The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 7 weeks on 3/2/12, thereby confirming its preexisting bullish trend. OEX/SPX remains above its 50-day and 200-day SMAs, and the 50-day SMA has remained bullishly above the 200-day SMA every day since 8/25/11. 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) fell below the lows of the previous 8 weeks on 3/2/12, thereby confirming a relatively weak trend for the medium term. IWM/SPY is technically neutral, below its 50-day SMA and 200-day SMA, but with the 50-day SMA now slightly above the 200-day SMA.
The S&P 500 Composite (SPX: 1,369.63) stalled out on Thursday and Friday, following a bearish Key Reversal Day on Wednesday.
NYSE volume fell 14% on Friday to its lowest level in more than 3 weeks, and the 50-day SMA of volume fell to its lowest level in 12 years. On days when stock prices rise, volume languishes at extremely low levels, suggesting weak demand for stocks.
The chart of Cumulative NYSE Advance-Decline Volume stalled out below its previous highs in February, April, and June, 2011, warning of bearish divergence.
SPX remains within a potential Bearish Rising Wedge chart pattern, which has forming since December. In addition, that pattern is contained within a larger potential Bearish Rising Wedge chart pattern beginning at the October low. Break downs below the lower boundary lines would offer technical warning of a possible fast return to the lows.
One of the most popular price momentum indicators, RSI(14), fell below its lows of the previous 10 trading days after failing to confirm higher price highs over the past 15 trading days. RSI(14) is warning of bearish divergence.
My Sensitive Short-Term Price Momentum Oscillator based on SPX turned down and currently shows zero upside momentum, indicating a bearish divergence compared to the close price of the SPX. In recent weeks, the slowness of the grind higher indicated that the stock market already had lost most of its bullish momentum.
Expect resistance near the 2011 highs, around the intraday peak on the SPX at 1370.58 set on 5/2/2011, allowing plus or minus a few percentage points for Gann’s “lost motion”.
Overbought, up big from the October low, and with no room above before encountering resistance, Potential Reward relative to potential Risk appears unattractive for stocks.
Recent sentiment data, detailed below, indicates alarming degrees of optimism and bullish complacency. When the majority of investors has been bullish for some time, we can assume that they 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.
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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).
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9 major U.S. stock sectors ranked in order of long-term relative strength:
Available by subscription only (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
7.06% , SLE , SARA LEE
6.97% , FMCN , Focus Media, FMCN
3.60% , KMX , CarMax
4.27% , WYNN , Wynn Resorts L
8.73% , DYN , DYNEGY
4.78% , IGT , INTL GAME TECH
9.71% , SHLD , SEARS HOLDINGS
3.59% , SIRI , Sirius Satellite
2.92% , MPEL , Melco Crown Entertainment, MPEL
2.02% , GT , GOODYEAR TIRE
1.90% , ADBE , ADOBE SYS
1.88% , RF , REGIONS FINAN
1.46% , FLEX , Flextronics International Ltd
1.81% , DISCA , Discovery Communications
1.19% , AIG , AMER INTL GROUP
1.63% , MZZ , Short 200% MidCap 400 PS, MZZ
0.80% , AM , AMER GREETINGS STK A
1.84% , BIDU , Baidu, Inc., BIDU
0.85% , NVDA , NVIDIA
1.70% , MSI , Motorola Solutions, MSI
1.16% , RIG , TRANSOCEAN
0.75% , PSTL , Steel Global PS ETF, PSTL
1.41% , TIF , TIFFANY
0.38% , CMS , CMS ENERGY
0.92% , MWV , MEADWESTVACO
2.08% , NFLX , Netflix, NFLX
1.19% , IP , INTL PAPER
0.55% , NTAP , NETWK APPLIANCE
0.73% , MKC , MCCORMICK
0.63% , KFT , Kraft Foods Inc.
0.06% , FDL , Dividend Leaders, FDL
0.78% , T , AT&T Corp., T
0.33% , LLY , ELI LILLY
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.03% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-0.33% , PIV , Value Line Timeliness MidCap Gr, PIV
-4.00% , BIG , BIG LOTS
-3.41% , BHI , BAKER HUGHES
-6.81% , OMX , OFFICEMAX INC., OMX
-1.35% , PXJ , Oil & Gas, PXJ
-0.28% , TMW , Wilshire 5000 ST TM, TMW
-1.40% , PBW , WilderHill Clean Energy PS, PBW
-3.80% , APC , ANADARKO PETRO
-1.38% , VBK , Growth SmallCap VIPERs, VBK
-2.43% , PCAR , PACCAR
-1.80% , ININ , Interactive Intelligence ININ
-1.07% , EFG , Growth EAFE MSCI, EFG
-0.67% , EWK , Belgium Index, EWK
-0.83% , VPL , Pacific VIPERs, VPL
-0.82% , SCZ , Small Cap EAFE MSCI iS, SCZ
-2.90% , CVG , CONVERGYS
-1.20% , PIN , India PS, PIN
-1.62% , JKK , Growth SmallCap iS M, JKK
-2.09% , MCK , MCKESSON CORP
-0.81% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-2.25% , RZV , Value SmallCap S&P 600, RZV
-1.29% , TER , TERADYNE
-1.99% , CMA , COMERICA
-2.13% , SVU , SUPERVALU
-0.75% , PEY , Dividend High Yield Equity PS, PEY
-2.73% , LXK , LEXMARK INTL STK A
-0.23% , PFM , Dividend Achievers PS, PFM
-0.69% , ADRA , Asia 50 BLDRS, ADRA
-1.48% , CINF , CINCINNATI FIN
-1.84% , NWL , NEWELL RUBBER
-2.37% , ADSK , AUTODESK
-0.68% , NYC , LargeCap Blend NYSE Composite iS, NYC
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
0.94% Bond, 20+ Years Treasury, TLT
0.72% Russia MV, RSX
0.56% China LargeCap Growth G D H USX PS, PGJ
0.51% Mexico Index, EWW
0.48% Bond EmrgMkt JPM iS, EMB
0.41% Indonesia MV, IDX
0.40% Bond, 10 Year Treasury, IEF
0.28% Financial Preferred, PGF
0.27% Bear, Short S&P 500, SH
0.22% Bond, Aggregate, AGG
0.21% Preferred Stock iS, PFF
0.20% Malaysia Index, EWM
0.09% Consumer Staples SPDR, XLP
0.03% Bond, Corp, LQD
0.02% Bond, 1-3 Year Treasury, SHY
0.01% Bond, TIPS, TIP
0.00% Bond Treasury Short-Term iS, SHV
-0.02% DIAMONDS (DJIA), DIA
-0.03% Value LargeCap Dynamic PS, PWV
-0.03% Real Estate US DJ, IYR
-0.06% Utilities SPDR, XLU
-0.07% Consumer Discretionary SPDR, XLY
-0.07% REIT Wilshire, RWR
-0.08% QQQ Nasdaq 100 Trust, QQQ
-0.09% Telecom DJ US, IYZ
-0.09% Bond Muni ATM-Free S&P iS, MUB
-0.09% Utilities VIPERs, VPU
-0.11% Realty Cohen & Steers, ICF
-0.12% China 25 iS, FXI
-0.14% Technology SPDR, XLK
-0.15% REIT VIPERs, VNQ
-0.15% Singapore Index, EWS
-0.16% Gold Shares S.T., GLD
-0.17% Health Care SPDR, XLV
-0.17% Brazil Index, EWZ
-0.18% Growth S&P 500/BARRA, IVW
-0.19% Growth 1000 Russell, IWF
-0.22% LargeCap Blend S&P 100, OEF
-0.24% Materials SPDR, XLB
-0.25% Emerging Markets, EEM
-0.26% S&P 500 iS LargeCap Blend, IVV
-0.27% Emerging VIPERs, VWO
-0.27% Technology DJ US, IYW
-0.27% Emerging 50 BLDRS, ADRE
-0.27% LargeCap 1000 R, IWB
-0.28% South Korea Index, EWY
-0.30% Value VIPERs, VTV
-0.30% Bond, High-Yield Junk, JNK
-0.30% Growth VIPERs, VUG
-0.30% S&P 500 SPDRs LargeCap Blend, SPY
-0.31% Dividend Appreciation Vipers, VIG
-0.32% Dividend SPDR, SDY
-0.34% Latin Am 40, ILF
-0.36% Info Tech VIPERs, VGT
-0.37% Financial SPDR, XLF
-0.38% Hong Kong Index, EWH
-0.39% Value 1000 Russell, IWD
-0.40% LargeCap VIPERs, VV
-0.40% Dividend DJ Select, DVY
-0.41% Bond, High-Yield Corporate, HYG
-0.43% LargeCap Blend Russell 3000, IWV
-0.47% LargeCap Blend S&P=Weight R, RSP
-0.47% Value S&P 500 B, IVE
-0.47% Agriculture DB PS, DBA
-0.49% Blend Total Market VIPERs, VTI
-0.51% Financials VIPERs, VFH
-0.53% MidCap Russell, IWR
-0.53% Growth MidCap Russell, IWP
-0.54% Financial DJ US, IYF
-0.54% Financial Services DJ, IYG
-0.57% Value MidCap Russell, IWS
-0.58% Dividend International, PID
-0.58% Bond Ex-US Treas, BWX
-0.59% Industrial SPDR, XLI
-0.61% Frontier Markets Guggenheim , FRN
-0.63% Netherlands Index, EWN
-0.67% Belgium Index, EWK
-0.69% Pacific ex-Japan, EPP
-0.70% Growth MidCap 400 B, IJK
-0.72% Basic Materials DJ US, IYM
-0.75% Global ex US ACWI iS, ACWX
-0.75% Dividend High Yield Equity PS, PEY
-0.75% Australia Index, EWA
-0.76% Value EAFE MSCI, EFV
-0.77% MidCap S&P 400 iS, IJH
-0.77% Global 100, IOO
-0.80% Biotech SPDR, XBI
-0.82% Networking, IGN
-0.82% Switzerland Index, EWL
-0.82% Small Cap EAFE MSCI iS, SCZ
-0.83% Pacific VIPERs, VPL
-0.84% MidCap S&P 400 SPDRs, MDY
-0.86% Chile MSCI iS, ECH
-0.87% Value MidCap S&P 400 B, IJJ
-0.92% Canada Index, EWC
-0.92% EAFE Index, EFA
-0.92% Thailand MSCI iS, THD
-0.92% India Earnings WTree, EPI
-0.94% Energy DJ, IYE
-0.95% Japan Index, EWJ
-0.96% Turkey MSCI iS, TUR
-0.98% France Index, EWQ
-1.01% Commodity Tracking, DBC
-1.01% Italy Index, EWI
-1.05% Spain Index, EWP
-1.07% Transportation Av DJ, IYT
-1.07% Growth EAFE MSCI, EFG
-1.08% Taiwan Index, EWT
-1.09% Capital Markets KWB ST, KCE
-1.12% Energy Global, IXC
-1.12% Germany Index, EWG
-1.12% EMU Europe Index, EZU
-1.13% Semiconductor iS IGW, SOXX
-1.13% Europe 350 S&P Index, IEV
-1.14% Energy SPDR, XLE
-1.16% Value SmallCap VIPERS, VBR
-1.18% United Kingdom Index, EWU
-1.20% India PS, PIN
-1.21% Water Resources, PHO
-1.22% Energy VIPERs, VDE
-1.24% Austria Index, EWO
-1.29% European VIPERs, VGK
-1.32% Homebuilders SPDR, XHB
-1.33% Small Cap VIPERs, VB
-1.35% South Africa Index, EZA
-1.35% Sweden Index, EWD
-1.37% Energy & Nat Res iS GS, IGE
-1.38% Growth SmallCap VIPERs, VBK
-1.40% WilderHill Clean Energy PS, PBW
-1.42% Value SmallCap Russell 2000, IWN
-1.48% Growth BARRA Small Cap 600, IJT
-1.50% SmallCap Russell 2000, IWM
-1.51% Growth SmallCap R 2000, IWO
-1.56% SmallCap S&P 600, IJR
-1.65% Value SmallCap S&P 600 B, IJS
-1.83% Microcap Russell, IWC
-1.88% Semiconductor SPDR, XSD
-1.93% Metals & Mining SPDR, XME
-1.96% Oil Fund PowerShares, DBO
-1.97% Silver Trust iS, SLV
-2.35% Oil, Crude, U.S. Oil Fund, USO
