Technical market conditions suggest that downside risk still may exceed upside potential for the stock market. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.
The SPDR S&P 500 ETF (SPY 140.84) appears “overbought” or “extended” at 2% to 3% above its 20-day EMA, as shown*.
S&P 500 (SPX: 1,405.87) rose 3.07 points or 0.22% on Friday for its 6th consecutive daily gain. SPX rose 1.07% for the week as a whole, with the great bulk of that gain made on the first 2 trading days, Monday and Tuesday. SPX is demonstrating a clear loss of momentum over the past 3 trading days.
Significant technical indicators failed to rise above June-July highs to confirm the higher high for the S&P 500. Technical cracks are becoming more visible.
The Dow-Jones Industrials rose above June-July highs but the Transports continue to lag well below June-July highs, thereby demonstrating a bearish divergence.
NYSE volume fell 12% on Friday 8/10/12 to the lowest level since 7/3/12 and one of the lowest levels of the year, possibly reflecting diminishing enthusiasm for chasing a 6-day SPX rally, as well as summer vacations. On-Balance Volume for the SPX continues to lag, demonstrating bearish divergence, as shown*.
NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price. Volume has not been confirming the price up move.
While the S&P 500 Composite Price Index has recovered nearly all of its April-June loss, both the percentage of these same 500 stocks that are above their 200-day SMAs and the percentage in bullish Point-and-Figure Chart uptrends have recovered much less of their losses. Moreover, both are systematically neutral relative to their own 50- and 200-day SMAs. Both indicators are failing to confirm the strength in the S&P 500 and are diverging bearishly. See the 2 charts*. Note that the percentage of the S&P 500 stocks above their 200-day SMAs actually turned down on Friday, despite the rise in the S&P 500 Composite Price Index.
*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 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).
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VIX Fear Index fell to 14.73 intraday on 8/10/12, its lowest level since 3/30/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a shift from worried concern to 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
1407.14, high of 8/7/2012
The S&P 500 Composite Potential Support
1391.04, low of 8/6/2012
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
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
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1349.72, 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
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.38, 200-day SMA
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1306.62, low of 6/12/2012
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
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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Tangible Assets, Commodities
U.S. dollar ETF (UUP) fell below its 50-day SMA on 8/3/12, turning systematically neutral. UUP remains above its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.14, 23.52, 25.84, 27.19, 28.97.
CRB Commodity Price Index remains systematically neutral: above its 50-day SMA, below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 8/18/11.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) challenged Thursday’s high on Friday on USDA crop estimate news but reversed to close below Thursday’s low in a relatively wide-range session on relatively high volume. That looks like bearish action for the short term. Following 8 weeks of rising prices on drought news, DBA looks extended, so a period of correction or consolidation would come as no surprise. DBA remains systematically neutral: above its 50-day SMA, above its 200-day SMA, and its rising 50-day SMA is now only slightly below its 200-day SMA. The 50-200 spread has been narrowing since late June and will cross next week. High food prices could bring trouble for the general economy because more consumer spending for food means less consumer spending available for other goods and services.
Crude Oil, United States Oil ETF (USO) turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 35.37, 36.97, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. GLD remains below its 200-day SMA, and its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.
Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.
Silver, iShares Silver Trust ETF (SLV) price whipsawed back above its 50-day SMA on 8/3/12, thereby turning systematically neutral again. SLV remains below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 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 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD turned systematically bearish again when it fell below its 50-day SMA on 8/10/12. SLV/GLD remains below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price rose above its 50-day SMA on 8/7/12, thereby turning systematically neutral. JJC fell to its lowest level in 8 months on 8/2/12, thereby confirming its major bearish trend. JJC price remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since 12/31/10. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this relative weakness may be suggesting rising doubts about prospects going forward.
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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
10.01% , JNS , JANUS CAPITAL
0.18% , JKG , MidCap Blend Core iS M, JKG
5.88% , JCP , JC PENNEY
7.59% , FMCN , Focus Media, FMCN
8.72% , LVLT.K , LEVEL 3 COMMUNICATIONS
7.46% , HAR , Harman International
3.44% , NFLX , Netflix, NFLX
0.63% , SCZ , Small Cap EAFE MSCI iS, SCZ
0.94% , FRN , Frontier Markets Guggenheim , FRN
2.06% , LLY , ELI LILLY
2.55% , PDCO , Patterson Dental Company
4.27% , SVU , SUPERVALU
2.97% , BRCM , BROADCOM STK A
6.28% , RIMM , RESEARCH IN MOTION LTD
1.65% , SYMC , SYMANTEC
2.23% , HP , Helmerich & Payne HP
0.88% , DE , DEERE & CO
0.23% , EFV , Value EAFE MSCI, EFV
0.86% , SNI , Scripps Networks Interactive
1.07% , DD , DU PONT
0.61% , DDM , Ultra Dow30 Double, DDM
0.47% , TUP , TUPPERWARE
0.28% , EWO , Austria Index, EWO
0.59% , NEM , NEWMONT MINING
0.33% , IOO , Global 100, IOO
0.32% , EIS , Israel MSCI iS, EIS
0.63% , IDX , Indonesia MV, IDX
0.71% , PBW , WilderHill Clean Energy PS, PBW
3.33% , SIRI , Sirius Satellite
1.89% , EMR , EMERSON ELECTRIC
0.79% , PAYX , PAYCHEX
0.23% , XLK , Technology SPDR, XLK
1.37% , SLB , SCHLUMBERGER
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-6.95% , BIG , BIG LOTS
-5.37% , YHOO , YAHOO
-0.43% , FPX , IPOs, First Tr IPOX-100, FPX
-3.22% , DV , DeVry, Inc.
-0.31% , RZV , Value SmallCap S&P 600, RZV
-2.01% , HMA , HEALTH MGMT STK A
-1.84% , GWW , WW GRAINGER
-0.07% , MYY , Short 100% MidCap 400, MYY
-0.74% , NCR , NCR
-1.83% , FDO , FAMILY DLR STRS
-2.47% , CVG , CONVERGYS
-1.28% , PMR , Retail, PMR
-0.73% , DBA , Agriculture DB PS, DBA
-1.78% , PMTC.O , PARAMETRIC
-2.22% , HOT , STARWOOD HOTELS
-2.12% , MON , MONSANTO
-0.57% , KO , COCA COLA
-1.57% , NWL , NEWELL RUBBER
-1.37% , RHT , Red Hat Inc.
-0.30% , JKL , Value SmallCap iS M, JKL
-0.20% , ADRD , Developed 100 BLDRS, ADRD
-1.71% , FAST , Fastenal Company
-0.20% , PID , Dividend International, PID
-0.97% , FDX , FEDEX
-0.89% , ZION , ZIONS
-0.77% , HOG , HARLEY DAVIDSON
-0.04% , IGN , Networking, IGN
-0.96% , LM , LEGG MASON
-0.11% , IYK , Consumer Non-Cyclical, IYK
-0.61% , NVDA , NVIDIA
-0.37% , DOG , Short 100% Dow 30, DOG
-0.57% , DXD , Short 200% Dow 30 PS, DXD
-0.93% , EWH , Hong Kong Index, EWH
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.44% Turkey MSCI iS, TUR
0.99% South Korea Index, EWY
0.94% Frontier Markets Guggenheim , FRN
0.92% Telecom DJ US, IYZ
0.89% Brazil Index, EWZ
0.88% India PS, PIN
0.72% Emerging 50 BLDRS, ADRE
0.71% WilderHill Clean Energy PS, PBW
0.71% Sweden Index, EWD
0.70% United Kingdom Index, EWU
0.69% Latin Am 40, ILF
0.63% Taiwan Index, EWT
0.63% Indonesia MV, IDX
0.63% Small Cap EAFE MSCI iS, SCZ
0.62% South Africa Index, EZA
0.55% China LargeCap Growth G D H USX PS, PGJ
0.51% Semiconductor iS IGW, SOXX
0.50% Bond, 20+ Years Treasury, TLT
0.47% Emerging Markets, EEM
0.47% Thailand MSCI iS, THD
0.47% Industrial SPDR, XLI
0.46% Mexico Index, EWW
0.46% Emerging VIPERs, VWO
0.44% Canada Index, EWC
0.42% Health Care SPDR, XLV
0.37% Water Resources, PHO
0.37% Semiconductor SPDR, XSD
0.36% Italy Index, EWI
0.34% Energy VIPERs, VDE
0.33% Global 100, IOO
0.31% Energy DJ, IYE
0.31% Utilities VIPERs, VPU
0.29% Utilities SPDR, XLU
0.29% Info Tech VIPERs, VGT
0.29% European VIPERs, VGK
0.29% Energy & Nat Res iS GS, IGE
0.29% Bond, 10 Year Treasury, IEF
0.28% Bond, Corp, LQD
0.28% Metals & Mining SPDR, XME
0.28% Dividend DJ Select, DVY
0.28% Austria Index, EWO
0.27% DIAMONDS (DJIA), DIA
0.26% Energy Global, IXC
0.24% Value VIPERs, VTV
0.24% Technology DJ US, IYW
0.24% Germany Index, EWG
0.23% Technology SPDR, XLK
0.23% Value EAFE MSCI, EFV
0.22% Real Estate US DJ, IYR
0.21% Dividend High Yield Equity PS, PEY
0.21% Basic Materials DJ US, IYM
0.21% Value MidCap Russell, IWS
0.21% LargeCap 1000 R, IWB
0.20% Transportation Av DJ, IYT
0.20% Blend Total Market VIPERs, VTI
0.19% Value LargeCap Dynamic PS, PWV
0.19% LargeCap Blend S&P 100, OEF
0.18% Growth S&P 500/BARRA, IVW
0.18% Bond Ex-US Treas, BWX
0.18% Energy SPDR, XLE
0.17% EAFE Index, EFA
0.17% LargeCap VIPERs, VV
0.16% S&P 500 SPDRs LargeCap Blend, SPY
0.16% Bond, Aggregate, AGG
0.16% Financials VIPERs, VFH
0.16% Growth MidCap 400 B, IJK
0.15% Growth 1000 Russell, IWF
0.14% Dividend SPDR, SDY
0.14% Value 1000 Russell, IWD
0.14% Realty Cohen & Steers, ICF
0.14% LargeCap Blend S&P=Weight R, RSP
0.14% REIT VIPERs, VNQ
0.14% Dividend Appreciation Vipers, VIG
0.13% S&P 500 iS LargeCap Blend, IVV
0.13% Capital Markets KWB ST, KCE
0.12% Gold Shares S.T., GLD
0.12% LargeCap Blend Russell 3000, IWV
0.11% Growth VIPERs, VUG
0.11% Netherlands Index, EWN
0.11% Japan Index, EWJ
0.11% Russia MV, RSX
0.11% Financial DJ US, IYF
0.11% EMU Europe Index, EZU
0.09% Value S&P 500 B, IVE
0.08% Global ex US ACWI iS, ACWX
0.07% REIT Wilshire, RWR
0.07% Financial SPDR, XLF
0.07% Bond, TIPS, TIP
0.06% QQQ Nasdaq 100 Trust, QQQ
0.06% India Earnings WTree, EPI
0.06% Europe 350 S&P Index, IEV
0.04% MidCap S&P 400 iS, IJH
0.04% MidCap Russell, IWR
0.04% Growth EAFE MSCI, EFG
0.04% Bond Muni ATM-Free S&P iS, MUB
0.02% Bond, 1-3 Year Treasury, SHY
0.02% Financial Services DJ, IYG
0.02% MidCap S&P 400 SPDRs, MDY
0.01% Bond Treasury Short-Term iS, SHV
-0.02% Pacific VIPERs, VPL
-0.03% Consumer Staples SPDR, XLP
-0.04% Value MidCap S&P 400 B, IJJ
-0.04% Oil Fund PowerShares, DBO
-0.04% Networking, IGN
-0.04% Australia Index, EWA
-0.05% Preferred Stock iS, PFF
-0.07% Malaysia Index, EWM
-0.08% Singapore Index, EWS
-0.08% Growth MidCap Russell, IWP
-0.08% Materials SPDR, XLB
-0.09% Belgium Index, EWK
-0.09% Bond, High-Yield Corporate, HYG
-0.09% Consumer Discretionary SPDR, XLY
-0.11% Financial Preferred, PGF
-0.11% Bond EmrgMkt JPM iS, EMB
-0.11% Silver Trust iS, SLV
-0.13% Bond, High-Yield Junk, JNK
-0.13% Value SmallCap S&P 600 B, IJS
-0.15% France Index, EWQ
-0.15% Growth SmallCap VIPERs, VBK
-0.16% Small Cap VIPERs, VB
-0.17% China 25 iS, FXI
-0.17% Value SmallCap VIPERS, VBR
-0.18% Value SmallCap Russell 2000, IWN
-0.18% Growth BARRA Small Cap 600, IJT
-0.20% Dividend International, PID
-0.22% Microcap Russell, IWC
-0.23% Bear, Short S&P 500, SH
-0.23% Oil, Crude, U.S. Oil Fund, USO
-0.24% SmallCap S&P 600, IJR
-0.25% Spain Index, EWP
-0.27% Growth SmallCap R 2000, IWO
-0.30% Switzerland Index, EWL
-0.34% Biotech SPDR, XBI
-0.35% SmallCap Russell 2000, IWM
-0.41% Pacific ex-Japan, EPP
-0.43% Chile MSCI iS, ECH
-0.53% Commodity Tracking, DBC
-0.73% Agriculture DB PS, DBA
-0.93% Hong Kong Index, EWH
-1.29% Homebuilders SPDR, XHB