S&P 500 Composite (SPX, 1,333.27) fell 10.33 points or 0.77% on Friday. Another afternoon rally attempt fizzled, and SPX closed below the open and below Thursday’s low. NYSE volume rose 10% as stock prices fell, revealing that Demand for stocks is weaker than Supply of stocks. Volume indicators have been bearish for months already.
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 slightly 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–still a short-term downtrend at this time.
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.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below 13-week lows on 5/20/11, 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.
Commodities, Oil, Gold, Silver, and Copper firmed slightly over the past week but remain in price downtrends and look quite risky.
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
5.95% , LVLT , LEVEL 3 COMMUNICATIONS
4.10% , APC , ANADARKO PETRO
1.38% , IIH , Internet Infrastructure H, IIH
3.19% , MAS , MASCO
1.26% , GLD , Gold Shares S.T., GLD
1.72% , EIX , EDISON INTL
1.25% , EXC , EXELON CORP
2.41% , DYN , DYNEGY
2.11% , PHM , PULTE HOMES
1.98% , GILD , Gilead Sciences Inc
1.05% , SIL , Silver Miners Global X, SIL
0.92% , HSP , HOSPIRA
1.49% , CTXS , CITRIX SYSTEMS
1.29% , IAU , Gold COMEX iS, IAU
0.94% , CEG , CONSTELL ENERGY
1.52% , EP , EL PASO
1.04% , AEE , AMEREN
0.51% , PUI , Utilities, PUI
1.49% , TDC , Teradata Corporation, TDC
1.02% , USO , Oil, Crude, U.S. Oil Fund, USO
1.44% , SDS , Short 200% S&P 500 PS, SDS
1.22% , DBO , Oil Fund PowerShares, DBO
0.97% , ALTR , ALTERA
0.93% , DBC , Commodity Tracking, DBC
0.82% , SH , Short 100% S&P 500, SH
1.49% , MZZ , Short 200% MidCap 400 PS, MZZ
0.40% , BIIB , BIOGEN IDEC
0.82% , VIA , VIACOM INC. (New)
0.60% , HAL , HALLIBURTON
0.75% , PSQ , Short 100% QQQ, PSQ
0.39% , DVN , DEVON ENERGY
0.81% , EOG , EOG RESOURCES
0.69% , KFT , Kraft Foods Inc.
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-17.48% , GPS , GAP
-3.51% , EWP , Spain Index, EWP
-4.65% , VFC , VF
-2.52% , EWO , Austria Index, EWO
-2.29% , FEZ , Euro STOXX 50, FEZ
-4.90% , JCP , JC PENNEY
-4.60% , ADSK , AUTODESK
-0.67% , PEJ , Leisure & Entertainment, PEJ
-4.33% , RL , Polo Ralph Lauren
-3.87% , SNI , Scripps Networks Interactive
-3.17% , URBN , Urban Outfitters Inc.
-3.38% , KSS , KOHLS
-1.51% , IXG , Financials Global LargeCap Value, IXG
-0.76% , ADRD , Developed 100 BLDRS, ADRD
-2.13% , AN , AUTONATION
-1.93% , HGSI , Human Genome Sciences Inc
-4.82% , SVU , SUPERVALU
-1.97% , BBBY , BED BATH BEYOND
-0.84% , XLG , LargeCap Rydex Rus Top 50, XLG
-3.88% , JNY , JONES APPAREL
-3.06% , STI , SUNTRUST BANKS
-0.93% , VCR , Consumer D. VIPERs, VCR
-1.78% , BK , BANK OF NEW YORK
-2.50% , HAR , Harman International
-3.12% , GS , GOLDMAN SACHS
-2.02% , EWN , Netherlands Index, EWN
-0.67% , RPV , Value S&P 500, RPV
-0.50% , FPX , IPOs, First Tr IPOX-100, FPX
-1.70% , SCHW.K , CHARLES SCHWAB, SCHW.O
-0.84% , PZI , Micro Cap Zachs, PZI
-1.26% , VFH , Financials VIPERs, VFH
-0.54% , IYW , Technology DJ US, IYW
-0.94% , JKJ , SmallCap Core iS M, JKJ
9 major U.S. stock sectors ranked in order of long-term relative strength:
Now available by subscription:
The Colby Global Markets Report (click here).
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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below 7-week lows on 5/13/11 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 5-week lows on 5/13/11. 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 4/28/11.
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) has been in a downside correction since 4/5/11 and remains neutral. The Ratio rose above all-time highs on 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 fell below the lows of the previous 10 weeks on 5/6/11 and remains in a price downtrend. 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 lows of the previous 3 weeks on 5/5/11 and remains in a price downtrend. 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: 1526.8 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 fell below 11-week lows on 5/12/11 and remains in a price downtrend. 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: 39.47, 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 fell below the previous 6-month lows on 5/12/11 and remains in 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 5/17/11, confirming 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) has been stuck in a neutral trading range most of the time since JNK price 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 5/20/11, 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 rose above 2-day highs on 5/20/11. USD rose above the highs of the previous 4 weeks on 5/13/11, reconfirming a long-overdue oversold bounce. 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.
S&P 500 Composite (SPX, 1,333.27) fell 10.33 points or 0.77% on Friday. NYSE volume rose 10% as stock prices fell, revealing that Demand for stocks is weaker than Supply of stocks.
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
1318.51, low of 5/17/11
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
1.26% Gold Shares S.T., GLD
1.22% Oil Fund PowerShares, DBO
1.05% Silver Miners Global X, SIL
1.02% Oil, Crude, U.S. Oil Fund, USO
0.93% Commodity Tracking, DBC
0.44% Biotech SPDR, XBI
0.29% Chile MSCI iS, ECH
0.24% Bond, 10 Year Treasury, IEF
0.18% Latin Am 40, ILF
0.12% Telecom DJ US, IYZ
0.09% Bond, Aggregate, AGG
0.07% Bond EmrgMkt JPM iS, EMB
0.05% Bond, 20+ Years Treasury, TLT
0.04% Frontier Markets Guggenheim , FRN
0.04% Financial Preferred, PGF
0.04% Bond, 1-3 Year Treasury, SHY
0.03% Brazil Index, EWZ
0.02% Bond, High-Yield Junk, JNK
-0.02% Bond Treasury Short-Term iS, SHV
-0.02% Energy & Nat Res iS GS, IGE
-0.03% Utilities VIPERs, VPU
-0.04% Bond, TIPS, TIP
-0.07% Bond, Corp, LQD
-0.07% Energy VIPERs, VDE
-0.07% Preferred Stock iS, PFF
-0.08% Bond, High-Yield Corporate, HYG
-0.09% India Earnings WTree, EPI
-0.11% Mexico Index, EWW
-0.12% Energy DJ, IYE
-0.12% Utilities SPDR, XLU
-0.12% Energy SPDR, XLE
-0.17% Emerging 50 BLDRS, ADRE
-0.18% India PS, PIN
-0.20% Bond Muni ATM-Free S&P iS, MUB
-0.20% Semiconductor iS IGW, SOXX
-0.23% China 25 iS, FXI
-0.23% Silver Trust iS, SLV
-0.31% Consumer Staples SPDR, XLP
-0.36% Energy Global, IXC
-0.40% Canada Index, EWC
-0.44% United Kingdom Index, EWU
-0.45% Microcap Russell, IWC
-0.52% Agriculture DB PS, DBA
-0.54% Indonesia MV, IDX
-0.54% Malaysia Index, EWM
-0.54% Technology DJ US, IYW
-0.54% Homebuilders SPDR, XHB
-0.55% Dividend High Yield Equity PS, PEY
-0.55% Semiconductor SPDR, XSD
-0.56% Bond Ex-US Treas, BWX
-0.57% Growth VIPERs, VUG
-0.57% Technology SPDR, XLK
-0.58% MidCap Russell, IWR
-0.58% Growth BARRA Small Cap 600, IJT
-0.59% Value MidCap Russell, IWS
-0.60% Growth S&P 500/BARRA, IVW
-0.61% Growth SmallCap VIPERs, VBK
-0.62% Info Tech VIPERs, VGT
-0.62% Growth SmallCap R 2000, IWO
-0.63% South Korea Index, EWY
-0.64% Dividend Appreciation Vipers, VIG
-0.64% Dividend DJ Select, DVY
-0.65% Transportation Av DJ, IYT
-0.66% Growth MidCap Russell, IWP
-0.66% Dividend International, PID
-0.67% Dividend SPDR, SDY
-0.68% LargeCap 1000 R, IWB
-0.70% LargeCap Blend Russell 3000, IWV
-0.70% LargeCap Blend S&P=Weight R, RSP
-0.70% Growth 1000 Russell, IWF
-0.71% Water Resources, PHO
-0.71% Value MidCap S&P 400 B, IJJ
-0.73% China LargeCap Growth G D H USX PS, PGJ
-0.73% SmallCap Russell 2000, IWM
-0.74% Small Cap VIPERs, VB
-0.74% S&P 500 iS LargeCap Blend, IVV
-0.74% LargeCap VIPERs, VV
-0.75% Blend Total Market VIPERs, VTI
-0.76% SmallCap S&P 600, IJR
-0.76% Value 1000 Russell, IWD
-0.76% Switzerland Index, EWL
-0.76% MidCap S&P 400 SPDRs, MDY
-0.76% QQQ Nasdaq 100 Trust, QQQ
-0.78% Emerging VIPERs, VWO
-0.78% Value SmallCap Russell 2000, IWN
-0.78% MidCap S&P 400 iS, IJH
-0.79% LargeCap Blend S&P 100, OEF
-0.79% S&P 500 SPDRs LargeCap Blend, SPY
-0.80% Metals & Mining SPDR, XME
-0.80% Small Cap EAFE MSCI iS, SCZ
-0.80% Emerging Markets, EEM
-0.80% Networking, IGN
-0.81% Value SmallCap S&P 600 B, IJS
-0.83% Health Care SPDR, XLV
-0.84% Value SmallCap VIPERS, VBR
-0.86% Value S&P 500 B, IVE
-0.88% Value VIPERs, VTV
-0.88% Growth MidCap 400 B, IJK
-0.91% Capital Markets KWB ST, KCE
-0.92% Basic Materials DJ US, IYM
-0.95% South Africa Index, EZA
-0.96% Consumer Discretionary SPDR, XLY
-0.97% Australia Index, EWA
-0.98% Hong Kong Index, EWH
-1.00% Materials SPDR, XLB
-1.02% Real Estate US DJ, IYR
-1.03% Value LargeCap Dynamic PS, PWV
-1.03% Sweden Index, EWD
-1.04% Pacific VIPERs, VPL
-1.05% DIAMONDS (DJIA), DIA
-1.06% Industrial SPDR, XLI
-1.09% Japan Index, EWJ
-1.10% Global 100, IOO
-1.16% WilderHill Clean Energy PS, PBW
-1.16% Pacific ex-Japan, EPP
-1.17% Thailand MSCI iS, THD
-1.20% Realty Cohen & Steers, ICF
-1.22% REIT VIPERs, VNQ
-1.25% REIT Wilshire, RWR
-1.26% Financials VIPERs, VFH
-1.27% Singapore Index, EWS
-1.27% Growth EAFE MSCI, EFG
-1.29% Taiwan Index, EWT
-1.30% Financial DJ US, IYF
-1.31% Global ex US ACWI iS, ACWX
-1.38% Financial SPDR, XLF
-1.42% EAFE Index, EFA
-1.54% Financial Services DJ, IYG
-1.60% Belgium Index, EWK
-1.61% Europe 350 S&P Index, IEV
-1.69% Value EAFE MSCI, EFV
-1.74% European VIPERs, VGK
-1.94% Turkey MSCI iS, TUR
-2.02% Netherlands Index, EWN
-2.12% Russia MV, RSX
-2.24% France Index, EWQ
-2.52% Austria Index, EWO
-2.54% EMU Europe Index, EZU
-2.76% Germany Index, EWG
-3.41% Italy Index, EWI
-3.51% Spain Index, EWP
