Highlights based on trading on Tuesday, June 12, 2012:
Selling pressure appears to have dissipated over the past 6 trading days, but that might be only a fleeting respite. The larger stock market trend still appears more bearish than bullish since the SPX peak at 1,422.38 on 4/2/12. Look for resistance near recent highs around the 1335 zone on the SPX. The path of least resistance appears to be down.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 2 years, reconfirming its preexisting major bullish trend. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below its lows of the previous 8 months, reconfirming its preexisting major bearish trend.
The S&P 500 (SPX: 1,324.18) rose 15.25 points or 1.17% on Tuesday, recovering most of Monday’s loss.
NYSE volume fell 4%, suggesting relatively subdued demand for stocks. Volume patterns generally have been bearish for months, with a tendency toward lower volume on rallies and higher volume on declines, indicating the dominance of selling pressure over buying pressure. NYSE Cumulative Up-Down Volume still shows a bearish divergence: it remains below its 200-day SMA, while the S&P 500 price index remains above its 200-day SMA.
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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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Stock Market Indicators
The Dow Theory confirmed a Primary Tide Bear Market on 6/4/12 when both Industrials and Transports closed below their closing price lows of the previous 5 months. The Dow Theory first 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 Averages gave an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Again on 5/1/12, the Industrials rose to a higher closing price high while the Transports failed to rise to a higher closing price high, thereby indicating a non-confirmation and bearish divergence.
NASDAQ Composite/S&P 500 Relative Strength Ratio fell below its lows of the previous 3 weeks on 6/11/12. The Ratio remains systematically neutral: below its 50-day and 200-day SMAs, but still with the 50-day above the 200-day SMA. Looks like a significant downside correction, at least.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 3 years on 5/24/12, reconfirming its bearish trend. Systematically, BKF/SPY remains bearish below its 50-day SMA, below its 200-day SMA, and with the 50-day SMA below the 200-day SMA every day since 1/13/11.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below its lows of the previous 3 years on 5/25/12, reconfirming its bearish trend. EEM/SPY remains below its 50-day and 200-day SMAs. Longer term, 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) reconfirmed a bearish major trend when it fell below its lows of the previous 8 years on 5/30/12. Systematically, EFA/SPY remains bearish below its 50-day and 200-day SMAs, and the 50-day SMA has remained below the 200-day SMA consistently every day since 1/14/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 2 years on 6/12/12, reconfirming its preexisting major bullish trend. OEX/SPX remains systematically bullish above its 50-day SMA, 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 lows of the previous 7 months on 6/11/12, reconfirming its preexisting major bearish trend. Systematically, IWM/SPY returned to bearish status again on 4/20/12 when the 50-day SMA crossed below the 200-day SMA. Longer term, IWM/SPY has been relatively weak for more than a year, since 4/5/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below its lows of the previous 8 months on 6/12/12, reconfirming its preexisting major bearish trend. MDY/SPY turned systematically bearish on 6/6/12, when its 50-day SMA crossed below its 200-day SMA. MDY/SPY remains below its 50-day SMA and 200-day SMA.
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Sentiment for Contrary Thinking
Investor sentiment data indicated alarming degrees of optimism and bullish complacency at the February to May 2012 market highs. That was bearish because when the majority of investors has been bullish for some time, investors 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. Some of the most recent data suggests that investors’ sentiment may be beginning to shift away from bullish complacency. The evidence is mixed, however, and there still is plenty of room for the pendulum of emotion to swing too far in the direction of bearish excess.
AAII Sentiment: There were 51.64% Bulls and 20.19% Bears, according to the AAII weekly survey reported on 2/9/12. This was the highest level of bullish sentiment in more than a year, since 52.34% Bulls on 1/13/11. As of 6/7/12, however, sentiment had reversed, with 27.45% Bulls and 45.75% Bears.
Investors Intelligence Sentiment: according to the Investors Intelligence weekly survey of stock market newsletter advisors, there were 34.0% Bulls and 26.6% Bears reported on 6/6/12. This represents a moderation in sentiment from 2012 extremes of 54.8% Bulls reported on 2/15/11 and 20.4% Bears reported on 5/9/12.
VIX Fear Index fell steeply to 19.63 intraday on 6/11/12, down from an intraday peak of 27.73 on 6/4/12. This suggests a rapid shift from concern toward bullish complacency. 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 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
1440.24, high of 5/19/2008
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1389.07, Fibonacci 78.6% of April-June 2012 range
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1362.93, Fibonacci 61.8% of April-June 2012 range
1353.34, 50-day SMA
1344.56, Fibonacci 50% of April-June 2012 range
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
The S&P 500 Composite Potential Support
1303.47, Fibonacci 23.6% of April-June 2012 range
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
1,289.89, 200-day SMA
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
1248.58, Fibonacci 50.0% of 2011-12 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
1207.56, Fibonacci 61.8% of 2011-12 range
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
1149.16, Fibonacci 78.6% R of 2011-12 range
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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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
1.52% , IOO , Global 100, IOO
2.07% , EWS , Singapore Index, EWS
1.23% , VXF , Extended Mkt VIPERs, VXF
1.95% , EPU , Peru MSCI iS, EPU
5.25% , UIS , UNISYS
5.00% , FII , FED INVESTORS STK B
1.75% , PXE , Energy Exploration & Prod, PXE
1.08% , PBE , Biotech & Genome, PBE
0.88% , PSJ , Software, PSJ
3.84% , SNDK , SanDisk Corporation
3.77% , CSX , CSX
1.82% , PXJ , Oil & Gas, PXJ
3.84% , PCAR , PACCAR
2.69% , ESRX , EXPRESS SCRIPTS
2.09% , DBO , Oil Fund PowerShares, DBO
2.83% , DPS , Dr Pepper Snapple Group
2.29% , URBN , Urban Outfitters Inc.
6.04% , KWT , Solar Energy MV, KWT
4.71% , PWER , POWER ONE
1.35% , IYZ , Telecom DJ US, IYZ
2.77% , SNA , SNAP ON
4.68% , LNCR , Lincare Holdings Inc
2.88% , PBW , WilderHill Clean Energy PS, PBW
1.70% , CMCSA , COMCAST HOLDINGS STK A
1.32% , IWC , Microcap Russell, IWC
3.36% , CCL , CARNIVAL STK A
1.55% , JNJ , JOHNSON&JOHNSON
3.35% , BSX , BOSTON SCIENT
1.38% , VBK , Growth SmallCap VIPERs, VBK
3.52% , BA , BOEING
0.81% , PSI , Semiconductors, PSI
2.00% , MWV , MEADWESTVACO
1.28% , IJS , Value SmallCap S&P 600 B, IJS
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-5.97% , STJ , ST JUDE MEDICAL
-3.87% , HAR , Harman International
-2.23% , PIC , Short 200% MidCap 400 PS, MZZ
-0.85% , MZZ , Micro Cap Zachs, PZI
-3.12% , PZI , APOLLO GROUP
-1.15% , APOL , PNC FINL SVC
-1.13% , PNC , Short 100% MidCap 400, MYY
-2.26% , MYY , SARA LEE
-2.65% , SLE , DeVry, Inc.
-1.27% , DV , CAREER EDUCATION CORP
-2.37% , CECO , Baidu, Inc., BIDU
-1.63% , BIDU , Ryanair Holdings plc
-0.14% , RYAAY , Bond Ex-US Treas, BWX
-0.22% , BWX , Bond Interm U.S. Gov, GVI
-0.36% , GVI , UNITED TECH
-0.81% , UTX , Steel Dynamics, STLD
-1.19% , STLD , CROCS Inc., CROX
-0.62% , CROX , Gentex Corporation
-0.32% , GNTX , Bond Muni ATM-Free S&P iS, MUB
-0.72% , MUB , H&R BLOCK
-0.43% , HRB , AVERY DENNISON
-0.20% , AVY , D.R. HORTON, DHI
-0.26% , DHI , UNUMPROVIDENT
-0.38% , UNM , AVON
-0.60% , AVP , Google
-0.18% , GOOG , EchoStar Communications
-0.31% , DISH , HOSPIRA
-0.26% , HSP , CMS ENERGY
-0.05% , CMS , Building & Construction, PKB
-0.72% , PKB , Bond 10-20 Year US Treas, TLH
-2.23% , TLH , Short 200% S&P 500 PS, SDS
-0.27% , SDS , KELLOGG
-0.56% , K , Patterson-UTI Energy Inc
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.69% India PS, PIN
3.26% Turkey MSCI iS, TUR
3.12% India Earnings WTree, EPI
3.02% Semiconductor SPDR, XSD
2.88% WilderHill Clean Energy PS, PBW
2.77% Thailand MSCI iS, THD
2.46% South Korea Index, EWY
2.39% United Kingdom Index, EWU
2.34% Russia MV, RSX
2.33% Oil, Crude, U.S. Oil Fund, USO
2.25% South Africa Index, EZA
2.23% China 25 iS, FXI
2.21% Sweden Index, EWD
2.13% Hong Kong Index, EWH
2.10% European VIPERs, VGK
2.09% Emerging VIPERs, VWO
2.09% Oil Fund PowerShares, DBO
2.07% Emerging Markets, EEM
2.07% Singapore Index, EWS
1.91% Pacific ex-Japan, EPP
1.91% Europe 350 S&P Index, IEV
1.88% Emerging 50 BLDRS, ADRE
1.86% Materials SPDR, XLB
1.81% Networking, IGN
1.79% Growth EAFE MSCI, EFG
1.79% Semiconductor iS IGW, SOXX
1.78% Financial Services DJ, IYG
1.74% Global ex US ACWI iS, ACWX
1.72% Germany Index, EWG
1.72% Metals & Mining SPDR, XME
1.68% Australia Index, EWA
1.67% Canada Index, EWC
1.67% Basic Materials DJ US, IYM
1.67% EAFE Index, EFA
1.66% Energy & Nat Res iS GS, IGE
1.66% Spain Index, EWP
1.65% Homebuilders SPDR, XHB
1.62% Industrial SPDR, XLI
1.61% Switzerland Index, EWL
1.60% Biotech SPDR, XBI
1.60% Value EAFE MSCI, EFV
1.57% Energy Global, IXC
1.55% Mexico Index, EWW
1.52% Global 100, IOO
1.50% Energy DJ, IYE
1.49% Financial DJ US, IYF
1.48% Latin Am 40, ILF
1.48% Financial SPDR, XLF
1.48% Brazil Index, EWZ
1.46% Belgium Index, EWK
1.45% Pacific VIPERs, VPL
1.44% Growth SmallCap R 2000, IWO
1.41% Energy SPDR, XLE
1.38% Growth SmallCap VIPERs, VBK
1.38% Taiwan Index, EWT
1.35% Telecom DJ US, IYZ
1.34% EMU Europe Index, EZU
1.34% France Index, EWQ
1.32% Financials VIPERs, VFH
1.32% Energy VIPERs, VDE
1.32% Microcap Russell, IWC
1.30% DIAMONDS (DJIA), DIA
1.29% Dividend International, PID
1.28% Value SmallCap S&P 600 B, IJS
1.27% Water Resources, PHO
1.26% Frontier Markets Guggenheim , FRN
1.26% SmallCap Russell 2000, IWM
1.26% Small Cap VIPERs, VB
1.26% Value LargeCap Dynamic PS, PWV
1.24% Technology DJ US, IYW
1.24% Value S&P 500 B, IVE
1.22% SmallCap S&P 600, IJR
1.22% QQQ Nasdaq 100 Trust, QQQ
1.20% Value SmallCap VIPERS, VBR
1.19% Japan Index, EWJ
1.19% Silver Trust iS, SLV
1.18% Value SmallCap Russell 2000, IWN
1.18% Growth MidCap Russell, IWP
1.18% LargeCap Blend S&P=Weight R, RSP
1.17% Indonesia MV, IDX
1.16% LargeCap Blend S&P 100, OEF
1.16% Value 1000 Russell, IWD
1.15% LargeCap Blend Russell 3000, IWV
1.15% S&P 500 SPDRs LargeCap Blend, SPY
1.14% LargeCap 1000 R, IWB
1.14% Growth VIPERs, VUG
1.12% Value MidCap S&P 400 B, IJJ
1.11% Value VIPERs, VTV
1.10% LargeCap VIPERs, VV
1.10% Growth BARRA Small Cap 600, IJT
1.10% China LargeCap Growth G D H USX PS, PGJ
1.09% Blend Total Market VIPERs, VTI
1.08% Consumer Discretionary SPDR, XLY
1.04% Growth 1000 Russell, IWF
1.03% Growth S&P 500/BARRA, IVW
1.01% Value MidCap Russell, IWS
1.01% MidCap Russell, IWR
1.01% MidCap S&P 400 SPDRs, MDY
1.00% Technology SPDR, XLK
1.00% Info Tech VIPERs, VGT
0.99% Growth MidCap 400 B, IJK
0.99% Netherlands Index, EWN
0.98% MidCap S&P 400 iS, IJH
0.95% REIT VIPERs, VNQ
0.95% Malaysia Index, EWM
0.94% Health Care SPDR, XLV
0.94% Real Estate US DJ, IYR
0.92% Dividend Appreciation Vipers, VIG
0.91% Dividend SPDR, SDY
0.88% Realty Cohen & Steers, ICF
0.88% Transportation Av DJ, IYT
0.88% REIT Wilshire, RWR
0.84% Small Cap EAFE MSCI iS, SCZ
0.79% Bond, High-Yield Junk, JNK
0.78% Italy Index, EWI
0.71% Gold Shares S.T., GLD
0.71% Capital Markets KWB ST, KCE
0.70% Bond, High-Yield Corporate, HYG
0.70% S&P 500 iS LargeCap Blend, IVV
0.65% Dividend DJ Select, DVY
0.65% Dividend High Yield Equity PS, PEY
0.54% Financial Preferred, PGF
0.49% Commodity Tracking, DBC
0.47% Consumer Staples SPDR, XLP
0.38% Bond EmrgMkt JPM iS, EMB
0.38% Preferred Stock iS, PFF
0.36% Austria Index, EWO
0.11% Utilities SPDR, XLU
0.09% Utilities VIPERs, VPU
0.00% Bond Treasury Short-Term iS, SHV
0.00% Agriculture DB PS, DBA
-0.05% Bond, 1-3 Year Treasury, SHY
-0.08% Bond, Aggregate, AGG
-0.12% Chile MSCI iS, ECH
-0.14% Bond Ex-US Treas, BWX
-0.22% Bond, TIPS, TIP
-0.29% Bond, Corp, LQD
-0.32% Bond Muni ATM-Free S&P iS, MUB
-0.54% Bond, 10 Year Treasury, IEF
-0.91% Bond, 20+ Years Treasury, TLT
-1.03% Bear, Short S&P 500, SH
