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 7/20/12.
Financial stock sector Relative Strength Ratio (XLF/SPY) turned systematically bearish on 7/19/12, when its 50-day SMA fell below its 200-day SMA.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 2 years on 7/20/12, 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 Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) whipsawed back down below its 50-day SMA on 7/19/12, thereby turning systematically bearish again.
Less risky “defensive” stocks (Utilities, Health Care, and Consumer) continue to outperform riskier cyclical stocks (Industrial, Energy, Materials, and Financial), suggesting that investors are choosing safety over risk.
The safest U.S. Treasury Bonds remain in strong, major uptrends.
The S&P 500 (SPX: 1,362.66) fell 13.85 points or 1.01% on Friday, its largest daily loss in nearly 4 weeks. SPX had looked like it might be getting somewhat overbought for the short term, and some indexes and indicators failed to confirm the previous day’s strength in the SPX. The spread between the SPX 50-day SMA and its 200-day SMA has been narrowing, and a price downtrend from this point could lead to a bearish crossover, possibly before the summer is over.
For the past few months, the day-to-day stock market movements have been highly reactive to the news of the day. That is unpredictable noise. Taking a longer perspective, weighing a wide variety of indicators, and projecting out weeks and months ahead, underlying market conditions suggest that downside risk still may exceed upside potential for the stock market. Choosing safety over risk appears to be the most reasonable approach.
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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Sentiment for Contrary Thinking
Investor sentiment data indicated alarming degrees of optimism and bullish complacency at the February to May 2012 market highs. That was 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, as it did during the April-June downside stock market correction.
AAII Sentiment shows a drop in bullish sentiment. According to the AAII weekly survey of individual investors reported on 7/19/12, there were 22.19% Bulls and 41.79% Bears. Individual investors have grown less optimistic in recent weeks.
Investors Intelligence Sentiment has shifted substantially toward bullish confidence since May. According to the Investors Intelligence weekly survey of stock market newsletter advisors reported on 7/18/12, there were 43.6% Bulls and 24.5% Bears. Advisors are bullish.
Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped 24 percentage points (in just one week) to 47.0% as stocks ran up to their highs of 7/3/12. That was greater bullish exposure than at the May high and “is a worrisome sign”, according to Mark Hulbert.
Corporate Insiders Are Bearish. Insiders sold 5.5 shares for each share bought as of 7/6/12–up from 1.6-to-1 in May and up from a long-term average of 2.25-to-1. The data is was reported by Vickers Weekly Insider Report, published by Argus Research, and Mark Hulbert.
NYSE Short Interest fell by more than 0.5 billion shares, the largest drop since January. This source of short-covering, potential demand for stocks has diminished.
The ICI reported $62.6 billion has been withdrawn from domestic equity mutual funds so far in 2012. This is another confirmation that supply is greater than demand for stocks.
VIX Fear Index fell to 15.45 intraday on 7/19/12, its lowest level since 4/2/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a rapid 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
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
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
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
The S&P 500 Composite Potential Support
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
1333.25, 50-day SMA
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
1313.33, 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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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
9.20% , BHI , BAKER HUGHES
10.32% , SNDK , SanDisk Corporation
1.85% , HAL , HALLIBURTON
2.09% , MZZ , Short 200% MidCap 400 PS, MZZ
2.99% , GOOG , Google
0.65% , ED , CON ED
2.22% , DHI , D.R. HORTON, DHI
0.87% , MU.O , MICRON TECH
0.35% , GE , GENERAL ELECTRIC
0.84% , WMB , WILLIAMS
1.10% , CNP , CENTERPNT ENERGY
1.01% , SLB , SCHLUMBERGER
1.16% , MYY , Short 100% MidCap 400, MYY
0.22% , FE , FIRSTENERGY
1.07% , FDO , FAMILY DLR STRS
3.91% , NE , NOBLE
0.08% , IYE , Energy DJ, IYE
1.22% , TLT , Bond, 20+ Years Treasury, TLT
0.86% , PNW , PINNACLE WEST
0.10% , LNCR , Lincare Holdings Inc
0.56% , PTEN , Patterson-UTI Energy Inc
0.21% , XLU , Utilities SPDR, XLU
0.41% , EXC , EXELON CORP
1.81% , DXD , Short 200% Dow 30 PS, DXD
0.32% , CVX , CHEVRONTEXACO
0.31% , AM , AMER GREETINGS STK A
0.19% , GLD , Gold Shares S.T., GLD
0.10% , IDU , Utilities DJ, IDU
1.21% , YHOO , YAHOO
0.53% , ITT , ITT INDS
0.45% , CMS , CMS ENERGY
0.23% , SLV , Silver Trust iS, SLV
0.24% , NTAP , NETWK APPLIANCE
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.42% , EWK , Belgium Index, EWK
-3.12% , EWO , Austria Index, EWO
-2.65% , XSD , Semiconductor SPDR, XSD
-1.89% , ADRU , Europe 100 BLDRS, ADRU
-2.49% , IGN , Networking, IGN
-5.38% , FHN , First Horizon National
-5.30% , AVP , AVON
-0.87% , PBE , Biotech & Genome, PBE
-6.76% , EWP , Spain Index, EWP
-13.17% , AMD , ADV MICRO DEV
-5.50% , ETFC , E*TRADE FINANCIAL
-5.33% , EWI , Italy Index, EWI
-1.64% , ADRA , Asia 50 BLDRS, ADRA
-2.25% , PXQ , Networking, PXQ
-7.19% , WFM.O , Whole Foods Market Inc
-2.91% , EWG , Germany Index, EWG
-4.32% , CHRW.O , CH Robinson Worldwide Inc, CHRWD
-0.82% , PWV , Value LargeCap Dynamic PS, PWV
-5.18% , SHLD , SEARS HOLDINGS
-2.00% , KCE , Capital Markets KWB ST, KCE
-2.03% , EWU , United Kingdom Index, EWU
-1.14% , CINF , CINCINNATI FIN
-4.13% , SBUX , STARBUCKS
-1.00% , CTAS , CINTAS
-2.69% , BEN , FRANKLIN RSC
-1.68% , LEG , LEGGETT & PLATT
-2.62% , EFV , Value EAFE MSCI, EFV
-1.11% , SIAL , SIGMA ALDRICH
-1.10% , IJK , Growth MidCap 400 B, IJK
-4.48% , TLAB , TELLABS
-1.42% , IWP , Growth MidCap Russell, IWP
-4.06% , MET , METLIFE
-0.91% , EWD , Sweden Index, EWD
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.22% Bond, 20+ Years Treasury, TLT
0.86% Bear, Short S&P 500, SH
0.73% Agriculture DB PS, DBA
0.39% Bond, 10 Year Treasury, IEF
0.31% Bond, TIPS, TIP
0.24% Utilities VIPERs, VPU
0.23% Energy SPDR, XLE
0.23% Silver Trust iS, SLV
0.21% Utilities SPDR, XLU
0.19% Gold Shares S.T., GLD
0.16% Energy VIPERs, VDE
0.14% Bond Muni ATM-Free S&P iS, MUB
0.14% Bond, Aggregate, AGG
0.08% Energy DJ, IYE
0.07% Bond, Corp, LQD
0.05% Financial Preferred, PGF
0.03% Bond EmrgMkt JPM iS, EMB
0.03% Preferred Stock iS, PFF
0.01% Bond, 1-3 Year Treasury, SHY
0.00% Commodity Tracking, DBC
0.00% Bond Treasury Short-Term iS, SHV
-0.17% Energy & Nat Res iS GS, IGE
-0.34% Real Estate US DJ, IYR
-0.37% Homebuilders SPDR, XHB
-0.42% Dividend High Yield Equity PS, PEY
-0.43% China LargeCap Growth G D H USX PS, PGJ
-0.43% Dividend DJ Select, DVY
-0.46% Energy Global, IXC
-0.46% Taiwan Index, EWT
-0.47% Bond, High-Yield Corporate, HYG
-0.49% Mexico Index, EWW
-0.53% REIT VIPERs, VNQ
-0.57% REIT Wilshire, RWR
-0.59% Realty Cohen & Steers, ICF
-0.59% Bond, High-Yield Junk, JNK
-0.60% Dividend SPDR, SDY
-0.61% Telecom DJ US, IYZ
-0.61% Consumer Staples SPDR, XLP
-0.62% Materials SPDR, XLB
-0.67% Bond Ex-US Treas, BWX
-0.76% LargeCap Blend S&P 100, OEF
-0.77% Value 1000 Russell, IWD
-0.81% Dividend Appreciation Vipers, VIG
-0.82% Value VIPERs, VTV
-0.82% Value LargeCap Dynamic PS, PWV
-0.84% Oil Fund PowerShares, DBO
-0.85% Chile MSCI iS, ECH
-0.86% Frontier Markets Guggenheim , FRN
-0.91% LargeCap 1000 R, IWB
-0.91% Sweden Index, EWD
-0.91% Blend Total Market VIPERs, VTI
-0.91% S&P 500 SPDRs LargeCap Blend, SPY
-0.92% Value MidCap Russell, IWS
-0.93% S&P 500 iS LargeCap Blend, IVV
-0.93% MidCap S&P 400 SPDRs, MDY
-0.93% Value S&P 500 B, IVE
-0.93% Canada Index, EWC
-0.94% Basic Materials DJ US, IYM
-0.96% Growth S&P 500/BARRA, IVW
-0.97% Biotech SPDR, XBI
-0.99% DIAMONDS (DJIA), DIA
-1.00% MidCap S&P 400 iS, IJH
-1.00% LargeCap VIPERs, VV
-1.00% Value SmallCap VIPERS, VBR
-1.01% Value SmallCap Russell 2000, IWN
-1.01% LargeCap Blend Russell 3000, IWV
-1.01% Growth 1000 Russell, IWF
-1.06% SmallCap S&P 600, IJR
-1.07% Hong Kong Index, EWH
-1.08% Singapore Index, EWS
-1.10% Value MidCap S&P 400 B, IJJ
-1.10% Growth MidCap 400 B, IJK
-1.10% Thailand MSCI iS, THD
-1.10% Growth VIPERs, VUG
-1.10% LargeCap Blend S&P=Weight R, RSP
-1.11% Small Cap VIPERs, VB
-1.12% South Korea Index, EWY
-1.13% MidCap Russell, IWR
-1.15% Technology SPDR, XLK
-1.16% Latin Am 40, ILF
-1.16% Pacific ex-Japan, EPP
-1.17% Value SmallCap S&P 600 B, IJS
-1.19% Growth BARRA Small Cap 600, IJT
-1.19% Australia Index, EWA
-1.21% Emerging 50 BLDRS, ADRE
-1.22% Consumer Discretionary SPDR, XLY
-1.22% Industrial SPDR, XLI
-1.23% Malaysia Index, EWM
-1.27% Oil, Crude, U.S. Oil Fund, USO
-1.28% SmallCap Russell 2000, IWM
-1.29% Health Care SPDR, XLV
-1.30% Financials VIPERs, VFH
-1.31% Info Tech VIPERs, VGT
-1.32% Metals & Mining SPDR, XME
-1.32% Financial DJ US, IYF
-1.33% QQQ Nasdaq 100 Trust, QQQ
-1.34% China 25 iS, FXI
-1.34% Technology DJ US, IYW
-1.42% Growth SmallCap VIPERs, VBK
-1.42% Growth MidCap Russell, IWP
-1.45% Microcap Russell, IWC
-1.48% Emerging Markets, EEM
-1.49% Emerging VIPERs, VWO
-1.51% Financial SPDR, XLF
-1.52% Growth SmallCap R 2000, IWO
-1.56% South Africa Index, EZA
-1.60% India Earnings WTree, EPI
-1.61% Switzerland Index, EWL
-1.61% Water Resources, PHO
-1.63% Dividend International, PID
-1.63% Financial Services DJ, IYG
-1.64% Global 100, IOO
-1.67% Semiconductor iS IGW, SOXX
-1.73% Russia MV, RSX
-1.75% Growth EAFE MSCI, EFG
-1.84% Turkey MSCI iS, TUR
-1.86% Brazil Index, EWZ
-1.88% Small Cap EAFE MSCI iS, SCZ
-1.89% WilderHill Clean Energy PS, PBW
-1.92% Netherlands Index, EWN
-1.94% India PS, PIN
-1.96% Global ex US ACWI iS, ACWX
-2.00% Capital Markets KWB ST, KCE
-2.00% Indonesia MV, IDX
-2.03% United Kingdom Index, EWU
-2.05% Pacific VIPERs, VPL
-2.25% Transportation Av DJ, IYT
-2.34% Japan Index, EWJ
-2.35% EAFE Index, EFA
-2.42% Belgium Index, EWK
-2.42% Europe 350 S&P Index, IEV
-2.49% Networking, IGN
-2.62% Value EAFE MSCI, EFV
-2.65% Semiconductor SPDR, XSD
-2.67% European VIPERs, VGK
-2.91% Germany Index, EWG
-2.94% France Index, EWQ
-3.12% Austria Index, EWO
-3.29% EMU Europe Index, EZU
-5.33% Italy Index, EWI
-6.76% Spain Index, EWP
