Technology stock sector Relative Strength Ratio (XLK/SPY) 50-day SMA fell below the 200-day SMA on 11/6/12, thereby turning systematically bearish.
The S&P 500 (SPX: 1,428.39) rose 0.79% on 13% more active trading on the NYSE. Many of the stocks that have been weakest bounced the most, which is typical of a minor counter-trend reaction.
Typically, action is followed by reaction, and so a day-to-day, counter-trend corrections are normal and expected.
The technical condition of the stock market does not support the excessive optimism that the bullish majority of stock investors and traders clearly exhibited over the past several months. Most of this optimism appeared to be based on expectations that the U.S. Fed and European Central Bank would buy bonds in unlimited quantities (with fiat currencies printed out of thin air and backed by nothing but a theory and a hope). Such inflation and debasement of the currencies bring with them unintended consequences, economic distortions and misallocation of financial resources, as well as potential for accelerating loss of purchasing power of the fiat currencies over the long term.
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*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.
Meanwhile, one money manager made gains for 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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Stock Market Indicators
The Dow Theory signaled a Primary Tide Bear Market on 5/17/12 when both Industrials and Transports closed below their closing price lows of the previous 4 months, including the critical lows of March and April, 2012. The Dow-Jones Industrial Average rose above its closing price highs of the previous 4-years on 10/5/12, but the Dow-Jones Transportation Average has remained relatively weak, substantially below its 2012 high, thereby demonstrating non confirmation and bearish divergence.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) fell below its lows of the previous 9 months on 10/19/12, thereby confirming a downside correction. QQQ/SPY fell below its 50-day SMA on 9/28/12, thereby turning systematically neutral again. QQQ/SPY fell below its 200-day SMA on 10/8/12. The QQQ/SPY 50-day SMA has remained above the 200-day SMA since 8/5/11–but the 50-200 spread has been narrowing rapidly and is on track to cross bearishly in days ahead.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) turned systematically neutral on 9/13/12, when it rose above its 50-day SMA. BKF/SPY remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) turned systematically neutral on 9/13/12, when it rose above its 50-day SMA. EEM/SPY has been whipsawing around its 200-day SMA. The 50-day SMA has remained below the 200-day SMA every day since 2/3/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) turned systematically neutral again on 10/10/12, when it whipsawed back up above its 50-day SMA. EFA/SPY has been hovering indecisively near its 200-day SMA in recent days. Longer term, the 50-day SMA has remained below the 200-day SMA every day since 1/14/11. EFA/SPY has been trending down for nearly 5 years, since 11/27/2007, and there is no convincing evidence of any significant change in that major long-term downtrend.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically neutral again on 10/11/12, when it fell below its 50-day SMA. OEF/SPY remains above its 200-day SMA, and the 50-day SMA has been above the 200-day SMA consistently every day since 8/24/11. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size. On the other side of the coin, Large Caps tend to underperform Mid Caps and Small Caps in bullish general market trends as investors prefer riskier and more volatile stocks.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below its 50-day SMA on 10/12/12, thereby turning systematically bearish again. IWM/SPY fell below its 200-day SMA on 9/24/12, and its 50-day SMA has remained below its 200-day SMA consistently every day since 4/20/12.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) whipsawed back up above its 50-day SMA on 10/23/12, thereby turning systematically neutral again. Longer term, the MDY/SPY 50-day SMA has been below the 200-day SMA since 6/6/12.
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The S&P 500 Composite 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
1474.51, high of 9/14/2012
1464.02, high of 10/18/2012
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1435.08, 50-day SMA
1434.27, high of 11/2/2012
1430.53, low of 9/26/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept 2012 range
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
The S&P 500 Composite Potential Support
1403.28, low of 10/26/12
1396.56, low of 9/4/2012
1395.14, Fibonacci 38.2% of June-Sept 2012 range
1391.04, low of 8/6/2012
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1380.00, 200-day SMA
1374.81, high of 7/3/2012
1370.62, Fibonacci 50.0% of June-Sept 2012 range
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1346.11, Fibonacci 61.8% of June-Sept 2012 range
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
1311.20, Fibonacci 78.6% of June-Sept 2012 range
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
1257.58, Fibonacci 61.8% of 2011 range
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
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price rose above its 50-day SMA on 11/2/12, thereby turning systematically neutral. UUP fell below its 200-day SMA on 8/31/12, and the 50-day SMA fell below the 200-day SMA on 10/2/12. Support 21.86, 21.57, 21.07, and 20.84. Resistance 22.36, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below its lows of the previous 3 months on 10/15/12, confirming a loss of upside momentum. DBA turned systematically neutral on 9/17/12 when price crossed below its 50-day SMA. Price remains above its 200-day SMA, and the 50-day SMA remains above the 200-day SMA.
Crude Oil, United States Oil ETF (USO) fell below its lows of the previous 4 months on 11/2/12, confirming its preexisting bearish trend. USO turned systematically bearish on 9/19/12, when price fell below its 50-day SMA. USO price fell below its 200-day SMA on 9/17/12, and the 50-day SMA remains below its 200-day SMA. Support 29.02, 26.28, and 22.74. Resistance 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. GLD turned systematically neutral on 10/23/12, when price fell below its 50-day SMA. GLD price rose above its 200-day SMA on 8/22/12. GLD 50-day SMA rose above the 200-day SMA on 9/20/12. Support: 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 167.28, 174.07, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically neutral on 11/5/12 when it fell below its 50-day SMA. Longer term, the 50-day SMA has been above the 200-day SMA since 10/19/12.
Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. SLV fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral. SLV has been trading around its 200-day SMA. SLV price 50-day SMA crossed above the 200-day SMA on 10/1/12. Support 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 31.52, 32.23, 33.23, 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 2 months on 11/2/12, confirming its preexisting corrective trend. SLV/GLD fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral again. SLV/GLD has been trading around its 200-day SMA. Longer term, SLV/GLD 50-day SMA crossed above the 200-day SMA on 10/9/12.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 9 weeks on 11/5/12. JJC price fell below its 50-day SMA on 10/22/12 and fell below its 200-day SMA on 10/19/12. “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, and so this price weakness may be taken as a warning about economic conditions ahead.
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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
19.12% , ODP , OFFICE DEPOT
16.97% , CSC , COMPUTER SCIENCE
11.96% , OMX , OFFICEMAX INC., OMX
1.28% , EWK , Belgium Index, EWK
2.19% , PPA , Aerospace & Defense, PPA
4.03% , VMC , VULCAN MATERIALS
6.81% , CECO , CAREER EDUCATION CORP
3.36% , DISH , EchoStar Communications
4.86% , R , RYDER SYSTEM
4.28% , MU.O , MICRON TECH
4.90% , APOL , APOLLO GROUP
3.52% , GT , GOODYEAR TIRE
4.09% , VLO , VALERO ENERGY
3.35% , APC , ANADARKO PETRO
4.43% , EOG , EOG RESOURCES
4.43% , STLD , Steel Dynamics, STLD
1.06% , PHO , Water Resources, PHO
2.85% , TYC , TYCO INTL
3.69% , FHN , First Horizon National
1.14% , EWU , United Kingdom Index, EWU
1.23% , EPP , Pacific ex-Japan, EPP
1.11% , EWH , Hong Kong Index, EWH
0.89% , PGJ , China LargeCap Growth G D H USX PS, PGJ
1.88% , GLD , Gold Shares S.T., GLD
3.10% , DVN , DEVON ENERGY
2.45% , BDX , BECTON DICKINSON
2.78% , SLV , Silver Trust iS, SLV
0.95% , IWS , Value MidCap Russell, IWS
0.99% , EWL , Switzerland Index, EWL
1.38% , SPLS , STAPLES
1.89% , IAU , Gold COMEX iS, IAU
1.50% , SOXX , Semiconductor iS IGW, SOXX
2.31% , LRCX , LAM RESEARCH CORP
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-12.29% , ESRX , EXPRESS SCRIPTS
-3.35% , DISCA , Discovery Communications
-4.59% , NIHD , NII Holdings, Inc.
-3.67% , CROX , CROCS Inc., CROX
-2.18% , LPX , LOUISIANA PAC
-6.95% , FII , FED INVESTORS STK B
-3.74% , THC , TENET HEALTHCARE
-1.91% , DXD , Short 200% Dow 30 PS, DXD
-0.51% , MDP , MEREDITH
-1.01% , ERIC.O , LM Ericsson Telephone Company
-0.89% , DOG , Short 100% Dow 30, DOG
-1.52% , IFF , INTL FLAV & FRAG
-1.40% , SDS , Short 200% S&P 500 PS, SDS
-0.87% , WY , WEYERHAEUSER
-0.43% , QID , Short 200% QQQ PS, QID
-0.39% , AEP , AM ELEC POWER
-0.60% , BRCM , BROADCOM STK A
-0.52% , HMA , HEALTH MGMT STK A
-0.20% , PSQ , Short 100% QQQ, PSQ
-0.92% , WPO , Washington Post
-0.41% , PNW , PINNACLE WEST
-0.41% , WAG , WALGREEN
-1.08% , SO , SOUTHERN
-0.03% , STJ , ST JUDE MEDICAL
-0.15% , WM , WASTE MANAGEMENT
-0.16% , VIAB.O , VIACOM STK B
-0.69% , CMCSA , COMCAST HOLDINGS STK A
-0.05% , PGF , Financial Preferred, PGF
-0.05% , AN , AUTONATION
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.01% Oil, Crude, U.S. Oil Fund, USO
2.78% Silver Trust iS, SLV
2.63% Oil Fund PowerShares, DBO
2.30% WilderHill Clean Energy PS, PBW
1.88% Gold Shares S.T., GLD
1.80% Commodity Tracking, DBC
1.77% Transportation Av DJ, IYT
1.61% Energy SPDR, XLE
1.55% Italy Index, EWI
1.53% Energy DJ, IYE
1.52% South Africa Index, EZA
1.50% Semiconductor iS IGW, SOXX
1.49% Energy VIPERs, VDE
1.48% Australia Index, EWA
1.45% Metals & Mining SPDR, XME
1.43% Energy & Nat Res iS GS, IGE
1.36% South Korea Index, EWY
1.34% Financial Services DJ, IYG
1.28% Belgium Index, EWK
1.23% Pacific ex-Japan, EPP
1.22% Sweden Index, EWD
1.21% France Index, EWQ
1.20% Semiconductor SPDR, XSD
1.19% Networking, IGN
1.14% United Kingdom Index, EWU
1.14% Energy Global, IXC
1.14% Europe 350 S&P Index, IEV
1.13% Financial SPDR, XLF
1.11% European VIPERs, VGK
1.11% EMU Europe Index, EZU
1.11% Hong Kong Index, EWH
1.09% SmallCap Value S&P 600 iS, IJS
1.08% MidCap Value S&P 400 iS, IJJ
1.08% Industrial SPDR, XLI
1.08% Financials VIPERs, VFH
1.06% Water Resources, PHO
1.06% Value LargeCap Dynamic PS, PWV
1.05% Materials SPDR, XLB
1.03% Financial DJ US, IYF
1.02% Basic Materials DJ US, IYM
1.02% Taiwan Index, EWT
1.01% LargeCap Value S&P 500 iS, IVE
1.00% Dividend ex-U.S. DJ iS, IDV
0.99% Austria Index, EWO
0.99% Switzerland Index, EWL
0.96% Dividend Appreciation Vipers, VIG
0.95% Value SmallCap VIPERS, VBR
0.95% Value MidCap Russell, IWS
0.95% Foreign LargeCap EAFE MSCI iS, EFA
0.92% Germany Index, EWG
0.92% SmallCap Value Russell 2000 iS, IWN
0.91% SmallCap Blend S&P 600 iS, IJR
0.90% DIAMONDS (DJIA), DIA
0.89% Spain Index, EWP
0.89% MidCap Russell, IWR
0.89% Emerging 50 BLDRS, ADRE
0.89% China LargeCap Growth G D H USX PS, PGJ
0.89% Value VIPERs, VTV
0.88% LargeCap Blend S&P=Weight R, RSP
0.88% Small Cap VIPERs, VB
0.88% Global ex U.S. LargeCap Blend, ACWX
0.88% MidCap S&P 400 SPDRs, MDY
0.88% MidCap Blend S&P 400 iS, IJH
0.87% LargeCap Value Russell 1000 iS, IWD
0.87% SmallCap Growth S&P 600 iS, IJT
0.86% MidCap Growth S&P 400 iS, IJK
0.85% China 25 iS, FXI
0.85% Growth MidCap Russell, IWP
0.84% Growth SmallCap VIPERs, VBK
0.84% Netherlands Index, EWN
0.81% Brazil Index, EWZ
0.79% Indonesia MV, IDX
0.79% Emerging Markets MSCI iS, EEM
0.78% S&P 500 SPDRs LargeCap Blend, SPY
0.77% LargeCap Blend S&P 500 iS, IVV
0.77% LargeCap Blend S&P 100, OEF
0.77% Global 100, IOO
0.76% LargeCap Blend Russell 1000 iS, IWB
0.76% Dividend SPDR, SDY
0.76% Blend Total Market VIPERs, VTI
0.75% SmallCap Blend Russell 2000 iS, IWM
0.75% LargeCap VIPERs, VV
0.74% SmallCap Blend EAFE MSCI iS, SCZ
0.74% Value EAFE MSCI, EFV
0.74% Consumer Staples SPDR, XLP
0.74% LargeCap Blend Russell 3000 iS, IWV
0.74% Dividend High Yield Equity PS, PEY
0.71% Russia MV, RSX
0.69% Growth EAFE MSCI, EFG
0.68% Mexico Index, EWW
0.68% Dividend U.S. DJ iS, DVY
0.68% SmallCap Growth Russell 2000 iS, IWO
0.68% Latin Am 40, ILF
0.67% Growth VIPERs, VUG
0.66% Agriculture DB PS, DBA
0.66% Dividend International, PID
0.64% Emerging VIPERs, VWO
0.63% Info Tech VIPERs, VGT
0.63% Pacific VIPERs, VPL
0.62% LargeCap Growth S&P 500 iS, IVW
0.61% Capital Markets KWB ST, KCE
0.59% Microcap Russell, IWC
0.58% Technology DJ US, IYW
0.57% Canada Index, EWC
0.55% India PS, PIN
0.55% LargeCap Growth Russell 1000 iS, IWF
0.54% Consumer Discretionary SPDR, XLY
0.52% Realty Cohen & Steers, ICF
0.46% Frontier Markets Guggenheim , FRN
0.45% Technology SPDR, XLK
0.43% REIT VIPERs, VNQ
0.38% India Earnings WTree, EPI
0.36% REIT Wilshire, RWR
0.32% Global LargeCap Blend MSCI iS, ACWI
0.31% Bond Ex-US Treas, BWX
0.24% Chile MSCI iS, ECH
0.23% Singapore Index, EWS
0.22% Utilities VIPERs, VPU
0.22% Japan Index, EWJ
0.22% Real Estate US DJ iS, IYR
0.18% QQQ Nasdaq 100 Trust, QQQ
0.16% Bond, Emerg Mkt JPM iS, EMB
0.15% Bond, High Yield Corp iBoxx iS, HYG
0.10% Health Care SPDR, XLV
0.10% Bond, High-Yield Junk, JNK
0.08% Preferred Stock iS, PFF
0.07% Malaysia Index, EWM
0.06% Utilities SPDR, XLU
0.05% Bond, Muni S&P ATM-Free iS, MUB
0.00% Telecom DJ US, IYZ
0.00% Bond Treasury Short-Term iS, SHV
-0.01% Biotech SPDR, XBI
-0.04% Bond, 1-3 Year Treasury, SHY
-0.05% Turkey MSCI iS, TUR
-0.05% Financial Preferred, PGF
-0.15% Homebuilders SPDR, XHB
-0.16% Thailand MSCI iS, THD
-0.26% Bond, TIPS U.S. Treasury iS, TIP
-0.29% Bond, Intermediate US Aggregate iS, AGG
-0.45% Bond, 10 Year Treasury, IEF
-0.48% Bond, Long-Term Corp iBoxx iS, LQD
-0.78% Bear, Short S&P 500, SH
-0.94% Bond, 20+ Years Treasury, TLT
