The S&P 500 (SPX: 1,413.58) fell 5.87 points or 0.41% on Friday. For the week as a whole, SPX declined 0.32%. The S&P 500 fell below its lows of the previous 4 trading days, fell below its declining 50-day SMA now standing at 1415.09, and fell further below a 4-week uptrend line, which it violated on Thursday.
NYSE trading volume fell 5% on Friday to a level that was 11% below its 200-day SMA. Low volume indicates tepid demand for stocks.
After all the monetary easing around the world in recent months, SPX is slightly below its close on the first trading day of April, 2012. There has been no gain in more than 8 months. Still, speculators have faith in the Fed, and they appear to be hoping for some kind of deal on the fiscal cliff. Bullish sentiment has been high for months, and the bullish majority has grown increasingly confident about a year-end rally. The Art of Contrary Thinking calls for questioning this popular optimism.
I have been skeptical that SPX would be able to overcome technical congestion (resistance) in its September-November trading range, and now it looks like SPX has failed the test of that range. The technical condition of the stock market has not supported the excessive optimism that the bullish majority of stock investors and traders clearly exhibited over the past several months. Low volume has revealed a lack of big buying power. Long-term momentum has been showing bearish divergence and has weakened considerably since the SPX price peak on 9/14/12. And the bull phase of the 4-year cycle is long in tooth. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
Our clients’ separately managed accounts made gains every quarter for the past 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 failed to confirm, remaining substantially below its 2012 high, thereby demonstrating non confirmation and bearish divergence. Both Averages broke down below their closing price lows of the previous 4 months again on 11/15/12 and 11/16/12.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) turned systematically bearish on 11/7/12 when the 50-day SMA fell below the 200-day SMA.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) turned systematically neutral on 11/29/12, when it rose above its 50-day SMA. BKF/SPY 50-day SMA has remained below its 200-day SMA since 1/13/11–but the 50-200 spread is narrowing and a crossover appears likely in days ahead.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) turned systematically bullish on 12/12/12, when the 50-day SMA crossed above the 200-day SMA.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) turned systematically bullish on 11/27/12, when the 50-day SMA crossed above the 200-day SMA.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically neutral on 10/11/12 when it fell below its 50-day SMA. OEF/SPY fell below its 200-day SMA on 11/7/11. The 50-day SMA has remained above the 200-day SMA since 8/24/11–but a bearish crossover appears highly probable in a day or two. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative stability and 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 seek greater potential returns in more volatile, smaller stocks.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) rose above its 50-day SMA on 11/29/12, thereby turning systematically neutral again. IWM/SPY 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) turned systematically bullish on 12/14/12, when the 50-day SMA crossed above the 200-day SMA.
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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
1438.59, high of 12/12/2012
1434.27, high of 11/2/2012
1430.53, low of 9/26/2012
1426.76, low of 12/12/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept ’12 range
1424.41, Fibonacci 61.8% of Sept-Nov ’12 range
1423.73, high of 12/3/2012
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
1415.09, 50-day SMA
The S&P 500 Composite Potential Support
1409.16, high of 11/23/2012
1403.28, low of 10/26/12
1398.23, low of 12/5/2012
1397.68, low of 11/26/2012
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
1387.49, 200-day SMA
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
1370.62, 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
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
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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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. TLT remains above its 200-day SMA, and TLT’s 50-day SMA has remained above the 200-day SMA every day since 6/24/11. Support 122.13, 121.78, 119.87, 118.05, 117.44, 115.69, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below its 50-day SMA on 12/12/12, thereby turning systematically neutral again. IEF remains above its 200-day SMA, and IEF’s 50-day SMA has remained above the 200-day SMA every day since 6/21/11. Support 107.80, 107.25, 106.59, 106.42, 105.84, 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) rose above its 50-day SMA on 11/28/12, thereby turning systematically neutral again. JNK/LQD 50-day SMA has remained consistently below the 200-day SMA every day since 6/1/12.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) turned systematically bullish again on 12/6/12 when it rose above its 50-day SMA. TIP/IEF rose above its 200-day SMA on 9/27/12, and the 50-day SMA rose above the 200-day SMA on 10/10/12.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) turned systematically bearish again on 12/11/12 when it fell below its 50-day SMA. 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 21.57, 21.07, and 20.84. Resistance 22.05, 22.30, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) turned systematically neutral again on 11/30/12 when price crossed back down below its 50-day SMA. On 12/12/12, DBA fell below its 200-day SMA . The 50-day SMA remains above the 200-day SMA, although the 50-200 spread has been narrowing gradually.
Crude Oil, United States Oil ETF (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 has remained below its 200-day SMA consistently every day since 6/7/12. Support 31.00, 29.02, 26.28, and 22.74. Resistance 32.93, 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) turned systematically neutral on 11/27/12, 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: 163.20, 162.30, 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 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 neutral on 11/5/12 when it fell below its 50-day SMA. The 50-day SMA has been above the 200-day SMA since 10/19/12–but the 50-200 spread has been narrowing and a bearish crossover appears probable in weeks ahead.
Silver, iShares Silver Trust ETF (SLV) turned systematically neutral again on 12/13/12 when it whipsawed below its 50-day SMA. The 50-day SMA crossed above the 200-day SMA on 10/1/12. Support 31.00, 29.84, 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 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) turned systematically neutral on 12/14/12 when it fell below its 50-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) rose above both its 50-day SMA and 200-day SMA on 11/30/12. Long term, JJC has been consolidating losses in Triangle chart pattern trading range between 38.99 and 51.41 for more than a year since October 2011. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
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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
6.81% , X , US STEEL CORP
5.71% , ADBE , ADOBE SYS
3.77% , PPG , PPG INDUSTRIES
4.06% , STLD , Steel Dynamics, STLD
5.17% , CLF , CLIFFS NATURAL RESOURCES, CLF
5.05% , SIRI , Sirius Satellite
0.49% , IEV , Europe 350 S&P Index, IEV
4.00% , FCX , FREEPRT MCMORAN STK B
2.65% , NUE , NUCOR
1.78% , CECO , CAREER EDUCATION CORP
2.41% , PMTC.O , PARAMETRIC
1.00% , PBW , WilderHill Clean Energy PS, PBW
3.78% , MPEL , Melco Crown Entertainment, MPEL
1.76% , LAMR , Lamar Advertising Company
1.42% , THC , TENET HEALTHCARE
0.35% , MJN , Mead Johnson Nutrition
0.72% , EIX , EDISON INTL
0.75% , DGX , QUEST DIAG
0.98% , CAH , CARDINAL HEALTH
1.07% , HOT , STARWOOD HOTELS
0.93% , DISCA , Discovery Communications
0.49% , HMA , HEALTH MGMT STK A
2.02% , WOR , WORTHINGTON INDS
0.49% , LUV , SOUTHWEST AIRLS
0.89% , RL , Polo Ralph Lauren
0.67% , R , RYDER SYSTEM
0.29% , BWX , Bond Ex-US Treas, BWX
0.97% , ADSK , AUTODESK
0.57% , HSIC , Henry Schein Inc
1.26% , DOW , DOW CHEMICAL
1.44% , ERIC.O , LM Ericsson Telephone Company
0.60% , DBA , Agriculture DB PS, DBA
0.44% , HNZ , HJ HEINZ
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-5.03% , SLB , SCHLUMBERGER
-5.50% , JBL , JABIL CIRCUIT
-4.67% , QCOM , QUALCOMM
-0.35% , IJK , Growth MidCap 400 B, IJK
-3.59% , ITW , ILLINOIS TOOL
-2.87% , DV , DeVry, Inc.
-3.76% , AAPL , APPLE COMPUTER
-0.24% , IWW , Value LargeCap Russell 3000, IWW
-1.64% , ALL , ALLSTATE
-2.58% , BHI , BAKER HUGHES
-1.45% , ININ , Interactive Intelligence ININ
-0.90% , NTRS , NORTHERN TRUST
-0.67% , BLL , BALL
-0.37% , PFM , Dividend Achievers PS, PFM
-0.52% , IGN , Networking, IGN
-0.35% , VPU , Utilities VIPERs, VPU
-0.55% , OEF , LargeCap Blend S&P 100, OEF
-1.60% , CMS , CMS ENERGY
-3.64% , BRCM , BROADCOM STK A
-0.46% , SO , SOUTHERN
-1.16% , SNDK , SanDisk Corporation
-0.60% , VUG , Growth VIPERs, VUG
-0.90% , T , AT&T Corp., T
-0.60% , IVW , Growth S&P 500/BARRA, IVW
-0.86% , VGT , Info Tech VIPERs, VGT
-0.78% , DVN , DEVON ENERGY
-0.78% , GPC , GENUINE PARTS
-0.85% , KMB , KIMBERLY CLARK
-1.01% , FII , FED INVESTORS STK B
-0.90% , DIS , WALT DISNEY
-0.89% , NWSA , News Corporation, NWSA
-0.43% , VV , LargeCap VIPERs, VV
-0.64% , DTE , DTE ENERGY
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.76% China 25 iS, FXI
1.69% Metals & Mining SPDR, XME
1.58% Belgium Index, EWK
1.43% China LargeCap Growth G D H USX PS, PGJ
1.25% Italy Index, EWI
1.10% Basic Materials DJ US, IYM
1.00% WilderHill Clean Energy PS, PBW
0.97% Brazil Index, EWZ
0.94% Hong Kong Index, EWH
0.92% Chile MSCI iS, ECH
0.85% India Earnings WTree, EPI
0.85% Netherlands Index, EWN
0.85% Frontier Markets Guggenheim , FRN
0.84% Oil Fund PowerShares, DBO
0.83% EMU Europe Index, EZU
0.80% Thailand MSCI iS, THD
0.80% Austria Index, EWO
0.79% Germany Index, EWG
0.78% France Index, EWQ
0.78% India PS, PIN
0.75% Bond, 20+ Years Treasury, TLT
0.74% Materials SPDR, XLB
0.73% Oil, Crude, U.S. Oil Fund, USO
0.69% Russia MV, RSX
0.65% SmallCap Blend EAFE MSCI iS, SCZ
0.62% Commodity Tracking, DBC
0.61% Emerging 50 BLDRS, ADRE
0.60% European VIPERs, VGK
0.60% Agriculture DB PS, DBA
0.59% Sweden Index, EWD
0.58% Spain Index, EWP
0.54% Growth EAFE MSCI, EFG
0.54% Japan Index, EWJ
0.53% Latin Am 40, ILF
0.51% Emerging VIPERs, VWO
0.49% Europe 350 S&P Index, IEV
0.49% Mexico Index, EWW
0.44% Emerging Markets MSCI iS, EEM
0.44% Value EAFE MSCI, EFV
0.43% Singapore Index, EWS
0.43% South Africa Index, EZA
0.36% Global ex U.S. LargeCap Blend, ACWX
0.35% Foreign LargeCap EAFE MSCI iS, EFA
0.35% Bear, Short S&P 500, SH
0.29% Bond Ex-US Treas, BWX
0.23% Pacific ex-Japan, EPP
0.22% United Kingdom Index, EWU
0.22% Bond, 10 Year Treasury, IEF
0.19% Pacific VIPERs, VPL
0.19% Switzerland Index, EWL
0.18% Bond, Intermediate US Aggregate iS, AGG
0.16% Microcap Russell, IWC
0.12% Capital Markets KWB ST, KCE
0.12% Australia Index, EWA
0.11% Bond, TIPS U.S. Treasury iS, TIP
0.08% SmallCap Value Russell 2000 iS, IWN
0.08% South Korea Index, EWY
0.07% Bond, Long-Term Corp iBoxx iS, LQD
0.07% Malaysia Index, EWM
0.06% Dividend International, PID
0.05% Energy Global, IXC
0.03% Transportation Av DJ, IYT
0.02% Bond, High-Yield Junk, JNK
0.02% Bond, 1-3 Year Treasury, SHY
0.02% Global LargeCap Blend MSCI iS, ACWI
0.00% Bond Treasury Short-Term iS, SHV
-0.01% Realty Cohen & Steers, ICF
-0.02% REIT VIPERs, VNQ
-0.03% REIT Wilshire, RWR
-0.05% Preferred Stock iS, PFF
-0.06% Value MidCap Russell, IWS
-0.06% SmallCap Blend Russell 2000 iS, IWM
-0.06% SmallCap Value S&P 600 iS, IJS
-0.07% Bond, Emerg Mkt JPM iS, EMB
-0.08% Bond, High Yield Corp iBoxx iS, HYG
-0.11% Global 100, IOO
-0.11% Value SmallCap VIPERS, VBR
-0.12% SmallCap Growth Russell 2000 iS, IWO
-0.13% Real Estate US DJ iS, IYR
-0.14% Small Cap VIPERs, VB
-0.15% Gold Shares S.T., GLD
-0.15% Dividend ex-U.S. DJ iS, IDV
-0.15% LargeCap Value S&P 500 iS, IVE
-0.17% Consumer Staples SPDR, XLP
-0.17% MidCap Russell, IWR
-0.18% Growth MidCap Russell, IWP
-0.18% SmallCap Growth S&P 600 iS, IJT
-0.19% LargeCap Blend S&P=Weight R, RSP
-0.20% SmallCap Blend S&P 600 iS, IJR
-0.20% MidCap S&P 400 SPDRs, MDY
-0.21% LargeCap Value Russell 1000 iS, IWD
-0.21% Dividend U.S. DJ iS, DVY
-0.21% Industrial SPDR, XLI
-0.22% Value VIPERs, VTV
-0.22% Growth SmallCap VIPERs, VBK
-0.22% Taiwan Index, EWT
-0.23% MidCap Blend S&P 400 iS, IJH
-0.24% Energy & Nat Res iS GS, IGE
-0.24% MidCap Value S&P 400 iS, IJJ
-0.25% Telecom DJ US, IYZ
-0.27% DIAMONDS (DJIA), DIA
-0.27% Value LargeCap Dynamic PS, PWV
-0.28% Financial Services DJ, IYG
-0.28% Dividend Appreciation Vipers, VIG
-0.31% Dividend SPDR, SDY
-0.32% Financial DJ US, IYF
-0.35% LargeCap Blend S&P 500 iS, IVV
-0.35% MidCap Growth S&P 400 iS, IJK
-0.35% Utilities VIPERs, VPU
-0.36% Financials VIPERs, VFH
-0.37% Energy VIPERs, VDE
-0.37% S&P 500 SPDRs LargeCap Blend, SPY
-0.37% Financial SPDR, XLF
-0.38% Energy SPDR, XLE
-0.38% LargeCap Blend Russell 1000 iS, IWB
-0.38% Indonesia MV, IDX
-0.39% Energy DJ, IYE
-0.39% Water Resources, PHO
-0.39% Health Care SPDR, XLV
-0.40% Utilities SPDR, XLU
-0.41% Turkey MSCI iS, TUR
-0.42% Canada Index, EWC
-0.42% Blend Total Market VIPERs, VTI
-0.43% Consumer Discretionary SPDR, XLY
-0.43% LargeCap VIPERs, VV
-0.46% LargeCap Blend Russell 3000 iS, IWV
-0.49% Semiconductor SPDR, XSD
-0.52% Networking, IGN
-0.55% LargeCap Blend S&P 100, OEF
-0.60% Growth VIPERs, VUG
-0.60% LargeCap Growth S&P 500 iS, IVW
-0.61% LargeCap Growth Russell 1000 iS, IWF
-0.76% Biotech SPDR, XBI
-0.76% Financial Preferred, PGF
-0.77% Semiconductor iS IGW, SOXX
-0.78% Homebuilders SPDR, XHB
-0.86% Info Tech VIPERs, VGT
-0.95% QQQ Nasdaq 100 Trust, QQQ
-0.95% Dividend High Yield Equity PS, PEY
-0.97% Technology SPDR, XLK
-0.98% Technology DJ US, IYW
-1.14% Silver Trust iS, SLV
-1.17% Bond, Muni S&P ATM-Free iS, MUB
