Stock indexes rose 3% over the past 3 days, rising above their highs of the previous 3 weeks, as traders switched from defensive risk avoidance to aggressive risk seeking.
VIX Fear Index fell below 4-week lows to 16.32, indicating a sudden return to bullish complacency.
S&P 500 Composite (SPX, 1,307.41) rose 10.74 points or 0.83% on Wednesday 6/29/11.
Trading volume on the NYSE rose 18% above Tuesday’s pace but still was 4% below the 200-day SMA. Low volume raises doubts about the significance of any rally attempt.
Consumer Staples SPDR stock sector ETF Relative Strength Ratio (XLP/SPY) fell below 7-week lows.
U.S. Treasury Bond fell below the lows of the previous 5 weeks as traders switched from defensive risk avoidance to aggressive risk seeking.
The U.S. dollar pulled back moderately this week to test last week’s lows, where it might find support.
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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
1.88% , FDV , Value 40 Large Low P/E FT DB, FDV
2.61% , PSTL , Steel Global PS ETF, PSTL
1.46% , ITF , Japan LargeCap Blend TOPIX 150, ITF
1.54% , ADRU , Europe 100 BLDRS, ADRU
1.84% , EWI , Italy Index, EWI
3.00% , IIH , Internet Infrastructure H, IIH
2.30% , EWO , Austria Index, EWO
0.51% , VB , Small Cap VIPERs, VB
5.86% , X , US STEEL CORP
1.95% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
6.56% , EBAY , EBAY
1.98% , EWN , Netherlands Index, EWN
0.47% , VDC , Consumer Staples VIPERs, VDC
4.33% , ZION , ZIONS
5.02% , MON , MONSANTO
1.45% , ADRA , Asia 50 BLDRS, ADRA
2.20% , FEZ , Euro STOXX 50, FEZ
0.63% , IYC , Consumer Cyclical DJ, IYC
0.75% , PPA , Aerospace & Defense, PPA
0.77% , JKJ , SmallCap Core iS M, JKJ
2.64% , STLD , Steel Dynamics, STLD
2.96% , BAC , BANK OF AMERICA
4.36% , EK , EASTMAN KODAK
0.70% , PKB , Building & Construction, PKB
1.75% , EFG , Growth EAFE MSCI, EFG
1.87% , EWP , Spain Index, EWP
2.04% , EZU , EMU Europe Index, EZU
3.40% , MET , METLIFE
3.36% , C , CITIGROUP
1.41% , PIC , Insurance, PIC
1.82% , EFV , Value EAFE MSCI, EFV
1.25% , EIS , Israel MSCI iS, EIS
2.79% , CPB , CAMPBELL SOUP
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-15.44% , KBH , KB HOME
-3.93% , PHM , PULTE HOMES
-2.36% , MDT , MEDTRONIC
-1.26% , ETR , ENTERGY
-1.48% , AMGN , AMGEN
-3.23% , DHI , D.R. HORTON, DHI
-0.89% , SH , Short 100% S&P 500, SH
-1.50% , NTAP , NETWK APPLIANCE
-0.67% , CPWR , COMPUWARE
-0.69% , LH , LAB CRP OF AMER
-1.14% , CCL , CARNIVAL STK A
-0.93% , BCR , C R BARD
-0.72% , TLH , Bond 10-20 Year US Treas, TLH
-0.44% , DISCA , Discovery Communications
-0.75% , ABC , AMERISOURCEBERGN
-0.30% , AGG , Bond, Aggregate, AGG
-0.54% , LEN , Lennar Corp. (LEN)
-1.24% , DXD , Short 200% Dow 30 PS, DXD
-0.16% , GVI , Bond Interm U.S. Gov, GVI
-0.77% , QID , Short 200% QQQ PS, QID
-1.09% , GR , GOODRICH CORP
-1.68% , SDS , Short 200% S&P 500 PS, SDS
-1.01% , RHT , Red Hat Inc.
-1.00% , KLAC , KLA TENCOR
-0.92% , SYK , STRYKER
-0.35% , FXI , China 25 iS, FXI
-0.86% , AMD , ADV MICRO DEV
-0.39% , PSQ , Short 100% QQQ, PSQ
-1.40% , DDS , DILLARD STK A
-0.79% , APD , AIR PRODS & CHEM
-0.51% , CBE , COOPER INDS STK A
-1.02% , SHW , SHERWIN WILLIAMS
-0.49% , RHI , ROBERT HALF
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9 Major U.S. Stock Sectors
ranked in order of long-term relative strength
Now available by subscription at a 33% discount.
The Colby Global Markets Report (click here)
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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) has been trading with a bearish bias since peaking on 10/14/10. The Ratio remains below the 200-day SMA, below the 50-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price broke down below 14-week lows on 6/23/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) has been trading with a bearish bias since peaking on 11/27/07. The Ratio remains below the 200-day SMA, below the 50-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price broke down below 14-week lows on 6/23/11.
NASDAQ Composite/S&P 500 Relative Strength Ratio entered a downside correction since peaking on 1/18/11. The Ratio fell below 8-month lows on 6/20/11. Absolute price closed below 6-month closing price lows on 6/17/11. The NASDAQ Advance-Decline Line fell below the lows of the previous 9-months on 6/17/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell further below 28-year lows on 5/26/11, again reconfirming its preexisting bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down further below 4-month lows on 6/13/11 and has been in a downside correction since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) rose above 11-week highs on 6/24/11. Price, however, remains stuck in a neutral trading range.
Crude Oil nearest futures contract price rose on 6/28/11 to test its falling 3-week trendline, where may find resistance. Oil broke down below the lows of the past 4 months on 6/27/11, reconfirming a significant downtrend. Recent data from the Commodity Futures Trading Commission showed hedge-fund and other money managers increased net long positions in Oil–which could prove to be bearish when this hot money rushes for the exits. 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 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 103.39, 104.60, 105.16, 114.83, 115.27, 120.42, 130.0, and 147.27.
Gold nearest futures contract price broke down below the lows of the past 5 weeks on 6/27/11, reconfirming a preexisting short-term downtrend. The Bears now have momentum on their side. On 6/9/11, when Gold was 1542.7, I noted that Gold “appears to have stalled out since 6/6/11. Gold’s 5-week countertrend bounce might be weakening. Reward/Risk does not appear attractive. It seems possible that Gold has finally topped out at 1577.4 after rising 132% from 681 in October, 2008.” 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: 1559.3 and 1577.4.
Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) fell further below 27-month lows on 6/17/11. The Ratio has been falling steeply since 4/8/11 and remains bearish. GDX is offering a bearish divergence relative to GLD, and that might be taken as a warning about prospects for GLD, Gold futures, bullion, and coins.
Silver nearest futures contract price broke down below the lows of the past 5 weeks on 6/27/11, confirming a short-term downtrend. The Bears now have momentum on their side. Silver fell 35% from 49.82 on 4/25/11 to 32.3 on 5/12/11, breaking down below 10-week lows. 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: 36.77, 37.86, 38.845, 39.38, 39.47, 49.82, 49.845 and 50.35.
Silver/Gold Ratio fell below the lows of the previous 4 months in 6/27/11, reconfirming a preexisting downtrend for the medium term. The Ratio entered a steep downtrend since the peak on 4/28/11 and remains bearish.
Copper nearest futures contract price has been trading choppy/sideways for the past few weeks. Longer term, Copper broke down below previous 5-month lows on 5/12/11, confirming an intermediate-term correction, if not a bear market. Weakness in Copper suggests doubts about the economic outlook. Support 3.9505, 3.8535, 3.846, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.2125, 4.402, 4.533, 4.554, 4.6495, 4.6535, and 4.6575.
U.S. Treasury Bond nearest futures contract price fell below the lows of the previous 5 weeks on 6/29/11 as traders switched from defensive risk avoidance to aggressive risk seeking. The Bond broke out above the highs of the previous 7 months on 6/24/11, thereby reconfirming a significant uptrend. 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 127.19, 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 further below 9-month lows on 6/16/11. Absolute price of JNK also broke down below 9-month lows on 6/16/11. Both confirm a bearish trend for JNK.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 6 months on 6/20/11, again reconfirming a significant downtrend. TIP/IEF entered a downtrend after peaking on 4/8/11. This downtrend means that fixed-income investors prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs.
The U.S. dollar nearest futures contract price pulled back moderately this week to test last week’s lows, where it might find support. USD closed above the highs of the previous 3 weeks on 6/16/11, which was a bullish indication for the short-term trend. In addition, the larger trend of the USD has been firming since making the low at 73.325 on 5/2/11. Support 73.88, 73.515, 73.325, 72.86, and 70.80. Resistance 76.54, 76.87, 76.98, 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 39.8% Bulls versus 26.9% Bears as of 6/29/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio fell to 1.48, which is moderately below normal, with a 20-year range of 0.41 to 3.74, a median of 1.56, and a mean of 1.64. Note that Advisory Service Sentiment as of 4/6/11 peaked at 3.65, its highest level in 8 years. The market has been working off that excess since 5/2/11 by correcting to the downside.
VIX Fear Index fell below 4-week lows to 16.32 on 6/29/11, indicating a sudden return 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 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.
As of the close on June 6, 2011, the Dow Theory confirmed a Secondary Reaction (a significant downside correction) for the general stock market, as the Dow Industrials and Transports both closed below 10-week lows. Previously, as of June 1, 2011, the Dow Theory gave a warning of a significant downside correction for the general stock market, as the Dow Industrials and Transports both closed below 5-week lows.
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 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.
S&P 500 Composite (SPX, 1,307.41) rose 10.74 points or 0.83% on Wednesday 6/29/11.
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, high of 5/10/11
1346.82, high of 5/19/11
S&P 500 Cash Index Potential Support
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
3.87% Sweden Index, EWD
3.06% Silver Trust iS, SLV
3.03% Financial Services DJ, IYG
2.77% Silver Miners Global X, SIL
2.50% Capital Markets KWB ST, KCE
2.33% Financial DJ US, IYF
2.30% Austria Index, EWO
2.22% Oil, Crude, U.S. Oil Fund, USO
2.21% Oil Fund PowerShares, DBO
2.19% France Index, EWQ
2.07% Financial SPDR, XLF
2.05% Belgium Index, EWK
2.04% EMU Europe Index, EZU
2.01% Financials VIPERs, VFH
1.98% Netherlands Index, EWN
1.95% Europe 350 S&P Index, IEV
1.94% European VIPERs, VGK
1.89% Canada Index, EWC
1.87% Spain Index, EWP
1.84% Italy Index, EWI
1.82% Value EAFE MSCI, EFV
1.81% Commodity Tracking, DBC
1.78% Mexico Index, EWW
1.75% EAFE Index, EFA
1.75% Growth EAFE MSCI, EFG
1.73% Small Cap EAFE MSCI iS, SCZ
1.65% Germany Index, EWG
1.64% Metals & Mining SPDR, XME
1.63% Energy Global, IXC
1.59% Materials SPDR, XLB
1.57% Japan Index, EWJ
1.56% United Kingdom Index, EWU
1.55% Australia Index, EWA
1.51% Energy & Nat Res iS GS, IGE
1.44% Global ex US ACWI iS, ACWX
1.43% Pacific ex-Japan, EPP
1.42% Thailand MSCI iS, THD
1.40% Latin Am 40, ILF
1.40% Pacific VIPERs, VPL
1.39% Global 100, IOO
1.35% Energy DJ, IYE
1.33% Dividend International, PID
1.32% Basic Materials DJ US, IYM
1.32% Energy VIPERs, VDE
1.29% Taiwan Index, EWT
1.27% Singapore Index, EWS
1.24% South Africa Index, EZA
1.21% South Korea Index, EWY
1.17% Energy SPDR, XLE
1.15% Chile MSCI iS, ECH
1.14% Realty Cohen & Steers, ICF
1.12% Turkey MSCI iS, TUR
1.11% REIT Wilshire, RWR
1.11% Real Estate US DJ, IYR
1.05% REIT VIPERs, VNQ
1.04% Value 1000 Russell, IWD
1.04% Value S&P 500 B, IVE
0.99% Bond, High-Yield Corporate, HYG
0.98% Value VIPERs, VTV
0.96% Emerging 50 BLDRS, ADRE
0.96% Value MidCap Russell, IWS
0.92% Emerging Markets, EEM
0.92% S&P 500 iS LargeCap Blend, IVV
0.91% LargeCap VIPERs, VV
0.90% LargeCap 1000 R, IWB
0.89% Value MidCap S&P 400 B, IJJ
0.89% LargeCap Blend S&P=Weight R, RSP
0.88% LargeCap Blend S&P 100, OEF
0.88% Blend Total Market VIPERs, VTI
0.86% S&P 500 SPDRs LargeCap Blend, SPY
0.85% Growth VIPERs, VUG
0.84% Emerging VIPERs, VWO
0.81% MidCap S&P 400 iS, IJH
0.80% Switzerland Index, EWL
0.80% Dividend High Yield Equity PS, PEY
0.80% Brazil Index, EWZ
0.80% Frontier Markets Guggenheim , FRN
0.80% MidCap S&P 400 SPDRs, MDY
0.79% Technology SPDR, XLK
0.79% MidCap Russell, IWR
0.79% Dividend SPDR, SDY
0.78% LargeCap Blend Russell 3000, IWV
0.78% India PS, PIN
0.75% Growth 1000 Russell, IWF
0.75% Value LargeCap Dynamic PS, PWV
0.75% Growth S&P 500/BARRA, IVW
0.69% Info Tech VIPERs, VGT
0.69% DIAMONDS (DJIA), DIA
0.68% Value SmallCap VIPERS, VBR
0.66% Utilities SPDR, XLU
0.65% Growth MidCap 400 B, IJK
0.64% Gold Shares S.T., GLD
0.64% Growth MidCap Russell, IWP
0.63% Water Resources, PHO
0.63% Bond, High-Yield Junk, JNK
0.61% Dividend DJ Select, DVY
0.60% Value SmallCap S&P 600 B, IJS
0.58% Consumer Staples SPDR, XLP
0.57% Indonesia MV, IDX
0.56% Growth SmallCap VIPERs, VBK
0.54% Networking, IGN
0.52% Industrial SPDR, XLI
0.51% Small Cap VIPERs, VB
0.50% Hong Kong Index, EWH
0.49% Agriculture DB PS, DBA
0.49% Utilities VIPERs, VPU
0.48% SmallCap Russell 2000, IWM
0.47% Transportation Av DJ, IYT
0.46% Dividend Appreciation Vipers, VIG
0.45% Consumer Discretionary SPDR, XLY
0.45% Telecom DJ US, IYZ
0.43% SmallCap S&P 600, IJR
0.42% Russia MV, RSX
0.41% Biotech SPDR, XBI
0.41% QQQ Nasdaq 100 Trust, QQQ
0.41% Growth SmallCap R 2000, IWO
0.39% Value SmallCap Russell 2000, IWN
0.38% India Earnings WTree, EPI
0.37% Growth BARRA Small Cap 600, IJT
0.34% WilderHill Clean Energy PS, PBW
0.34% Financial Preferred, PGF
0.27% Technology DJ US, IYW
0.26% Malaysia Index, EWM
0.23% Bond Ex-US Treas, BWX
0.20% Health Care SPDR, XLV
0.15% Preferred Stock iS, PFF
0.13% Semiconductor iS IGW, SOXX
0.04% Bond, TIPS, TIP
0.02% Bond Treasury Short-Term iS, SHV
0.00% China LargeCap Growth G D H USX PS, PGJ
0.00% Bond, 1-3 Year Treasury, SHY
-0.05% Semiconductor SPDR, XSD
-0.06% Microcap Russell, IWC
-0.06% Bond EmrgMkt JPM iS, EMB
-0.23% Bond, Corp, LQD
-0.30% Bond, Aggregate, AGG
-0.35% Bond Muni ATM-Free S&P iS, MUB
-0.35% China 25 iS, FXI
-0.60% Bond, 10 Year Treasury, IEF
-0.66% Bond, 20+ Years Treasury, TLT
-0.72% Homebuilders SPDR, XHB
