“The speaker’s tone — and a hostile White House response — raised the level of pessimism that a wide-ranging agreement could be reached quickly to head off hundreds of billions of dollars in automatic tax increases and spending cuts beginning next month,” the New York Times reported.
Who benefits when the words of politicians move markets, rather that natural market forces? Who knows what politicians will say before they say it?
The S&P 500 (SPX: 1,419.45) fell 9.03 points or 0.63% on Thursday. The S&P 500 fell below its lows of the previous 2 trading days and a 4-week uptrend line. SPX managed to hold slightly above its declining 50-day SMA now standing at 1415.73.
NYSE trading volume fell 9% on Thursday to a level that was 6% below its 200-day SMA. Low volume indicates tepid demand for stocks.
I have been skeptical about whether SPX will be able to overcome technical congestion (resistance) in its September-November trading range. Long-term price momentum has been demonstrating bearish divergence all year, and the bull phase of the 4-year cycle is long in tooth.
Still, speculators appear to be hoping for some kind of deal on the fiscal cliff. The majority has been confident about a year-end rally. Bullish sentiment has been high for months and has been rising further into year end.
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. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
Our clients’ separately managed accounts preserved capital over the past 9 weeks while the S&P 500 fell 8.9%, based on intraday highs and lows from 9/14/12 to 11/16/12. In addition, our clients’ 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 every day since 1/13/11.
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 probable in days ahead. 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) rose 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– but a bullish crossover appears probable in days ahead.
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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
The S&P 500 Composite Potential Support
1418.71, high of 8/17/2012
1415.73, 50-day SMA
1415.32, high of 5/1/2012
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
1387.25, 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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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 21.76, 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: 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 a bearish crossover seems possible 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) rose above its 50-day SMA on 11/20/12, thereby turning systematically bullish. 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
7.95% , RFMD , RF Micro Devices Inc
15.93% , BBY , BEST BUY
11.19% , NIHD , NII Holdings, Inc.
4.67% , MBI , MBIA
2.02% , CVS , CVS
1.48% , CIEN.O , CIENA
4.74% , RSH , RADIOSHACK
0.39% , EWI , Italy Index, EWI
4.13% , RIMM , RESEARCH IN MOTION LTD
1.86% , APOL , APOLLO GROUP
0.74% , GOOG , Google
1.18% , NEE , NextEra Energy Resources LLC
0.62% , ERIC.O , LM Ericsson Telephone Company
0.22% , EWS , Singapore Index, EWS
0.37% , RAI , Reynolds American
0.44% , IYT , Transportation Av DJ, IYT
0.31% , EWP , Spain Index, EWP
0.53% , HSY , HERSHEY FOODS
1.05% , HON , HONEYWELL INTL
0.85% , SPLS , STAPLES
1.49% , QID , Short 200% QQQ PS, QID
0.11% , LEG , LEGGETT & PLATT
0.14% , PPL , PPL
0.52% , PLL , PALL
0.24% , YUM , YUM BRANDS
0.18% , AMAT , APPLIED MATERIAL
0.53% , PPG , PPG INDUSTRIES
0.13% , URBN , Urban Outfitters Inc.
0.17% , TXT , TEXTRON
0.11% , SYK , STRYKER
0.35% , AVP , AVON
0.16% , MCHP , Microchip Technology Incorporated
0.51% , GIS , GENERAL MILLS
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-6.34% , LXK , LEXMARK INTL STK A
-0.95% , IXJ , Healthcare Global, IXJ
-0.61% , IXP , Telecommunications Global, IXP
-4.68% , NBR , NABORS
-3.30% , UIS , UNISYS
-1.21% , EWD , Sweden Index, EWD
-1.07% , IGE , Energy & Nat Res iS GS, IGE
-1.75% , CINF , CINCINNATI FIN
-1.97% , JNY , JONES APPAREL
-0.51% , IJJ , Value MidCap S&P 400 B, IJJ
-0.66% , IWS , Value MidCap Russell, IWS
-1.98% , MHP , MCGRAW HILL
-2.83% , LSI , LSI LOGIC
-0.83% , IYH , Healthcare DJ, IYH
-0.94% , TUR , Turkey MSCI iS, TUR
-1.50% , VIAB.O , VIACOM STK B
-1.54% , SPG , SIMON PROP GRP
-0.65% , PKB , Building & Construction, PKB
-2.47% , LLTC , LINEAR TECH
-0.35% , WMB , WILLIAMS
-1.82% , TMK , TORCHMARK
-2.12% , RIG , TRANSOCEAN
-3.12% , BRCM , BROADCOM STK A
-1.35% , NOV , NATIONAL OILWELL VARC0
-1.98% , LMT , LOCKHEED MARTIN
-0.42% , JKD , LargeCap Blend Core iS M, JKD
-2.32% , MET , METLIFE
-0.85% , ICF , Realty Cohen & Steers, ICF
-0.67% , EWM , Malaysia Index, EWM
-0.51% , PID , Dividend International, PID
-0.54% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-2.13% , GT , GOODYEAR TIRE
-1.62% , EBAY , EBAY
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
0.59% Bear, Short S&P 500, SH
0.44% Transportation Av DJ, IYT
0.39% Italy Index, EWI
0.37% South Korea Index, EWY
0.31% Spain Index, EWP
0.28% Networking, IGN
0.26% Austria Index, EWO
0.22% Taiwan Index, EWT
0.22% Singapore Index, EWS
0.08% Chile MSCI iS, ECH
0.07% Bond, 20+ Years Treasury, TLT
0.01% Bond Treasury Short-Term iS, SHV
0.00% Netherlands Index, EWN
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Belgium Index, EWK
-0.04% Bond, Emerg Mkt JPM iS, EMB
-0.11% Switzerland Index, EWL
-0.12% EMU Europe Index, EZU
-0.13% Value EAFE MSCI, EFV
-0.16% Bond, Long-Term Corp iBoxx iS, LQD
-0.16% Bond, Intermediate US Aggregate iS, AGG
-0.17% Consumer Staples SPDR, XLP
-0.19% Homebuilders SPDR, XHB
-0.19% Bond, 10 Year Treasury, IEF
-0.21% Telecom DJ US, IYZ
-0.22% Financial Preferred, PGF
-0.23% Thailand MSCI iS, THD
-0.23% Preferred Stock iS, PFF
-0.23% Global 100, IOO
-0.24% Water Resources, PHO
-0.26% France Index, EWQ
-0.27% Materials SPDR, XLB
-0.28% Bond, Muni S&P ATM-Free iS, MUB
-0.28% Bond, TIPS U.S. Treasury iS, TIP
-0.28% Europe 350 S&P Index, IEV
-0.29% Bond, High-Yield Junk, JNK
-0.30% Foreign LargeCap EAFE MSCI iS, EFA
-0.31% Global ex U.S. LargeCap Blend, ACWX
-0.32% Industrial SPDR, XLI
-0.32% Latin Am 40, ILF
-0.33% China LargeCap Growth G D H USX PS, PGJ
-0.33% European VIPERs, VGK
-0.34% Indonesia MV, IDX
-0.35% Dividend Appreciation Vipers, VIG
-0.35% Bond, High Yield Corp iBoxx iS, HYG
-0.36% Financial Services DJ, IYG
-0.37% Germany Index, EWG
-0.37% Dividend SPDR, SDY
-0.38% Pacific VIPERs, VPL
-0.39% United Kingdom Index, EWU
-0.39% Utilities VIPERs, VPU
-0.39% Utilities SPDR, XLU
-0.40% Frontier Markets Guggenheim , FRN
-0.41% Emerging 50 BLDRS, ADRE
-0.42% Pacific ex-Japan, EPP
-0.42% Dividend High Yield Equity PS, PEY
-0.43% Japan Index, EWJ
-0.44% Emerging Markets MSCI iS, EEM
-0.44% South Africa Index, EZA
-0.45% SmallCap Blend EAFE MSCI iS, SCZ
-0.45% Capital Markets KWB ST, KCE
-0.46% Bond Ex-US Treas, BWX
-0.48% Emerging VIPERs, VWO
-0.48% Dividend U.S. DJ iS, DVY
-0.49% Canada Index, EWC
-0.49% Microcap Russell, IWC
-0.50% Financial SPDR, XLF
-0.51% Australia Index, EWA
-0.51% Dividend ex-U.S. DJ iS, IDV
-0.51% LargeCap Blend S&P=Weight R, RSP
-0.51% Dividend International, PID
-0.51% MidCap Value S&P 400 iS, IJJ
-0.52% Growth VIPERs, VUG
-0.52% LargeCap Blend Russell 3000 iS, IWV
-0.52% SmallCap Blend S&P 600 iS, IJR
-0.52% DIAMONDS (DJIA), DIA
-0.53% LargeCap VIPERs, VV
-0.54% LargeCap Value S&P 500 iS, IVE
-0.54% SmallCap Growth S&P 600 iS, IJT
-0.55% LargeCap Value Russell 1000 iS, IWD
-0.55% Financial DJ US, IYF
-0.55% LargeCap Blend Russell 1000 iS, IWB
-0.56% Basic Materials DJ US, IYM
-0.56% Global LargeCap Blend MSCI iS, ACWI
-0.56% Financials VIPERs, VFH
-0.57% Blend Total Market VIPERs, VTI
-0.58% MidCap Russell, IWR
-0.59% Value SmallCap VIPERS, VBR
-0.59% LargeCap Growth Russell 1000 iS, IWF
-0.60% Growth EAFE MSCI, EFG
-0.61% SmallCap Value Russell 2000 iS, IWN
-0.61% Growth MidCap Russell, IWP
-0.61% LargeCap Blend S&P 100, OEF
-0.61% MidCap Blend S&P 400 iS, IJH
-0.61% MidCap Growth S&P 400 iS, IJK
-0.61% S&P 500 SPDRs LargeCap Blend, SPY
-0.62% SmallCap Value S&P 600 iS, IJS
-0.62% Small Cap VIPERs, VB
-0.62% LargeCap Blend S&P 500 iS, IVV
-0.63% Oil, Crude, U.S. Oil Fund, USO
-0.63% Agriculture DB PS, DBA
-0.64% SmallCap Growth Russell 2000 iS, IWO
-0.64% SmallCap Blend Russell 2000 iS, IWM
-0.64% MidCap S&P 400 SPDRs, MDY
-0.64% Value VIPERs, VTV
-0.65% LargeCap Growth S&P 500 iS, IVW
-0.65% Consumer Discretionary SPDR, XLY
-0.66% Value MidCap Russell, IWS
-0.67% Real Estate US DJ iS, IYR
-0.67% Growth SmallCap VIPERs, VBK
-0.67% Malaysia Index, EWM
-0.67% Energy Global, IXC
-0.67% Hong Kong Index, EWH
-0.70% Brazil Index, EWZ
-0.72% Technology SPDR, XLK
-0.72% Metals & Mining SPDR, XME
-0.73% Info Tech VIPERs, VGT
-0.75% REIT Wilshire, RWR
-0.76% REIT VIPERs, VNQ
-0.78% Technology DJ US, IYW
-0.79% QQQ Nasdaq 100 Trust, QQQ
-0.82% Value LargeCap Dynamic PS, PWV
-0.84% Gold Shares S.T., GLD
-0.85% Oil Fund PowerShares, DBO
-0.85% Realty Cohen & Steers, ICF
-0.85% Health Care SPDR, XLV
-0.87% China 25 iS, FXI
-0.89% Russia MV, RSX
-0.90% Energy VIPERs, VDE
-0.90% Commodity Tracking, DBC
-0.92% Energy DJ, IYE
-0.93% Energy SPDR, XLE
-0.94% Mexico Index, EWW
-0.94% Turkey MSCI iS, TUR
-0.95% Semiconductor iS IGW, SOXX
-0.99% WilderHill Clean Energy PS, PBW
-1.07% Energy & Nat Res iS GS, IGE
-1.08% Semiconductor SPDR, XSD
-1.12% Biotech SPDR, XBI
-1.21% Sweden Index, EWD
-1.26% India PS, PIN
-1.47% India Earnings WTree, EPI
-2.60% Silver Trust iS, SLV
