Consumer Discretionary stock sector ETF Relative Strength Ratio (XLY/SPY) fell below its 50-day SMA on 2/4/13, thereby turning systematically neutral.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its 50-day SMA on 2/4/13, thereby turning systematically neutral.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below its 50-day SMA on 2/4/13, thereby turning systematically neutral.
The S&P 500 (SPX: 1,495.71 ) fell 1.15% on Monday. SPX closed below its lowest daily lows of the previous 5 trading days. The Nasdaq Composite Index fell more, down 1.51%.
Stock prices opened lower on a downside gap and remained under pressure all morning. Following a pause after noon, stocks fell further in the final half hour and closed near their lows of the day. Trapped bulls didn’t stand a chance.
Popular daily price momentum oscillators fell steeply, following previous warnings of bearish momentum divergence. For example, RSI(14) fell below its 50-day SMA and below its lows of the previous 5 weeks. In addition, MACD(12,26,9) crossed below its signal line. Momentum is a leading indicator of price.
The bullish majority has to be wondering if it might have taken “risk on” too far. The Art of Contrary Thinking called for questioning strong bullish sentiment. Investor sentiment data indicated high degrees of optimism and bullish complacency in recent weeks, matching or exceeding extremes in September, 2012, when many stock price indexes hit peaks and reversed to the downside. Elevated levels of optimism are bearish because when the majority is extremely bullish, 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 the market mood always reverts to the mean–eventually. Sentiment extremes are a leading indicator of price.
Our clients’ separately managed accounts made gains in 6 of the past 7 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Market Indicators
The Dow Theory confirmed a Primary Tide Bull Market on 1/18/13, when both Dow-Jones Industrial and Transportation Averages closed above their closing price highs of the previous 5 years.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) turned systematically bearish again on 1/3/13, when it whipsawed back down below its 50-day SMA.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its 50-day SMA on 2/4/13, thereby turning systematically neutral.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) turned systematically neutral on 1/23/13, when it fell below its 50-day SMA.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below its 50-day SMA on 2/4/13, thereby turning systematically neutral.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically bearish on 12/17/12, when the 50-day SMA fell below the 200-day SMA. 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. On the other hand, Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative stability and safety of large size.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) 50-day SMA rose above the 200-day SMA on 1/8/13, thereby turning systematically bullish.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) turned systematically bullish on 12/14/12, when the 50-day SMA crossed above the 200-day SMA.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
The S&P 500 Composite Potential Support
1496.33, low of 1/28/13
1489.46, low of 1/24/13
1474.51, high of 9/14/2012
1463.76, low of 1/15/13
1451.64, low on 1/8/13
1448.00, high of 12/19/2012
1447.81, 50-day SMA
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1438.59, high of 12/12/2012
1434.27, high of 11/2/2012
1432.82, low of 12/20/2012
1430.53, low of 9/26/2012
1426.76, low of 12/12/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept ’12 range
1424.41, Fibonacci 61.8% of Sept-Nov ’12 range
1423.73, high of 12/3/2012
1422.58, low of 12/21/2012
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1420.34, high of 12/7/2012
1419.70, high of 11/29/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
1409.16, high of 11/23/2012
1403.28, low of 10/26/12
1401.58, low of 12/28/12
1400.27, 200-day SMA
1398.11, low of 12/31/2012
1397.68, low of 11/26/2012
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
1385.43, low of 11/28/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.62, 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
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 bearish again on 1/10/13 when it whipsawed back down below its 50-day SMA and a 6-months long downtrend line. 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 21.07, and 20.84. Resistance 21.90, 22.05, 22.30, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price turned systematically bearish on 1/11/13 when the 50-day SMA crossed down below the 200-day SMA.
Crude Oil, United States Oil ETF (USO) price turned systematically neutral on 12/26/12, when price rose above its 50-day SMA. The 50-day SMA has remained below its 200-day SMA consistently every day since 6/7/12, although the 50-200 spread has narrowed since 1/3/13. Support 34.38, 33.57, 31.00, 29.02, 26.28, and 22.74. Resistance 35.53, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price turned systematically neutral on 11/27/12, when it fell below its 50-day SMA. Support: 158.39, 157.40, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 164.40, 166.94, 170.01, 174.07, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically bearish on 12/27/12, when the 50-day SMA crossed below the 200-day SMA.
Silver, iShares Silver Trust ETF (SLV) price turned systematically neutral again on 2/4/13, when it whipsawed down below its 50-day SMA. Too many recent whipsaws are a sign that Silver is stuck in an unprofitable trading range, however. Support 29.73, 28.61, 27.97, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 31.41, 32.72, 33.31, 34.08, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) turned systematically bullish again on 1/30/13, when it whipsawed back up above its 50-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) rose above its highs of the previous 3 months on 2/1/13, which generally should be taken as a bullish signal. Still, JJC has been consolidating in trading range between 38.99 and 51.41 since October 2011. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
4.66% , HUM , HUMANA
4.20% , HRB , H&R BLOCK
1.03% , MYY , Short 100% MidCap 400, MYY
1.75% , PSQ , Short 100% QQQ, PSQ
3.67% , QID , Short 200% QQQ PS, QID
0.58% , LRCX , LAM RESEARCH CORP
2.04% , OMX , OFFICEMAX INC., OMX
0.71% , CLX , CLOROX
0.61% , VRSN , VeriSign Inc
0.40% , DPS , Dr Pepper Snapple Group
0.61% , FDX , FEDEX
0.66% , TDC , Teradata Corporation, TDC
0.19% , DRI , DARDEN REST
0.11% , KLAC , KLA TENCOR
0.88% , S , SPRINT NEXTEL
0.49% , BIG , BIG LOTS
0.11% , VLO , VALERO ENERGY
6.03% , NFLX , Netflix, NFLX
0.01% , BDX , BECTON DICKINSON
0.33% , SPG , SIMON PROP GRP
0.07% , CMI , CUMMINS
0.18% , MUB , Bond Muni ATM-Free S&P iS, MUB
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-13.78% , MHP , MCGRAW HILL
-10.66% , MCO , MOODYS CORP
-5.43% , EWP , Spain Index, EWP
-0.99% , RPV , Value S&P 500, RPV
-2.29% , PIN , India PS, PIN
-6.70% , GCI , GANNETT
-1.23% , PST , 200% Short Bond 7-10 Yr T, PST
-2.64% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-2.85% , FXI , China 25 iS, FXI
-5.98% , NYT , NY TIMES STK A
-4.45% , FEZ , Euro STOXX 50, FEZ
-1.97% , TE , TECO ENERGY
-2.74% , AMP , Ameriprise Financial Inc.
-1.52% , IXP , Telecommunications Global, IXP
-4.26% , BC , BRUNSWICK
-1.85% , CSC , COMPUTER SCIENCE
-3.72% , EWK , Belgium Index, EWK
-2.68% , SYY , SYSCO
-3.02% , YUM , YUM BRANDS
-1.35% , VCR , Consumer D. VIPERs, VCR
-1.72% , CCE , COCA COLA ENTER
-1.67% , EWH , Hong Kong Index, EWH
-5.81% , EWI , Italy Index, EWI
-3.50% , QLD , Ultra QQQ Double, QLD
-1.33% , SPLS , STAPLES
-1.80% , RAI , Reynolds American
-1.18% , IWV , LargeCap Blend Russell 3000, IWV
-5.02% , JNY , JONES APPAREL
-1.69% , CCL , CARNIVAL STK A
-0.83% , COL , ROCKWELL COLLINS
-0.86% , VDC , Consumer Staples VIPERs, VDC
-0.90% , KCE , Capital Markets KWB ST, KCE
-2.77% , IEV , Europe 350 S&P Index, IEV
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.28% Bond, 20+ Years Treasury, TLT
1.16% Bear, Short S&P 500, SH
0.66% Networking, IGN
0.65% Bond, TIPS U.S. Treasury iS, TIP
0.58% Bond, 10 Year Treasury, IEF
0.34% Gold Shares S.T., GLD
0.34% Bond, Long-Term Corp iBoxx iS, LQD
0.28% Bond, Intermediate US Aggregate iS, AGG
0.18% Bond, Muni S&P ATM-Free iS, MUB
0.10% Japan Index, EWJ
0.02% Bond, 1-3 Year Treasury, SHY
-0.01% Bond Treasury Short-Term iS, SHV
-0.13% Preferred Stock iS, PFF
-0.14% Agriculture DB PS, DBA
-0.15% Taiwan Index, EWT
-0.16% Financial Preferred, PGF
-0.20% REIT Wilshire, RWR
-0.21% Real Estate US DJ iS, IYR
-0.22% Bond Ex-US Treas, BWX
-0.23% REIT VIPERs, VNQ
-0.29% Silver Trust iS, SLV
-0.33% Pacific VIPERs, VPL
-0.33% Bond, Emerg Mkt JPM iS, EMB
-0.33% Realty Cohen & Steers, ICF
-0.35% Commodity Tracking, DBC
-0.39% Chile MSCI iS, ECH
-0.41% Malaysia Index, EWM
-0.42% Bond, High Yield Corp iBoxx iS, HYG
-0.42% Bond, High-Yield Junk, JNK
-0.47% Thailand MSCI iS, THD
-0.55% Canada Index, EWC
-0.58% Singapore Index, EWS
-0.68% Utilities VIPERs, VPU
-0.68% Utilities SPDR, XLU
-0.69% Transportation Av DJ, IYT
-0.72% Dividend International, PID
-0.81% Frontier Markets Guggenheim , FRN
-0.83% Energy & Nat Res iS GS, IGE
-0.84% Turkey MSCI iS, TUR
-0.84% DIAMONDS (DJIA), DIA
-0.85% MidCap Growth S&P 400 iS, IJK
-0.86% Industrial SPDR, XLI
-0.87% Telecom DJ US, IYZ
-0.88% Dividend Appreciation Vipers, VIG
-0.88% Value MidCap Russell, IWS
-0.90% Capital Markets KWB ST, KCE
-0.91% Energy VIPERs, VDE
-0.91% MidCap S&P 400 SPDRs, MDY
-0.91% Dividend U.S. DJ iS, DVY
-0.92% MidCap Blend S&P 400 iS, IJH
-0.94% Consumer Staples SPDR, XLP
-0.95% Biotech SPDR, XBI
-0.95% Energy SPDR, XLE
-0.95% Value VIPERs, VTV
-0.96% Materials SPDR, XLB
-0.97% LargeCap Value S&P 500 iS, IVE
-0.97% Small Cap VIPERs, VB
-0.97% MidCap Value S&P 400 iS, IJJ
-0.98% Dividend SPDR, SDY
-0.98% Value LargeCap Dynamic PS, PWV
-0.99% Growth SmallCap VIPERs, VBK
-0.99% LargeCap Blend S&P=Weight R, RSP
-1.00% LargeCap Value Russell 1000 iS, IWD
-1.02% MidCap Russell, IWR
-1.02% Growth MidCap Russell, IWP
-1.03% Australia Index, EWA
-1.03% Energy DJ, IYE
-1.05% Blend Total Market VIPERs, VTI
-1.05% LargeCap VIPERs, VV
-1.07% South Africa Index, EZA
-1.07% Financials VIPERs, VFH
-1.09% LargeCap Blend S&P 500 iS, IVV
-1.10% Value SmallCap VIPERS, VBR
-1.10% Metals & Mining SPDR, XME
-1.11% Health Care SPDR, XLV
-1.12% Mexico Index, EWW
-1.12% Water Resources, PHO
-1.13% S&P 500 SPDRs LargeCap Blend, SPY
-1.14% Financial SPDR, XLF
-1.15% SmallCap Growth Russell 2000 iS, IWO
-1.17% SmallCap Blend S&P 600 iS, IJR
-1.18% LargeCap Blend Russell 1000 iS, IWB
-1.18% LargeCap Blend Russell 3000 iS, IWV
-1.18% Homebuilders SPDR, XHB
-1.18% LargeCap Growth S&P 500 iS, IVW
-1.19% LargeCap Growth Russell 1000 iS, IWF
-1.19% United Kingdom Index, EWU
-1.19% Financial DJ US, IYF
-1.20% LargeCap Blend S&P 100, OEF
-1.20% Pacific ex-Japan, EPP
-1.21% SmallCap Blend Russell 2000 iS, IWM
-1.21% Growth VIPERs, VUG
-1.22% SmallCap Growth S&P 600 iS, IJT
-1.22% Financial Services DJ, IYG
-1.23% South Korea Index, EWY
-1.23% Consumer Discretionary SPDR, XLY
-1.24% Switzerland Index, EWL
-1.25% Microcap Russell, IWC
-1.29% SmallCap Value Russell 2000 iS, IWN
-1.29% Emerging VIPERs, VWO
-1.30% SmallCap Value S&P 600 iS, IJS
-1.31% Technology SPDR, XLK
-1.31% Emerging Markets MSCI iS, EEM
-1.37% Brazil Index, EWZ
-1.41% Global LargeCap Blend MSCI iS, ACWI
-1.42% Latin Am 40, ILF
-1.42% SmallCap Blend EAFE MSCI iS, SCZ
-1.44% Basic Materials DJ US, IYM
-1.45% Energy Global, IXC
-1.45% Growth EAFE MSCI, EFG
-1.48% Technology DJ US, IYW
-1.49% Oil Fund PowerShares, DBO
-1.49% Dividend High Yield Equity PS, PEY
-1.53% Info Tech VIPERs, VGT
-1.54% Semiconductor iS IGW, SOXX
-1.57% WilderHill Clean Energy PS, PBW
-1.58% Russia MV, RSX
-1.58% Indonesia MV, IDX
-1.60% Emerging 50 BLDRS, ADRE
-1.61% Oil, Crude, U.S. Oil Fund, USO
-1.67% Hong Kong Index, EWH
-1.70% Global ex U.S. LargeCap Blend, ACWX
-1.71% Global 100, IOO
-1.74% QQQ Nasdaq 100 Trust, QQQ
-1.80% Foreign LargeCap EAFE MSCI iS, EFA
-1.83% Sweden Index, EWD
-1.94% Semiconductor SPDR, XSD
-2.12% India Earnings WTree, EPI
-2.26% China LargeCap Growth G D H USX PS, PGJ
-2.29% India PS, PIN
-2.32% Dividend ex-U.S. DJ iS, IDV
-2.34% Value EAFE MSCI, EFV
-2.74% European VIPERs, VGK
-2.77% Europe 350 S&P Index, IEV
-2.85% China 25 iS, FXI
-3.30% Netherlands Index, EWN
-3.34% Austria Index, EWO
-3.64% Germany Index, EWG
-3.72% Belgium Index, EWK
-3.97% EMU Europe Index, EZU
-4.22% France Index, EWQ
-5.43% Spain Index, EWP
-5.81% Italy Index, EWI
