57% Financials VIPERs, VFH
0.57% Pacific ex-Japan, EPP
0.53% Australia Index, EWA
0.53% Utilities SPDR, XLU
0.52% Telecom DJ US, IYZ
0.52% Spain Index, EWP
0.48% Bond, TIPS, TIP
0.48% Global ex US ACWI iS, ACWX
0.47% Financial DJ US, IYF
0.47% Financial Services DJ, IYG
0.45% Value EAFE MSCI, EFV
0.43% Emerging Markets, EEM
0.42% EAFE Index, EFA
0.41% Growth EAFE MSCI, EFG
0.39% Bond, 10 Year Treasury, IEF
0.39% United Kingdom Index, EWU
0.37% Latin Am 40, ILF
0.36% Emerging 50 BLDRS, ADRE
0.35% EMU Europe Index, EZU
0.33% European VIPERs, VGK
0.32% Emerging VIPERs, VWO
0.32% Bear, Short S&P 500, SH
0.30% Bond, Aggregate, AGG
0.27% Capital Markets KWB ST, KCE
0.26% Dividend DJ Select, DVY
0.25% India Earnings WTree, EPI
0.24% Canada Index, EWC
0.20% Dividend SPDR, SDY
0.18% Bond EmrgMkt JPM iS, EMB
0.17% Bond Muni ATM-Free S&P iS, MUB
0.17% Financial Preferred, PGF
0.12% Europe 350 S&P Index, IEV
0.12% Value SmallCap Russell 2000, IWN
0.11% Value 1000 Russell, IWD
0.11% Microcap Russell, IWC
0.10% China LargeCap Growth G D H USX PS, PGJ
0.04% Bond, 1-3 Year Treasury, SHY
0.02% Global 100, IOO
0.01% Bond Treasury Short-Term iS, SHV
0.00% WilderHill Clean Energy PS, PBW
0.00% Value S&P 500 B, IVE
0.00% Singapore Index, EWS
-0.02% Value SmallCap VIPERS, VBR
-0.04% Value MidCap Russell, IWS
-0.05% LargeCap Blend Russell 3000, IWV
-0.06% Value VIPERs, VTV
-0.06% Netherlands Index, EWN
-0.07% Dividend International, PID
-0.07% Malaysia Index, EWM
-0.08% Networking, IGN
-0.09% Belgium Index, EWK
-0.10% LargeCap Blend S&P 100, OEF
-0.10% Germany Index, EWG
-0.11% Agriculture DB PS, DBA
-0.13% Hong Kong Index, EWH
-0.13% SmallCap Russell 2000, IWM
-0.15% Growth BARRA Small Cap 600, IJT
-0.16% Value MidCap S&P 400 B, IJJ
-0.19% Gold Shares S.T., GLD
-0.20% Value LargeCap Dynamic PS, PWV
-0.21% Consumer Staples SPDR, XLP
-0.21% Consumer Discretionary SPDR, XLY
-0.21% Dividend Appreciation Vipers, VIG
-0.22% S&P 500 SPDRs LargeCap Blend, SPY
-0.23% Energy Global, IXC
-0.23% LargeCap VIPERs, VV
-0.23% LargeCap 1000 R, IWB
-0.23% DIAMONDS (DJIA), DIA
-0.25% Value SmallCap S&P 600 B, IJS
-0.25% Blend Total Market VIPERs, VTI
-0.26% S&P 500 iS LargeCap Blend, IVV
-0.26% MidCap S&P 400 SPDRs, MDY
-0.26% Preferred Stock iS, PFF
-0.26% Small Cap VIPERs, VB
-0.26% MidCap Russell, IWR
-0.28% MidCap S&P 400 iS, IJH
-0.28% SmallCap S&P 600, IJR
-0.29% Homebuilders SPDR, XHB
-0.31% Switzerland Index, EWL
-0.32% Semiconductor SPDR, XSD
-0.32% Growth MidCap 400 B, IJK
-0.33% LargeCap Blend S&P=Weight R, RSP
-0.36% Growth S&P 500/BARRA, IVW
-0.37% Industrial SPDR, XLI
-0.41% Materials SPDR, XLB
-0.43% QQQ Nasdaq 100 Trust, QQQ
-0.44% Growth VIPERs, VUG
-0.45% Sweden Index, EWD
-0.45% Water Resources, PHO
-0.46% Technology SPDR, XLK
-0.47% Growth SmallCap R 2000, IWO
-0.50% Health Care SPDR, XLV
-0.51% Growth SmallCap VIPERs, VBK
-0.56% Growth 1000 Russell, IWF
-0.59% Silver Trust iS, SLV
-0.60% Technology DJ US, IYW
-0.65% Growth MidCap Russell, IWP
-0.71% Info Tech VIPERs, VGT
-0.86% Commodity Tracking, DBC
-0.87% Energy SPDR, XLE
-0.89% Energy DJ, IYE
-0.91% Russia MV, RSX
-0.92% Basic Materials DJ US, IYM
-1.03% Energy & Nat Res iS GS, IGE
-1.04% Semiconductor iS IGW, SOXX
-1.06% Energy VIPERs, VDE
-1.06% Bond, High-Yield Corporate, HYG
-1.06% Bond, High-Yield Junk, JNK
-1.24% Oil Fund PowerShares, DBO
-1.24% Oil, Crude, U.S. Oil Fund, USO
-1.25% Indonesia MV, IDX
-1.26% Biotech SPDR, XBI
-2.03% Mexico Index, EWW
-2.57% Metals & Mining SPDR, XME
