Silver and Crude Oil reversed to the downside on 5/26/11. Previous minor strength might have been only a temporary countertrend bounce in a larger downside correction.
U.S. Treasury Bond nearest futures contract price rose above the highs of the previous 5 months on 5/26/11, again reconfirming a significant uptrend. The Bond built a 5-month, intermediate-term bullish base since the low of 12/15/10. In its favor, nearly everyone has been talking bearish on Bonds this year, so the Bond is rising up off an extreme oversold condition.
Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) broke down below 2-month lows, again warning us to be careful with low-grade bonds.
S&P 500 Composite (SPX, 1,325.69) rose 5.22 points or 0.40% on Thursday. Trading volume fell 8% on the NYSE. SPX again closed below its 20-day and 50-day simple moving averages and below an 18 trading day down trendline. Although choppy up and down movement day-to-day is normal and expected within any trend, the 18 trading day trend is clearly down.
According to Alistair Barr, reporting for MarketWatch.com, some of the world’s largest hedge-fund firms suffered losses so far in May: Paulson Advantage Fund -3.93%, FX Concepts GCP Fund -4.13%, Bridgewater Associates -2.09%, Armajaro’s Commodities fund -4.32%, Tudor Momentum Fund Limited -5.6%, Lynx Fund -5.77%, Caxton’s Hawk Fund -3.54%, Aspect Diversified -5.6%, and Winton Capital Management Fund -3.34%.
But not all money managers are down in May; see:
The Colby Global Markets Report (click here).
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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
1.09% , PIC , Insurance, PIC
8.57% , TIF , TIFFANY
4.98% , HOT , STARWOOD HOTELS
4.79% , CTXS , CITRIX SYSTEMS
6.92% , NTAP , NETWK APPLIANCE
0.59% , EWN , Netherlands Index, EWN
4.27% , BRCM , BROADCOM STK A
1.09% , ITF , Japan LargeCap Blend TOPIX 150, ITF
2.68% , MRVL , MARVELL TECHNOLOGY
2.23% , MCO , MOODYS CORP
2.25% , EMC , EMC
1.44% , IWC , Microcap Russell, IWC
1.71% , EZA , South Africa Index, EZA
2.61% , BHH , Internet B2B H, BHH
3.70% , BC , BRUNSWICK
5.01% , COH , COACH
1.98% , MSFT , MICROSOFT
4.94% , PHM , PULTE HOMES
1.10% , PBJ , Food & Beverage, PBJ
0.90% , ADRU , Europe 100 BLDRS, ADRU
4.25% , CBS , CBS CORP.
1.56% , EPI , India Earnings WTree, EPI
0.61% , TLH , Bond 10-20 Year US Treas, TLH
3.28% , HOLX , Hologic, Inc., HOLX
3.09% , LTD , LIMITED BRANDS
1.17% , IJR , SmallCap S&P 600, IJR
1.73% , TBH , Telebras HOLDRS, TBH
0.97% , FDO , FAMILY DLR STRS
0.58% , PWB , Lg Cap Growth PSD, PWB
2.01% , SYMC , SYMANTEC
2.60% , WPI , WATSON PHARM
3.35% , WYN , Wyndham Worldwide
1.24% , XRAY , DENTSPLY International Inc
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-12.95% , CSC , COMPUTER SCIENCE
-2.75% , BIG , BIG LOTS
-1.57% , ABT , ABBOTT LABS
-1.17% , NYT , NY TIMES STK A
-0.28% , UTH , Utilities H, UTH
-2.20% , TLAB , TELLABS
-0.31% , PPH , Pharmaceutical H, PPH
-1.17% , GR , GOODRICH CORP
-0.55% , PPA , Aerospace & Defense, PPA
-1.60% , TBT , 200% Short US T Bond, TBT
-1.04% , PST , 200% Short Bond 7-10 Yr T, PST
-0.76% , ERTS , ELECTRONIC ARTS
-0.84% , MRK , MERCK & CO
-0.74% , BBBY , BED BATH BEYOND
-1.33% , QID , Short 200% QQQ PS, QID
-0.89% , MYY , Short 100% MidCap 400, MYY
-0.61% , PSQ , Short 100% QQQ, PSQ
-0.35% , HMA , HEALTH MGMT STK A
-0.35% , CMS , CMS ENERGY
-0.44% , PGN , PROGRESS ENERGY
-0.92% , LMT , LOCKHEED MARTIN
-1.60% , RSH , RADIOSHACK
-1.68% , TXT , TEXTRON
-1.02% , LLY , ELI LILLY
-1.00% , WAG , WALGREEN
-0.15% , DOG , Short 100% Dow 30, DOG
-0.34% , DIS , WALT DISNEY
-0.52% , FDX , FEDEX
-0.30% , GOOG , Google
-0.43% , AMP , Ameriprise Financial Inc.
-0.34% , IBM , IBM
-1.90% , ODP , OFFICE DEPOT
-0.91% , SDS , Short 200% S&P 500 PS, SDS
9 major U.S. stock sectors ranked in order of long-term relative strength:
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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below 11-week lows on 5/23/11 and remains bearish. The Ratio gave a bearish signal on 5/3/11 by crossing below its 50-day SMA. The Ratio remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below 8-week lows on 5/23/11. The Ratio gave a bearish signal on 5/11/11 by crossing below its 50-day SMA. The Ratio remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA.
NASDAQ Composite/S&P 500 Relative Strength Ratio appears to have entered a downside correction since peaking on 1/18/11 and remains neutral. Absolute price appears to have entered a downside correction since peaking on 5/2/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell further below 28-year lows on 5/20/11, again reconfirming its preexisting bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below 2-month lows on 5/24/11 and has been in a downside correction since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) has been correcting and consolidating major gains since 4/5/11 and remains neutral. The Ratio rose above all-time highs on 4/5/11.
Crude Oil nearest futures contract price reversed to the downside on 5/26/11. Previous minor strength might have been only a temporary countertrend bounce in a larger downside correction. Oil fell below the lows of the previous 10 weeks on 5/6/11, signaling a price downtrend in a larger time frame. On 5/3/11, when Crude Oil was 111.56, I wrote, “Crude Oil nearest futures contract price fell below the lows of the previous 7 trading days on 5/3/11, suggesting a short-term price pullback.” Support 94.63, 87.09, 83.85, 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 73.52, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 114.83, 120.42, 130.0, and 147.27.
Gold nearest futures contract price fell below the previous day’s low on 5/26/11. Previous minor strength might have been only a temporary countertrend bounce in a larger downside correction. On 5/2/11, when Gold was 1557.1, I wrote, “Gold rose above all-time highs on 5/2/11, again reconfirming its major uptrend. Gold looks overextended, however, and could be due for a downside correction.” Support: 1462.5, 1445.0, 1411.5, 1380.7, 1419.5, 1351.4, 1309.1, 1307.7, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: 1532.5 and 1577.4.
Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) has been falling steeply since 4/8/11 and remains bearish.
Silver nearest futures contract price reversed to the downside on 5/26/11. Previous minor strength might have been only a temporary countertrend bounce in a larger downside correction. The problem is that Silver broke support levels and uptrend lines in recent weeks, so the larger trend may be bearish. Silver fell below 11-week lows on 5/12/11. On 5/2/11, when Silver was 46.084, I wrote, “Silver nearest futures contract price broke sharply below the lows of the previous 2 weeks. The short-term price trend has turned down. If this downtrend continues, it could have implications for inflation expectations.” Support 32.3, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 39.38, 39.47, 49.845 and 50.35.
Silver/Gold Ratio entered a steep downtrend since the peak on 4/28/11 and remains bearish.
Copper nearest futures contract price consolidated after falling below the previous 6-month lows on 5/12/11 and confirming an intermediate-term correction, if not a bear market. Weakness in Copper suggests doubts about the economic outlook. On 4/18/11, when Copper was 4.2175, I wrote, “Copper nearest futures contract price fell below the lows of the previous 4 weeks on 4/18/11, confirming a short-term downtrend.” Support 3.8535, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.533, 4.554, 4.6495, and 4.6575.
U.S. Treasury Bond nearest futures contract price rose above the highs of the previous 5 months on 5/26/11, again reconfirming a significant uptrend. The Bond built a 5-month, intermediate-term bullish base since the low of 12/15/10. In its favor, nearly everyone has been talking bearish on Bonds this year, so the Bond is rising up off an extreme oversold condition. Support 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 128.00 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.
Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) broke down below 2-month lows on 5/26/11. Absolute price of JNK peaked at 41.32 on 11/4/10.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below 13-week lows on 5/23/11, again reconfirming a medium-term downtrend. TIP/IEF entered a downtrend after peaking on 4/8/11. This downtrend means that fixed-income investors now prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Inflation expectations are dying.
The U.S. dollar nearest futures contract price fell below 3-day lows on 5/26/11, possibly suggesting a minor price pullback. USD rose above highs of the previous 7 weeks on Monday 5/23/11, reconfirming a longer time frame uptrend. On 5/5/11, when USD was 74.375, I wrote, ” The U.S. dollar nearest futures contract price rose above the highs of the previous 5 trading days on 5/5/11, suggesting a possible rally attempt. On 5/6/11, when USD was 75.08, I wrote, “The U.S. dollar nearest futures contract price rose above the highs of the previous 2 weeks on 5/6/11, confirming a long-overdue oversold bounce. Momentum and volume were strong.” Support 74.945, 72.86 and 70.80. Resistance 76.87, 77.675, 78.98, 79.34, 81.635, 81.935, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.
Advisory Service Sentiment: There were 57.3% Bulls versus 15.7% Bears as of 4/6/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio soared to 3.65, up from 2.23 the previous week. The Ratio rose its highest level in the 8 years since the 20-year high of 3.74 set on 6/18/03. Following that 2003 peak, the stock market turned sideways/choppy for 2 months and sentiment reverted toward the mean. The Ratio’s 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.63. According to Humphrey B. Neill, The Art of Contrary Thinking, when everybody thinks alike, everyone is likely to be wrong.
VIX Fear Index fell below its 3-year range on 4/20/11, hitting 14.30 intraday, and again confirming a preexisting trend toward bullish complacency. This follows a brief spike up to an intraday peak of 31.28 on 3/16/11. Fear was short-lived. 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 Dow Theory signaled a Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. Looking ahead, joint closes below the 5/17/11 closing price lows could have serious bearish implications for the multi-month Secondary Trend. Here are the critical closing price levels to watch out for: 12,479.60 for the Dow-Jones Industrials and 5,335.37 for the Dow-Jones Transports.
On 5/2/11, when the S&P 500 Composite (SPX) was 1,358.59, I warned, “The majority of major stock price indexes opened higher on gaps but reversed to close with losses on the day. This may signal exhaustion of the short-term uptrend. Sentiment indicators have been suggesting that the stock market may be over loved and overbought. And in view of the sharp reversals in the metal commodities, the so-called “inflation trade”, when speculators buy stocks and sell fixed-income instruments based on expectations of rising price levels for goods and services, may be on thin ice.”
Based on the daily SPX, momentum indicators have turned down and remained bearish. Momentum indicators gave bearish divergence warnings in April; that is, they never made it back to their February peaks when the price indexes rose to higher highs. These bearish divergence warnings are still in effect.
For all the bullish sentiment and bullish news stories (such as better-than-expected earnings and big deal M&A) over the past 3 months, SPX is lower than it was 3 months ago. Worse, a wide variety of momentum indicators are significantly lower than they were 3 months ago, thereby showing bearish divergence. This suggests exhaustion of the uptrend.
Furthermore, the absolute prices of the major stock price indexes show patterns of lower highs and lower lows since 5/2/11. “Lower highs and lower lows” is the classic definition of a bearish downtrend.
S&P 500 Composite (SPX, 1,325.69) rose 5.22 points or 0.40% on Thursday. Trading volume fell 8% on the NYSE. SPX again closed below its 20-day and 50-day simple moving averages and below an 18 trading day down trendline. Although choppy up and down movement day-to-day is normal and expected within any trend, the 18 trading day trend is clearly down.
S&P 500 Cash Index 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
1406.32, high of 5/29/2008
1381.50, Fibonacci 78.6% of 2007-2009 range
1370.50, high of 5/2/11
1359.44.50, high of 5/10/11
S&P 500 Cash Index Potential Support
1294.70, low of 4/18/11
1249.05, low of 3/16/11
1246.73, high of 12/13/10
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
1173.00, low of 11/16/10
1171.70, low of 10/27/10
1166.74, low of 10/20/10
1159.71, low of 10/19/10
1,151.41, low of 10/7/10
1,131.87, low of 10/4/10
1122.79, low of 9/23/2010
1114.63, low of 9/15/2010
1110.88, low of 9/10/2010
1091.15, low of 9/7/2010
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
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
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
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
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.30% South Korea Index, EWY
2.16% India PS, PIN
1.86% Brazil Index, EWZ
1.72% Latin Am 40, ILF
1.71% South Africa Index, EZA
1.70% Australia Index, EWA
1.62% Chile MSCI iS, ECH
1.56% India Earnings WTree, EPI
1.44% Microcap Russell, IWC
1.41% Pacific ex-Japan, EPP
1.39% Growth SmallCap R 2000, IWO
1.34% REIT VIPERs, VNQ
1.32% SmallCap Russell 2000, IWM
1.31% Realty Cohen & Steers, ICF
1.31% REIT Wilshire, RWR
1.31% Growth BARRA Small Cap 600, IJT
1.30% Real Estate US DJ, IYR
1.29% Emerging Markets, EEM
1.28% Switzerland Index, EWL
1.26% Growth SmallCap VIPERs, VBK
1.26% Emerging 50 BLDRS, ADRE
1.23% Semiconductor SPDR, XSD
1.22% United Kingdom Index, EWU
1.22% Emerging VIPERs, VWO
1.21% Frontier Markets Guggenheim , FRN
1.18% Small Cap VIPERs, VB
1.17% SmallCap S&P 600, IJR
1.16% Pacific VIPERs, VPL
1.15% Homebuilders SPDR, XHB
1.13% Value SmallCap Russell 2000, IWN
1.12% Growth MidCap 400 B, IJK
1.10% Global ex US ACWI iS, ACWX
1.06% Networking, IGN
1.06% Value SmallCap S&P 600 B, IJS
1.03% Telecom DJ US, IYZ
0.98% Value SmallCap VIPERS, VBR
0.98% Small Cap EAFE MSCI iS, SCZ
0.97% Europe 350 S&P Index, IEV
0.97% France Index, EWQ
0.95% Metals & Mining SPDR, XME
0.95% Spain Index, EWP
0.95% Austria Index, EWO
0.94% Semiconductor iS IGW, SOXX
0.94% EAFE Index, EFA
0.91% MidCap S&P 400 SPDRs, MDY
0.91% Consumer Discretionary SPDR, XLY
0.90% Japan Index, EWJ
0.90% Value EAFE MSCI, EFV
0.90% Growth EAFE MSCI, EFG
0.90% Energy Global, IXC
0.88% Growth MidCap Russell, IWP
0.87% Biotech SPDR, XBI
0.86% MidCap S&P 400 iS, IJH
0.86% Bond, 20+ Years Treasury, TLT
0.86% European VIPERs, VGK
0.83% Mexico Index, EWW
0.81% MidCap Russell, IWR
0.80% Global 100, IOO
0.75% Malaysia Index, EWM
0.70% Info Tech VIPERs, VGT
0.67% Value MidCap S&P 400 B, IJJ
0.67% Water Resources, PHO
0.67% Value MidCap Russell, IWS
0.66% Thailand MSCI iS, THD
0.66% Technology SPDR, XLK
0.65% WilderHill Clean Energy PS, PBW
0.65% Growth VIPERs, VUG
0.64% Technology DJ US, IYW
0.64% Energy VIPERs, VDE
0.62% QQQ Nasdaq 100 Trust, QQQ
0.62% Dividend International, PID
0.61% Agriculture DB PS, DBA
0.60% Blend Total Market VIPERs, VTI
0.59% Growth 1000 Russell, IWF
0.59% Netherlands Index, EWN
0.59% Energy & Nat Res iS GS, IGE
0.57% LargeCap Blend Russell 3000, IWV
0.57% Russia MV, RSX
0.56% Financial DJ US, IYF
0.55% Bond, 10 Year Treasury, IEF
0.55% China 25 iS, FXI
0.55% LargeCap Blend S&P=Weight R, RSP
0.55% Growth S&P 500/BARRA, IVW
0.52% Financials VIPERs, VFH
0.52% EMU Europe Index, EZU
0.52% Financial SPDR, XLF
0.52% LargeCap 1000 R, IWB
0.50% Italy Index, EWI
0.50% Energy SPDR, XLE
0.49% S&P 500 iS LargeCap Blend, IVV
0.48% Value 1000 Russell, IWD
0.46% Taiwan Index, EWT
0.46% S&P 500 SPDRs LargeCap Blend, SPY
0.46% Financial Services DJ, IYG
0.45% LargeCap VIPERs, VV
0.44% Energy DJ, IYE
0.43% Singapore Index, EWS
0.43% Bond, Corp, LQD
0.43% Basic Materials DJ US, IYM
0.43% China LargeCap Growth G D H USX PS, PGJ
0.41% Industrial SPDR, XLI
0.40% Canada Index, EWC
0.40% Transportation Av DJ, IYT
0.37% Commodity Tracking, DBC
0.36% Indonesia MV, IDX
0.35% Belgium Index, EWK
0.33% Bond Ex-US Treas, BWX
0.33% Sweden Index, EWD
0.32% LargeCap Blend S&P 100, OEF
0.32% Value VIPERs, VTV
0.30% Value S&P 500 B, IVE
0.30% Dividend DJ Select, DVY
0.27% Dividend SPDR, SDY
0.27% Germany Index, EWG
0.25% Dividend Appreciation Vipers, VIG
0.25% Value LargeCap Dynamic PS, PWV
0.24% Bond, TIPS, TIP
0.23% Materials SPDR, XLB
0.21% Bond, Aggregate, AGG
0.18% Dividend High Yield Equity PS, PEY
0.17% Bond Muni ATM-Free S&P iS, MUB
0.16% Hong Kong Index, EWH
0.16% Consumer Staples SPDR, XLP
0.14% Health Care SPDR, XLV
0.12% DIAMONDS (DJIA), DIA
0.06% Bond, 1-3 Year Treasury, SHY
0.05% Capital Markets KWB ST, KCE
0.00% Bond, High-Yield Junk, JNK
-0.01% Bond Treasury Short-Term iS, SHV
-0.03% Utilities SPDR, XLU
-0.04% Utilities VIPERs, VPU
-0.05% Turkey MSCI iS, TUR
-0.05% Financial Preferred, PGF
-0.07% Preferred Stock iS, PFF
-0.09% Bond, High-Yield Corporate, HYG
-0.24% Gold Shares S.T., GLD
-0.27% Bond EmrgMkt JPM iS, EMB
-0.28% Silver Miners Global X, SIL
-0.79% Oil Fund PowerShares, DBO
-0.83% Oil, Crude, U.S. Oil Fund, USO
-1.11% Silver Trust iS, SLV
