The Dow Theory Reconfirmed The Bull Trend, But Other Divergences Continue
The Dow Theory reconfirmed a Primary Tide Bull Market on 5/30/14 when the Dow-Jones Industrial Average rose to a higher closing price high to conform the higher high by the Dow-Jones Transportation Average on the previous day.
Industrial stock sector ETF (XLI) Relative Strength Ratio (XLI/SPY) crossed below its 50-day SMA on 5/31/14, thereby turning systematically neutral (from bullish).
Consumer Staples stock sector ETF (XLP) Relative Strength Ratio (XLP/SPY) crossed above its 50-day SMA on 5/30/14, thereby turning systematically neutral (from bearish).
Gold, SPDR Gold Shares ETF (GLD) absolute price fell to its lowest level in nearly 4 months on 5/30/14, reconfirming its preexisting bearish trend.
Silver, iShares Silver Trust ETF (SLV) price fell to its lowest level in 11 months on 5/30/14, reconfirming its preexisting bearish trend.
The S&P 500 Composite Index (SPX: 1,923.57, up 0.18%) absolute price opened lower but quickly reversed to a new intraday high by 11:19 am ET. Stock prices surrendered gains and traded choppy in mid-session. An afternoon uptrend lifted SPX above its morning high. SPX closed above the open and the midpoint of the day’s high-low range and above all previous closing prices.
Stochastic (12,3,3) oscillator based on the S&P 500 rose further above 97%, which signals extremely overbought.
Divergences continue. Although the S&P 500 rose to a higher high on Friday, the NASDAQ Composite fell 0.13% and the small-cap Russell 2000 index fell 0.49%.
NYSE total volume rose 16% to a level 5% below its 200-day SMA. Generally, rising volume confirms the direction (up or down) of a price move, but falling volume may indicate diminishing power behind a price trend, which can suggest a price reversal ahead.
The Number of Daily Net New Highs on the NYSE (New Highs minus New Lows) fell to 423 from 455 the previous trading day. These levels compare to peaks above 800 recorded in 2012 and 2013, when the S&P 500 was lower than it is now. So this indicator still is diverging bearishly relative to last year’s levels.
Momentum oscillators RSI and MACD based on the S&P 500 Index failed to rise to higher highs in 2014 to confirm price. Both continue to demonstrate bearish divergence compared to the price of the underlying index, the S&P 500.
Beyond the noisy day-to-day price action, the outlook for the stock market appears uncertain. Divergences, generally low trading volume on up days, rising trading volume on down days, and excessive bullish sentiment remain challenges to a sustainable upside trend. On the other hand, the bullish case appears to rest primarily on continuation of central banks’ highly-accommodative monetary policies and hopes for faster economic recovery.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Market Indicators
The Dow Theory reconfirmed a Primary Tide Bull Market on 5/30/14 when the Dow-Jones Industrial Average rose to a higher closing price high to conform the higher high by the Dow-Jones Transportation Average on the previous day.
NASDAQ 100 ETF/S&P 500 ETF Relative Strength Ratio (QQQ/SPY) fell below its lows of the previous 7 months on 5/7/14, thereby suggesting a significant downtrend. The QQQ/SPY 50-day SMA crossed below the 200-day SMA on 5/19/14, thereby turning systematically bearish (from neutral). Absolute price of QQQ crossed above its 50-day SMA on 5/16/14, thereby turning systematically bullish (from neutral).
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 8 years on 3/13/14, thereby reconfirming its preexisting long-term downtrend. The 50-day SMA remains in weak position below the 200-day SMA. BKF/SPY has underperformed since it peaked on 10/14/2010. Absolute price of BKF has been stuck in a trading range from 32.62 to 39.67 for about a year and has remained systematically neutral most of that time.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below its lows of the previous 8 years on 3/13/14, thereby reconfirming its preexisting long-term downtrend. The 50-day SMA remains in weak position below the 200-day SMA. Long term, EEM/SPY has underperformed since the ratio peaked on 10/14/2010. Absolute price of EEM has been stuck in a trading range from 36.16 to 45.34 for more than 2 years and has remained systematically neutral most of that time.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below its lows of the previous 11 years on 3/20/14, thereby reconfirming its preexisting long-term downtrend. The 50-day SMA remains in weak position below the 200-day SMA. Long term, EFA/SPY has underperformed since the ratio peaked on 11/27/2007.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically neutral (from bearish) on 4/3/14 by crossing above its 50-day SMA. The 50-day SMA remains below the 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) fell below its lowest levels of the previous 11 months on 5/14/14, thereby reconfirming its preexisting major bearish trend. The IWM/SPY 50-day SMA crossed below the 200-day SMA on 4/29/14, thereby turning systematically bearish (from neutral). Absolute price has remained systematically neutral most of the time since price peaked at 120.58 on 3/4/14.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) 50-day SMA crossed below the 200-day SMA on 5/9/14, thereby turning systematically bearish (from neutral). Absolute price has remained systematically neutral most of the time since price peaked at 254.48 on 4/4/14.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible Assets, Commodities
U.S. dollar ETF (UUP) price rose above its 50-day SMA on 5/12/14, thereby turning systematically neutral (from bearish).UUP has remained systematically bearish most of the time since peaking at 22.98 on 7/9/13. Support 21.07 and 20.84. Resistance 21.96, 22.34, 22.98, 23.14, 23.52, 25.84, 27.19, and 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) absolute price fell to its lowest level in nearly 3 months on 5/28/14, thereby reconfirming a downside price pullback. DBA crossed back down below its 50-day SMA on 5/9/14, thereby turning systematically neutral (from bullish).
Crude Oil, United States Oil ETF (USO) absolute price rose above its highs of the previous 8 months on 5/23/14, thereby confirming its preexisting bullish uptrend. USO rose above its 50-day SMA on 5/12/14, thereby turning systematically bullish (from neutral). Support 35.96, 35.63, 34.97, 34.00, 32.53, 32.12, 30.79, 29.02, 26.28, and 22.74. Resistance 39.54, 39.64, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) absolute price fell to its lowest level in nearly 4 months on 5/30/14, reconfirming its preexisting bearish trend. The 50-day SMA fell below the 200-day SMA on 5/28/14, thereby turning systematically bearish (from neutral). Support: 114.46, 113.08, and 102.28. Resistance: 133.69, 137.62, 143.43, 149.44, 153.85, 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) fell to its lowest level in nearly 5 months on 5/28/14, thereby reconfirming its preexisting bearish major trend. GDX/GLD has been systematically bearish most of the time since GDX absolute price peaked at 66.98 on 9/9/11. Absolute price of GDX remains systematically bearish.
Silver, iShares Silver Trust ETF (SLV) price fell to its lowest level in 11 months on 5/30/14, reconfirming its preexisting bearish trend. SLV price turned systematically bearish (from neutral) on 3/20/14 when it crossed below its 50-day SMA. Support 17.75, 16.73, 14.37, 12.27, 11.64, and 8.45. Resistance: 21.30, 22.23, 23.84, 25.34, 27.14, 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 to its lowest level in more than 3 years on 5/1/14, thereby confirming its preexisting major downtrend. SLV/GLD turned systematically bearish (from neutral) on 2/26/14 when it crossed below its 50-day SMA.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) absolute price whipsawed back up above its 50-day SMA on 5/8/14, thereby turning systematically neutral (from bearish). The 50-day SMA remains in weak position below the 200-day SMA. JJC price broke down below the lows of the previous 4 years on 3/19/14, suggesting a major long-term downtrend. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
13.14% , BIG , BIG LOTS
3.03% , AVY , AVERY DENNISON
5.65% , AGN , ALLERGAN
1.55% , SRCL , Stericycle, SRCL
0.60% , HSIC , Henry Schein Inc
1.91% , CMA , COMERICA
0.31% , IXN , Technology Global, IXN
1.34% , INTC , INTEL
0.47% , AN , AUTONATION
1.66% , IP , INTL PAPER
1.68% , CPB , CAMPBELL SOUP
1.56% , MJN , Mead Johnson Nutrition
1.49% , MSFT , MICROSOFT
0.76% , MSI , Motorola Solutions, MSI
1.15% , HSP , HOSPIRA
0.72% , SYK , STRYKER
1.04% , ABT , ABBOTT LABS
0.49% , IYR , Real Estate US DJ, IYR
0.63% , DLX , DELUXE
0.40% , PFM , Dividend Achievers PS, PFM
0.78% , HOLX , Hologic, Inc., HOLX
0.15% , EFG , Growth EAFE MSCI, EFG
0.28% , PDCO , Patterson Dental Company
0.30% , VIG , Dividend Appreciation Vipers, VIG
1.01% , EIX , EDISON INTL
0.97% , SYY , SYSCO
0.98% , KMB , KIMBERLY CLARK
2.21% , CL , COLGATE
0.74% , UNP , UNION PACIFIC
1.04% , WMT , WAL MART STORES
0.27% , XLV , Health Care SPDR, XLV
0.75% , URBN , Urban Outfitters Inc.
0.85% , CVS , CVS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.33% , IDX , Indonesia MV, IDX
-9.81% , NIHD , NII Holdings, Inc.
-0.76% , DBC , Commodity Tracking, DBC
-1.01% , FRX , FOREST LABS STK A
-1.05% , XBI , Biotech SPDR, XBI
-2.69% , EZA , South Africa Index, EZA
-1.11% , GNW , GENWORTH FINANCIAL
-2.13% , EWZ , Brazil Index, EWZ
-1.37% , EEM , Emerging Markets, EEM
-1.21% , SLV , Silver Trust iS, SLV
-5.54% , CLF , CLIFFS NATURAL RESOURCES, CLF
-0.45% , IWC , Microcap Russell, IWC
-1.22% , ECH , Chile MSCI iS, ECH
-1.33% , XME , Metals & Mining SPDR, XME
-4.60% , X , US STEEL CORP
-0.28% , IJK , Growth MidCap 400 B, IJK
-1.01% , MBI , MBIA
-0.80% , PAYX , PAYCHEX
-1.00% , DBA , Agriculture DB PS, DBA
-1.32% , CAT , CATERPILLAR
-1.29% , VWO , Emerging VIPERs, VWO
-0.67% , EWA , Australia Index, EWA
-2.07% , NUE , NUCOR
-0.74% , EWM , Malaysia Index, EWM
-1.33% , SCHW.K , CHARLES SCHWAB, SCHW.O
-1.13% , RHI , ROBERT HALF
-0.78% , TER , TERADYNE
-1.49% , KMX , CarMax
-0.24% , IGT , INTL GAME TECH
-0.45% , SEE , SEALED AIR
-0.29% , EWS , Singapore Index, EWS
-2.07% , ILF , Latin Am 40, ILF
-1.31% , EWW , Mexico Index, EWW
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
0.85% , Spain Index, EWP
0.78% , Consumer Staples SPDR, XLP
0.77% , Utilities VIPERs, VPU
0.66% , Utilities SPDR, XLU
0.53% , Realty Cohen & Steers, ICF
0.52% , China 25 iS, FXI
0.51% , Italy Index, EWI
0.49% , Real Estate US DJ iS, IYR
0.48% , REIT Wilshire, RWR
0.46% , REIT VIPERs, VNQ
0.40% , Austria Index, EWO
0.37% , Dividend U.S. DJ iS, DVY
0.37% , Telecom DJ US, IYZ
0.36% , Frontier Markets Guggenheim , FRN
0.31% , Dividend High Yield Equity PS, PEY
0.30% , Dividend Appreciation Vipers, VIG
0.28% , Hong Kong Index, EWH
0.27% , Health Care SPDR, XLV
0.27% , Dividend SPDR, SDY
0.27% , France Index, EWQ
0.24% , Value VIPERs, VTV
0.24% , LargeCap Value S&P 500 iS, IVE
0.23% , Value LargeCap Dynamic PS, PWV
0.22% , Financial SPDR, XLF
0.22% , Financials VIPERs, VFH
0.21% , EMU Europe Index, EZU
0.19% , LargeCap Growth Russell 1000 iS, IWF
0.18% , LargeCap Blend S&P 500 iS, IVV
0.17% , Japan Index, EWJ
0.17% , Financial DJ US, IYF
0.17% , Financial Services DJ, IYG
0.16% , LargeCap Blend S&P 100, OEF
0.16% , Canada Index, EWC
0.16% , Global 100, IOO
0.16% , S&P 500 SPDRs LargeCap Blend, SPY
0.16% , Germany Index, EWG
0.15% , Netherlands Index, EWN
0.15% , Growth EAFE MSCI, EFG
0.15% , LargeCap VIPERs, VV
0.14% , Europe 350 S&P Index, IEV
0.13% , LargeCap Blend S&P=Weight R, RSP
0.12% , Semiconductor iS IGW, SOXX
0.12% , LargeCap Blend Russell 3000 iS, IWV
0.12% , LargeCap Blend Russell 1000 iS, IWB
0.11% , Belgium Index, EWK
0.11% , Technology SPDR, XLK
0.11% , Bond, High Yield Corp iBoxx iS, HYG
0.10% , Growth MidCap Russell, IWP
0.10% , LargeCap Growth S&P 500 iS, IVW
0.10% , SmallCap Blend EAFE MSCI iS, SCZ
0.09% , Consumer Discretionary SPDR, XLY
0.09% , Bond, Intermediate US Aggregate iS, AGG
0.09% , DIAMONDS (DJIA), DIA
0.09% , Growth VIPERs, VUG
0.09% , Bond, Emerging Mkt JPM iS, EMB
0.07% , Value MidCap Russell, IWS
0.07% , European VIPERs, VGK
0.06% , LargeCap Value Russell 1000 iS, IWD
0.05% , Bond, High-Yield Junk, JNK
0.04% , Energy & Nat Res iS GS, IGE
0.02% , Dividend ex-U.S. DJ iS, IDV
0.02% , Bond, 1-3 Year Treasury, SHY
0.02% , Blend Total Market VIPERs, VTI
0.02% , MidCap Russell, IWR
0.02% , Bond, Long-Term Corp iBoxx iS, LQD
0.01% , Foreign LargeCap EAFE MSCI iS, EFA
0.01% , QQQ Nasdaq 100 Trust, QQQ
0.01% , Bond Treasury Short-Term iS, SHV
0.00% , Preferred Stock iS, PFF
0.00% , Global LargeCap Blend MSCI iS, ACWI
-0.02% , Materials SPDR, XLB
-0.03% , Transportation Av DJ, IYT
-0.03% , Switzerland Index, EWL
-0.04% , Bond, 20+ Years Treasury, TLT
-0.05% , Value EAFE MSCI, EFV
-0.06% , Financial Preferred, PGF
-0.06% , Semiconductor SPDR, XSD
-0.06% , MidCap Value S&P 400 iS, IJJ
-0.07% , Energy SPDR, XLE
-0.07% , Industrial SPDR, XLI
-0.07% , Technology DJ US, IYW
-0.08% , Bond, 10 Year Treasury, IEF
-0.09% , Energy VIPERs, VDE
-0.10% , Value SmallCap VIPERS, VBR
-0.10% , Bond, Muni S&P ATM-Free iS, MUB
-0.11% , Dividend International, PID
-0.11% , Sweden Index, EWD
-0.13% , Bond Ex-US Treas, BWX
-0.14% , United Kingdom Index, EWU
-0.15% , Info Tech VIPERs, VGT
-0.15% , Energy Global, IXC
-0.15% , Water Resources, PHO
-0.17% , Energy DJ, IYE
-0.18% , SmallCap Value S&P 600 iS, IJS
-0.21% , Bear, Short S&P 500, SH
-0.21% , MidCap Blend S&P 400 iS, IJH
-0.22% , Basic Materials DJ US, IYM
-0.23% , Pacific VIPERs, VPL
-0.23% , Bond, TIPS U.S. Treasury iS, TIP
-0.26% , Capital Markets KWB ST, KCE
-0.26% , MidCap S&P 400 SPDRs, MDY
-0.27% , Global ex U.S. LargeCap Blend, ACWX
-0.28% , MidCap Growth S&P 400 iS, IJK
-0.29% , Singapore Index, EWS
-0.29% , SmallCap Value Russell 2000 iS, IWN
-0.33% , Small Cap VIPERs, VB
-0.41% , Homebuilders SPDR, XHB
-0.42% , Gold Shares S.T., GLD
-0.44% , SmallCap Blend S&P 600 iS, IJR
-0.45% , SmallCap Blend Russell 2000 iS, IWM
-0.45% , Microcap Russell, IWC
-0.49% , SmallCap Growth S&P 600 iS, IJT
-0.50% , Pacific ex-Japan, EPP
-0.55% , Growth SmallCap VIPERs, VBK
-0.58% , Networking, IGN
-0.61% , Oil, Crude, U.S. Oil Fund, USO
-0.67% , Australia Index, EWA
-0.68% , India PS, PIN
-0.70% , Thailand MSCI iS, THD
-0.71% , Oil Fund PowerShares, DBO
-0.74% , Malaysia Index, EWM
-0.75% , SmallCap Growth Russell 2000 iS, IWO
-0.76% , Commodity Tracking, DBC
-0.79% , Taiwan Index, EWT
-1.00% , Agriculture DB PS, DBA
-1.02% , Turkey MSCI iS, TUR
-1.05% , Biotech SPDR, XBI
-1.21% , Silver Trust iS, SLV
-1.22% , Chile MSCI iS, ECH
-1.29% , Emerging VIPERs, VWO
-1.31% , Mexico Index, EWW
-1.31% , South Korea Index, EWY
-1.33% , Metals & Mining SPDR, XME
-1.37% , Emerging Markets MSCI iS, EEM
-1.38% , WilderHill Clean Energy PS, PBW
-1.42% , India Earnings WTree, EPI
-1.46% , China LargeCap Growth G D H USX PS, PGJ
-1.50% , Emerging 50 BLDRS, ADRE
-1.88% , Russia MV, RSX
-2.07% , Latin Am 40, ILF
-2.13% , Brazil Index, EWZ
-2.69% , South Africa Index, EZA
-3.33% , Indonesia MV, IDX
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The S&P 500 Composite Potential Resistance
none
The S&P 500 Composite Potential Support
1874.56, 50-day SMA
1859.79, low of 5/7/2014
1850.61, low of 4/28/2014
1813.55, high of 11/29/2013
1795.79, 200-day SMA
1737.92, low of 2/5/2014
1729.86, high of 9/19/2013
1711.57, high of 10/15/2013
1709.67, high of 8/2/2013
1703.85, high of 9/26/2013
1700.18, high of 8/8/2013
1698.78, high of 7/23/2013
1696.81, high of 8/13/2013
1696.55, high of 10/1/2013
1695.93, low of 10/15/2013
1687.18, high of 5/22/2013
1687.11, low of 9/27/2013
1676.03, low of 7/26/2013
1674.99, low of 9/30/2013
1672.40, high of 9/9/2013
1671.84, low of 7/16/2013
1670.36, low of 10/3/2013
1669.51, high of 8/26/2013
1654.19, high of 6/18/2013
1654.18, high of 7/9/2013
1652.61, low of 8/16/2013
1646.47, low of 10/9/2013
1629.05, low of 8/27/2013
1560.33, low of 6/24/2013
1536.03, low of 4/18/2013
1530.94, high of 2/19/2013
1485.01, low of 2/26/2013
1474.51, high of 9/14/2012
1451.64, low on 1/8/2013
1448.00, high of 12/19/2012
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
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
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
1234.81, low of 11/3/2011
1231.04, high of 12/16/2011
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
1074.77, low of 10/4/2011
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
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
