Stocks rallied strongly for the first 3.5 hours before stabilizing in the final 3 hours on Wednesday. The S&P 500 Composite Index (SPX: 1,587.73) finished higher by 1.22%, the Nasdaq Composite Index rose 1.83%, the Dow Jones Industrial Average advanced by 0.88%, and the Dow Jones Transportation Average jumped 1.79% higher.
The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average closed at new highs, thereby confirming bullish trends.
On the other hand, the following price indexes failed to confirm (that is, they did not rise above recent highs): Dow Jones Transportation Average, Russell 2000 Small Cap Index, and S&P Mid Cap 400 Index.
In addition, the following indicators based on the S&P 500 failed to rise to new highs: On-Balance Volume, the percentage of stocks in the S&P 500 trading above their 50-day SMAs, and the Bullish Percentage of stocks in the S&P 500 in Point-and-Figure Chart uptrends. NYSE Net New Highs also failed to rise above previous highs.
Breadth was bullish, with 2973 Advances and 1054 Declines, and the Cumulative Daily Net Difference of the Number of Advancing Stocks Minus the Number of Declining Stocks on the NYSE also rose above its March high, thereby showing bullish confirmation of new highs.
Advancing/Declining Volume was positive, with 2.7 Advancing Stock Volume to 1.0 Declining Stock Volume. The Cumulative Daily Net Difference of the Volume of Advancing Stocks Minus the Volume of Declining Stocks on the NYSE rose above its March high, thereby showing bullish confirmation of new highs.
Daily price momentum oscillators have been diverging bearishly for many weeks and months while price indexes rose to higher highs. Momentum oscillators have remained below their highs of January, 2013, and below their 2011-2012 highs. For example, RSI(14) based on the S&P 500 Index, now at 65.62, peaked at 74.46 on 1/29/13. MACD(12,26,9), now at 10.54, peaked at 17.88 on 1/29/13. Bearishly diverging momentum is a problem because momentum is a leading indicator of price.
The Art of Contrary Thinking has been calling for questioning overwhelming bullish sentiment. Objective investor sentiment data clearly have demonstrated extremely high degrees of optimism and bullish complacency, matching or exceeding extremes at past market price tops. 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.
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Stock Market Indicators
The Dow Theory last confirmed a Primary Tide Bull Market on 3/14/13, when both Dow-Jones Industrial and Transportation Averages closed at new price highs. The Dow-Jones Industrial Average closed at a higher high on 4/10/13, while the Dow-Jones Transportation Average rose to a lower high, thereby continuing a bearish divergence.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) fell below its lows of the previous 19 months on 4/8/13. QQQ/SPY has remained systematically bearish most of the time since 11/7/12, when the 50-day SMA fell below the 200-day SMA. Absolute price turned systematically neutral on 4/5/13 when it fell below the 50-day SMA.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below the lows of the previous 4 years on 4/8/13, again confirming a major downtrend. BKF/SPY turned systematically bearish on 3/27/13, when the 50-day SMA crossed below the 200-day SMA. BKF/SPY fell below its 50-day SMA on 2/4/13 and fell below its 200-day SMA on 2/19/13. Price peaked at 42.29 on 2/1/13 and fell to another 4-month low on 4/5/13.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below the lows of the previous 4 years on 4/8/13, again confirming a major downtrend. EEM/SPY turned systematically bearish on 3/20/13 when the 50-day SMA fell below the 200-day SMA. Price peaked at 45.34 on 1/2/13 and fell to a 4-month low on 4/4/13.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below the lows of the previous 5 months on 4/1/13, again confirming a medium-term downtrend. EFA/SPY remains systematically neutral but has been losing momentum since 12/28/12.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) fell below the lows of the previous 16 months on 3/28/13, again confirming a major downtrend. OEF/SPY has remained systematically bearish most of the time since 12/17/12, when the 50-day SMA crossed below 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) turned systematically neutral on 4/1/13 when it fell below the 50-day SMA.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below the lows of the previous 2 months on 4/3/13, suggesting a short-term correction, at least. MDY/SPY turned systematically neutral on 4/1/13 when it fell below the 50-day SMA.
Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price shows 3-day pullback this week, which seems normal after its 4-week run up. TLT rose above its highs of the past 3 months on 4/5/13, thereby confirming a medium-term uptrend. Previously, price rose above its 50-day SMA on 3/22/13, thereby turning systematically neutral. Various technical oscillators, such as RSI and MACD, are now pointing upward after showing losses of downside momentum and bullish divergences since 2/1/13. Support 117.49, 114.62, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 123.71, 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price rose above its highs of the past 3 months on 4/5/13, thereby confirming a medium-term uptrend. Previously, price rose above its 50-day SMA on 3/18/13, thereby turning systematically neutral. IEF formed a technical base after hitting an “oversold” low at 105.56 on 2/1/13 and successfully testing that low 3 times. Various technical oscillators, such as RSI and MACD, are now pointing upward after showing losses of downside momentum and bullish divergences since 2/1/13. Support 107.22, 106.56, 105.56, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its 50-day SMA on 4/3/13, thereby turning systematically neutral again. JNK/LQD has been neutral for most of the past 3 years, and neutral appears to be the long-term trend.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) whipsawed back down below its 50-day SMA on 3/18/13, thereby turning systematically neutral again. Longer term, TIP/IEF has been neutral for most of the past 3 years. Absolute price of TIP peaked at 123.44 on 12/6/12 and remains systematically neutral.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price rose above its highs of the past 7-months on 3/27/13 thereby confirming its medium-term uptrend. UUP turned systematically bullish (from neutral) on 4/3/13, when the 50-day SMA crossed above the 200-day SMA. Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 22.35, 22.15, 21.53, 21.07, and 20.84. Resistance 22.69, 22.78, 22.96, 23.14, 23.52, 25.84, 27.19, and 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below its lows of the previous 2 years on 4/5/13, again confirming its major bearish trend. 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 whipsawed back down below its 50-day SMA on 4/3/13, thereby turning systematically neutral again. Longer term, USO has been mostly bearish since peaking at 119.17 on 7/11/08. Support 32.87, 32.16, 31.00, 29.02, 26.28, and 22.74. Resistance 34.86, 35.53, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price fell below its lows of the previous 10 months on 4/4/13, confirming its preexisting major bearish trend. Price turned systematically bearish on 2/22/13, when the 50-day SMA fell below the 200-day SMA. Longer term, GLD has been mostly bearish since peaking at 185.85 on 9/6/11. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 156.80, 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 again on 12/27/12, when the 50-day SMA crossed below the 200-day SMA. Longer term, GDX/GLD has remained mostly bearish for more than 6 years, since 9/5/06.
Silver, iShares Silver Trust ETF (SLV) price fell below its lows of the previous 9 months on 4/4/13, confirming its preexisting major bearish trend. Price turned systematically bearish on 3/1/13, when the 50-day SMA fell below the 200-day SMA. Longer term, SLV has been mostly bearish since peaking at 48.35 on 4/28/11. Support 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.35, 28.50, 28.61, 29.73, 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) fell below its lows of the previous 7 months on 4/5/13, confirming a major downtrend. SLV/GLD is systematically bearish.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price fell below its lows of the previous 17 months on 4/4/13, confirming a major bearish trend. JJC is systematically bearish. JJC has been consolidating losses between 38.99 and 51.41 since 10/5/11. Longer term, JJC has been mostly bearish since peaking at 61.69 on 2/14/11. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, so price weakness in Copper implies a weak economic outlook.
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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 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
2.38% , XBI , Biotech SPDR, XBI
1.42% , PWB , Lg Cap Growth PSD, PWB
4.75% , CS , Credit Suisse Group, CS
5.67% , CIEN.O , CIENA
6.13% , BIDU , Baidu, Inc., BIDU
13.87% , NIHD , NII Holdings, Inc.
5.38% , MU.O , MICRON TECH
3.78% , TMO , THERMO ELECTRON
2.83% , MVV , Ultra MidCap400 Double, MVV
4.15% , TDC , Teradata Corporation, TDC
2.43% , IYZ , Telecom DJ US, IYZ
1.07% , FDO , FAMILY DLR STRS
2.88% , AN , AUTONATION
2.88% , PMTC.O , PARAMETRIC
4.21% , JNS , JANUS CAPITAL
0.79% , VAW , Materials VIPERs, VAW
4.27% , SHLD , SEARS HOLDINGS
3.91% , KMX , CarMax
2.08% , CSC , COMPUTER SCIENCE
2.73% , XLNX , XILINX
2.38% , MCO , MOODYS CORP
4.38% , GCI , GANNETT
3.57% , SNDK , SanDisk Corporation
1.90% , SNA , SNAP ON
3.00% , TLAB , TELLABS
3.79% , AMGN , AMGEN
2.92% , MRK , MERCK & CO
2.53% , CTSH , Cognizant Technology Solutions
3.21% , WFM.O , Whole Foods Market Inc
0.76% , IDU , Utilities DJ, IDU
3.29% , HIG , HARTFORD FINL
2.59% , AVP , AVON
1.38% , MDY , MidCap S&P 400 SPDRs, MDY
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Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-16.36% , HMA , HEALTH MGMT STK A
-5.47% , THC , TENET HEALTHCARE
-3.46% , FAST , Fastenal Company
-2.53% , LPX , LOUISIANA PAC
-1.69% , GLD , Gold Shares S.T., GLD
-1.24% , SH , Short 100% S&P 500, SH
-2.41% , ERIC.O , LM Ericsson Telephone Company
-2.51% , SDS , Short 200% S&P 500 PS, SDS
-0.82% , DOG , Short 100% Dow 30, DOG
-1.37% , TLT , Bond, 20+ Years Treasury, TLT
-1.61% , NTAP , NETWK APPLIANCE
-1.32% , PGR , PROGRESSIVE OHIO
-0.69% , BWX , Bond Ex-US Treas, BWX
-3.91% , QID , Short 200% QQQ PS, QID
-2.10% , SIL , Silver Miners Global X, SIL
-0.18% , FLR , FLUOR
-0.95% , EMN , EASTMAN CHEM
-0.07% , GVI , Bond Interm U.S. Gov, GVI
-1.79% , DXD , Short 200% Dow 30 PS, DXD
-0.15% , PH , PARKER HANNIFIN
-0.11% , HNZ , HJ HEINZ
-0.10% , XOM , EXXON MOBIL
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.02% , Spain Index, EWP
2.86% , Networking, IGN
2.66% , Italy Index, EWI
2.43% , Telecom DJ US, IYZ
2.38% , Biotech SPDR, XBI
2.28% , Capital Markets KWB ST, KCE
2.24% , Semiconductor iS IGW, SOXX
2.12% , Belgium Index, EWK
2.09% , Japan Index, EWJ
2.05% , Semiconductor SPDR, XSD
2.04% , Technology DJ US, IYW
1.94% , QQQ Nasdaq 100 Trust, QQQ
1.92% , Germany Index, EWG
1.92% , Microcap Russell, IWC
1.91% , South Korea Index, EWY
1.91% , Info Tech VIPERs, VGT
1.89% , Netherlands Index, EWN
1.87% , India PS, PIN
1.82% , EMU Europe Index, EZU
1.81% , SmallCap Blend Russell 2000 iS, IWM
1.79% , SmallCap Value S&P 600 iS, IJS
1.78% , Transportation Av DJ, IYT
1.76% , SmallCap Growth Russell 2000 iS, IWO
1.76% , Technology SPDR, XLK
1.76% , SmallCap Growth S&P 600 iS, IJT
1.76% , Value EAFE MSCI, EFV
1.75% , Water Resources, PHO
1.71% , SmallCap Blend S&P 600 iS, IJR
1.71% , SmallCap Value Russell 2000 iS, IWN
1.69% , European VIPERs, VGK
1.68% , Health Care SPDR, XLV
1.64% , Austria Index, EWO
1.62% , Growth SmallCap VIPERs, VBK
1.59% , Europe 350 S&P Index, IEV
1.56% , Pacific VIPERs, VPL
1.48% , Foreign LargeCap EAFE MSCI iS, EFA
1.47% , MidCap Growth S&P 400 iS, IJK
1.47% , Global ex U.S. LargeCap Blend, ACWX
1.46% , France Index, EWQ
1.45% , Small Cap VIPERs, VB
1.43% , Switzerland Index, EWL
1.40% , LargeCap Growth S&P 500 iS, IVW
1.40% , MidCap Blend S&P 400 iS, IJH
1.39% , Hong Kong Index, EWH
1.38% , MidCap S&P 400 SPDRs, MDY
1.38% , Growth MidCap Russell, IWP
1.37% , Value SmallCap VIPERS, VBR
1.36% , LargeCap Growth Russell 1000 iS, IWF
1.35% , Growth VIPERs, VUG
1.34% , Financial SPDR, XLF
1.33% , Industrial SPDR, XLI
1.32% , Financial Services DJ, IYG
1.31% , LargeCap Blend Russell 1000 iS, IWB
1.31% , Global 100, IOO
1.30% , Global LargeCap Blend MSCI iS, ACWI
1.29% , Blend Total Market VIPERs, VTI
1.29% , Sweden Index, EWD
1.28% , South Africa Index, EZA
1.28% , China LargeCap Growth G D H USX PS, PGJ
1.26% , LargeCap Blend Russell 3000 iS, IWV
1.25% , LargeCap VIPERs, VV
1.25% , LargeCap Blend S&P 500 iS, IVV
1.24% , LargeCap Blend S&P 100, OEF
1.24% , MidCap Value S&P 400 iS, IJJ
1.23% , MidCap Russell, IWR
1.22% , S&P 500 SPDRs LargeCap Blend, SPY
1.22% , Financial DJ US, IYF
1.21% , Dividend U.S. DJ iS, DVY
1.21% , Mexico Index, EWW
1.20% , Growth EAFE MSCI, EFG
1.19% , LargeCap Blend S&P=Weight R, RSP
1.17% , Emerging 50 BLDRS, ADRE
1.17% , Consumer Discretionary SPDR, XLY
1.16% , United Kingdom Index, EWU
1.15% , Financials VIPERs, VFH
1.14% , India Earnings WTree, EPI
1.13% , Dividend ex-U.S. DJ iS, IDV
1.12% , Dividend SPDR, SDY
1.11% , Value MidCap Russell, IWS
1.09% , SmallCap Blend EAFE MSCI iS, SCZ
1.08% , Value VIPERs, VTV
1.04% , Dividend High Yield Equity PS, PEY
1.03% , Brazil Index, EWZ
1.01% , Dividend International, PID
1.00% , LargeCap Value S&P 500 iS, IVE
1.00% , LargeCap Value Russell 1000 iS, IWD
0.96% , Emerging Markets MSCI iS, EEM
0.93% , Value LargeCap Dynamic PS, PWV
0.92% , Australia Index, EWA
0.87% , DIAMONDS (DJIA), DIA
0.86% , Emerging VIPERs, VWO
0.83% , Pacific ex-Japan, EPP
0.81% , Utilities SPDR, XLU
0.80% , Utilities VIPERs, VPU
0.77% , Dividend Appreciation Vipers, VIG
0.76% , Latin Am 40, ILF
0.75% , Consumer Staples SPDR, XLP
0.69% , Materials SPDR, XLB
0.69% , Indonesia MV, IDX
0.69% , Oil Fund PowerShares, DBO
0.68% , Canada Index, EWC
0.68% , WilderHill Clean Energy PS, PBW
0.67% , Thailand MSCI iS, THD
0.65% , Malaysia Index, EWM
0.62% , REIT VIPERs, VNQ
0.62% , Homebuilders SPDR, XHB
0.61% , Taiwan Index, EWT
0.61% , Realty Cohen & Steers, ICF
0.59% , Real Estate US DJ iS, IYR
0.57% , REIT Wilshire, RWR
0.56% , Oil, Crude, U.S. Oil Fund, USO
0.54% , Energy SPDR, XLE
0.52% , Basic Materials DJ US, IYM
0.52% , Energy VIPERs, VDE
0.50% , China 25 iS, FXI
0.49% , Energy DJ, IYE
0.49% , Bond, High-Yield Junk, JNK
0.48% , Energy Global, IXC
0.32% , Bond, High Yield Corp iBoxx iS, HYG
0.22% , Russia MV, RSX
0.20% , Energy & Nat Res iS GS, IGE
0.05% , Financial Preferred, PGF
0.05% , Bond, Emerging Mkt JPM iS, EMB
0.05% , Preferred Stock iS, PFF
0.00% , Bond Treasury Short-Term iS, SHV
0.00% , Singapore Index, EWS
0.00% , Bond, 1-3 Year Treasury, SHY
-0.05% , Bond, Muni S&P ATM-Free iS, MUB
-0.20% , Chile MSCI iS, ECH
-0.21% , Bond, Intermediate US Aggregate iS, AGG
-0.22% , Commodity Tracking, DBC
-0.26% , Bond, Long-Term Corp iBoxx iS, LQD
-0.31% , Metals & Mining SPDR, XME
-0.42% , Bond, 10 Year Treasury, IEF
-0.50% , Agriculture DB PS, DBA
-0.56% , Bond, TIPS U.S. Treasury iS, TIP
-0.69% , Bond Ex-US Treas, BWX
-0.74% , Frontier Markets Guggenheim , FRN
-0.82% , Turkey MSCI iS, TUR
-1.24% , Bear, Short S&P 500, SH
-1.29% , Silver Trust iS, SLV
-1.37% , Bond, 20+ Years Treasury, TLT
-1.69% , Gold Shares S.T., GLD
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The S&P 500 Composite Potential Resistance
none
The S&P 500 Composite Potential Support
1576.09, intraday high of 10/11/2007
1538.57, low of 3/19/2013
1533.79, 50-day SMA
1485.01, low of 2/26/2013
1474.51, high of 9/14/2012
1463.76, low of 1/15/2013
1451.64, low on 1/8/13
1448.00, high of 12/19/2012
1443.14, 200-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
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
1398.11, low of 12/31/2012
1397.68, low of 11/26/2012
1396.56, low of 9/4/2012
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
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
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
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
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
