Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) whipsawed back above its 50-day SMA on 5/3/13, thereby turning systematically bullish (from neutral). JNK/LQD has been neutral for most of the past 3 years.
The Dow-Jones Industrial Average closed at a higher high on 5/3/13, while the Dow-Jones Transportation Average rose to a lower high, thereby continuing a bearish divergence.
U.S. stocks gapped higher on the open and continued to rise until 10:30 a.m. ET. Prices then drifted moderately lower into the close but still managed to hold most of their gains from the previous close. Relatively small gains from opening prices for many stocks that actually trade formed indecisive Spinning Top Candlesticks during the regular 9:30 a.m. to 4:00 p.m. ET trading session, however.
The S&P 500 Composite Index (SPX: 1,614.42) finished up 1.05% at a new high, the Nasdaq Composite Index rose 1.14% to a 12-year high, the Dow Jones Industrial Average advanced by 0.96% to a new high, and the Dow Jones Transportation Average rose 2.05%–but fell short of its March high.
NYSE total volume rose 7% to a level 10% above its 200-day SMA Rising volume on a price rise confirms that price rise.
Breadth was positive, with 2,926 Advances and 1,113 Declines. In addition, Advancing/Declining Volume was positive, with 2.9 Advancing Stock Volume to 0.9 Declining Stock Volume.
A variety of stock market price momentum indicators continue to show bearish divergences, while investor sentiment has been at bullish extremes most of the year. My interpretation of the technical indicators suggests that the medium-term stock market uptrend evident from November may be overdone, and the stock market seems overdue for a significant downside correction.
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Stock Market Indicators
The Dow Theory last confirmed a Primary Tide Bull Market on 3/14/13, when both Dow-Jones Industrial and Transportation Averages closed at new price highs. The Dow-Jones Industrial Average closed at a higher high on 5/3/13, while the Dow-Jones Transportation Average rose to a lower high, thereby continuing a bearish divergence.
NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) rose above its 50-day SMA on 4/30/13, thereby turning systematically neutral (from bearish).
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below the lows of the previous 4 years on 4/17/13, reconfirming its major downtrend. BKF/SPY turned systematically bearish on 3/27/13, when the 50-day SMA crossed below the 200-day SMA. BKF/SPY fell below its 50-day SMA on 2/4/13 and fell below its 200-day SMA on 2/19/13. Price peaked at 42.29 on 2/1/13 and fell to a 5-month low on 4/17/13.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below the lows of the previous 4 years on 4/15/13, reconfirming its major downtrend. EEM/SPY turned systematically bearish on 3/20/13, when the 50-day SMA fell below the 200-day SMA. Price peaked at 45.34 on 1/2/13 and fell to a 5-month low on 4/17/13.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) rose above its 50-day SMA on 4/23/13, thereby turning systematically bullish again. EFA price confirmed the uptrend by rising above the highs of the previous 21 months on 5/3/13.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEF/SPY) turned systematically bearish again (from neutral) on 4/24/13, when it whipsawed back down below its 50-day SMA. 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 hand, 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) fell below the lows of the previous 5 months on 5/1/13. IWM/SPY turned systematically neutral on 4/1/13 when it fell below the 50-day SMA.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below the lows of the previous 3 months on 4/18/13. MDY/SPY turned systematically neutral (from bullish) on 4/1/13 when it fell below the 50-day SMA. Absolute price rose to a new high on 5/3/13.
Daily price momentum oscillators have been diverging bearishly for many weeks and months while most of the stock price indexes rose to higher highs. Daily price momentum oscillators have remained below their highs of January, 2013, as well as below their 2011-2012 highs. For example, RSI(14) based on the S&P 500 Index peaked at 74.46 on 1/29/13 but was only able to rise to 64.15 on 5/3/13 when the S&P 500 closed at a higher high. And MACD(12,26,9) peaked at 17.88 on 1/29/13 but was only 11.95 on 5/3/13. In addition, the percentage of stocks in the S&P 500 trading above their 50-day SMAs, and the Bullish Percentage of stocks in the S&P 500 in Point-and-Figure Chart uptrends failed to rise to higher highs in April and May, 2013. Bearishly diverging momentum is a problem because momentum is a leading indicator of price.
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price rose above its 50-day SMA on 3/22/13, thereby turning systematically neutral (from bearish). Support 119.88, 117.49, 114.62, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 124.26, 126.08, 127.19, 127.72, 130.69, and 132.22.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price rose above its rose above its 50-day SMA on 3/18/13, thereby turning systematically neutral (from bearish). Support 108.39, 107.71, 107.22, 106.56, 105.56, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 109.17, 109.20, 109.32, and 109.89.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) whipsawed back above its 50-day SMA on 5/3/13, thereby turning systematically bullish (from neutral). JNK/LQD has been neutral for most of the past 3 years.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) appears to be heading for a bearish cross, with the 50-day SMA likely to fall below the 50-day SMA in days ahead. TIP/IEF fell below its 50-day SMA on 3/18/13, thereby turning systematically neutral (from bullish). Longer term, TIP/IEF has been neutral for most of the past 3 years. Absolute price of TIP peaked at 123.44 on 12/6/12 and turned systematically bearish on 5/3/13.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price turned systematically neutral (from bullish) on 4/26/13, when it whipsawed back below the 50-day SMA. Longer term, UUP has been consolidating secular trend losses since bottoming at 20.84 on 5/4/11. Support 22.12, 21.53, 21.07, and 20.84. Resistance 22.69, 22.78, 22.96, 23.14, 23.52, 25.84, 27.19, and 28.97.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price turned systematically neutral (from bearish) on 4/29/13 when price rose above the 50-day SMA.
Crude Oil, United States Oil ETF (USO) price turned systematically neutral (from bearish) on 5/2/13 when price rose above the 50-day SMA. Longer term, however, USO had been mostly bearish since peaking at 119.17 on 7/11/08. Support 32.12, 30.79, 29.02, 26.28, and 22.74. Resistance 34.86, 35.53, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price fell below its lows of the previous 2 years on 4/15/13, thereby reconfirming its preexisting major bearish trend. Price turned systematically bearish on 2/22/13, when the 50-day SMA fell below the 200-day SMA. Longer term, GLD has been mostly bearish since peaking at 185.85 on 9/6/11. Support: 139.78 135.85, and 130.51. 142.55. Resistance: 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) turned systematically bearish again on 12/27/12, when the 50-day SMA crossed below the 200-day SMA. Longer term, GDX/GLD has remained mostly bearish for more than 6 years, since 9/5/06.
Silver, iShares Silver Trust ETF (SLV) price fell below its lows of the previous 2 years on 4/15/13, thereby reconfirming its preexisting major bearish trend. Price turned systematically bearish on 3/1/13, when the 50-day SMA fell below the 200-day SMA. Longer term, SLV has been mostly bearish since peaking at 48.35 on 4/28/11. Support 21.96, 20.73, and 19.44. Resistance: 23.70, 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 below its lows of the previous 2 years on 4/24/13, confirming a major downtrend. SLV/GLD remains systematically bearish.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price fell below its lows of the previous 2 years on 5/1/13, thereby reconfirming its preexisting bearish major trend. JJC has been mostly bearish since peaking at 61.69 on 2/14/11. “Dr. Copper” is widely accepted as one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, so price weakness in Copper implies a weak economic outlook.
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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
1.74% , EPU , Peru MSCI iS, EPU
4.64% , XL , XL CAPITAL STK A
1.30% , SCZ , Small Cap EAFE MSCI iS, SCZ
4.73% , TBT , 200% Short US T Bond, TBT
2.61% , XME , Metals & Mining SPDR, XME
1.40% , VBR , Value SmallCap VIPERS, VBR
6.27% , SCHW.K , CHARLES SCHWAB, SCHW.O
1.11% , IYG , Financial Services DJ, IYG
1.54% , RPG , Growth S&P 500, RPG
5.67% , AIG , AMER INTL GROUP
4.14% , WOR , WORTHINGTON INDS
13.01% , ZEUS , Olympic Steel, ZEUS
3.48% , GLW , CORNING
3.25% , NYT , NY TIMES STK A
2.37% , EA.O , ELECTRONIC ARTS
5.27% , ATI , ALLEGHENY TECH
6.33% , X , US STEEL CORP
3.03% , OXY , OCCIDENTAL
1.35% , PWB , Lg Cap Growth PSD, PWB
3.04% , NTAP , NETWK APPLIANCE
3.23% , CAT , CATERPILLAR
1.15% , RPV , Value S&P 500, RPV
2.26% , CMA , COMERICA
3.09% , SVU , SUPERVALU
4.09% , FLR , FLUOR
1.93% , BIG , BIG LOTS
0.95% , SIL , Silver Miners Global X, SIL
2.23% , PXE , Energy Exploration & Prod, PXE
4.03% , ETFC , E*TRADE FINANCIAL
1.82% , VIS , Industrials VIPERs, VIS
2.14% , IYT , Transportation Av DJ, IYT
1.52% , IWO , Growth SmallCap R 2000, IWO
1.99% , IYM , Basic Materials DJ US, IYM
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Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.43% , QLGC , QLOGIC
-4.54% , TDC , Teradata Corporation, TDC
-4.19% , HMA , HEALTH MGMT STK A
-1.04% , MYY , Short 100% MidCap 400, MYY
-2.36% , TLT , Bond, 20+ Years Treasury, TLT
-1.06% , JPM , J P MORGAN CHASE
-0.96% , DOG , Short 100% Dow 30, DOG
-1.13% , PSQ , Short 100% QQQ, PSQ
-1.76% , WAG , WALGREEN
-0.68% , TIP , Bond, TIPS, TIP
-1.52% , AIV , APT INV MNGMT
-1.21% , PETM , PETsMART Inc
-1.65% , BBBY , BED BATH BEYOND
-0.97% , SH , Short 100% S&P 500, SH
-2.06% , SDS , Short 200% S&P 500 PS, SDS
-0.94% , LQD , Bond, Corp, LQD
-1.03% , SYY , SYSCO
-0.25% , EMB , Bond EmrgMkt JPM iS, EMB
-1.08% , EQR , EQUITY RESIDENT BEN INT
-0.55% , EIX , EDISON INTL
-1.06% , PFE , PFIZER
-0.33% , UNM , UNUMPROVIDENT
-0.51% , XEL , XCEL ENERGY
-0.31% , GVI , Bond Interm U.S. Gov, GVI
-0.07% , VPU , Utilities VIPERs, VPU
-0.20% , XLU , Utilities SPDR, XLU
-0.49% , PEG , PUBL SVC ENTER
-0.33% , D , DOMINION RSCS
-0.41% , DUK , DUKE ENERGY
-0.28% , BWX , Bond Ex-US Treas, BWX
-0.13% , NI , NISOURCE
-0.74% , LO , Lorillard, Inc. LO
-0.64% , BAX , BAXTER INTL
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.61% , Metals & Mining SPDR, XME
2.25% , Germany Index, EWG
2.20% , Mexico Index, EWW
2.18% , Semiconductor SPDR, XSD
2.14% , Transportation Av DJ, IYT
2.03% , Energy VIPERs, VDE
1.99% , Basic Materials DJ US, IYM
1.89% , Energy DJ, IYE
1.81% , Energy SPDR, XLE
1.80% , Energy & Nat Res iS GS, IGE
1.78% , Belgium Index, EWK
1.77% , SmallCap Value S&P 600 iS, IJS
1.76% , Materials SPDR, XLB
1.76% , SmallCap Blend S&P 600 iS, IJR
1.73% , Industrial SPDR, XLI
1.71% , SmallCap Growth S&P 600 iS, IJT
1.68% , Capital Markets KWB ST, KCE
1.68% , Russia MV, RSX
1.65% , SmallCap Value Russell 2000 iS, IWN
1.59% , Water Resources, PHO
1.59% , SmallCap Blend Russell 2000 iS, IWM
1.57% , EMU Europe Index, EZU
1.55% , Oil, Crude, U.S. Oil Fund, USO
1.53% , Energy Global, IXC
1.52% , SmallCap Growth Russell 2000 iS, IWO
1.50% , Oil Fund PowerShares, DBO
1.48% , Austria Index, EWO
1.43% , Microcap Russell, IWC
1.43% , France Index, EWQ
1.42% , Japan Index, EWJ
1.42% , Spain Index, EWP
1.40% , Value SmallCap VIPERS, VBR
1.38% , Small Cap VIPERs, VB
1.37% , Growth SmallCap VIPERs, VBK
1.34% , Networking, IGN
1.34% , MidCap Growth S&P 400 iS, IJK
1.32% , Netherlands Index, EWN
1.30% , SmallCap Blend EAFE MSCI iS, SCZ
1.29% , MidCap Blend S&P 400 iS, IJH
1.28% , Foreign LargeCap EAFE MSCI iS, EFA
1.28% , United Kingdom Index, EWU
1.27% , Australia Index, EWA
1.26% , Consumer Discretionary SPDR, XLY
1.25% , Europe 350 S&P Index, IEV
1.25% , MidCap Value S&P 400 iS, IJJ
1.25% , Homebuilders SPDR, XHB
1.23% , European VIPERs, VGK
1.22% , Sweden Index, EWD
1.21% , Latin Am 40, ILF
1.19% , MidCap S&P 400 SPDRs, MDY
1.19% , Dividend SPDR, SDY
1.19% , LargeCap Blend S&P=Weight R, RSP
1.18% , Value MidCap Russell, IWS
1.18% , QQQ Nasdaq 100 Trust, QQQ
1.17% , Silver Trust iS, SLV
1.17% , MidCap Russell, IWR
1.16% , Chile MSCI iS, ECH
1.15% , Dividend Appreciation Vipers, VIG
1.15% , Italy Index, EWI
1.13% , Growth VIPERs, VUG
1.12% , Dividend High Yield Equity PS, PEY
1.12% , Technology DJ US, IYW
1.12% , Value EAFE MSCI, EFV
1.11% , Financial Services DJ, IYG
1.11% , Commodity Tracking, DBC
1.09% , Global LargeCap Blend MSCI iS, ACWI
1.09% , LargeCap Growth S&P 500 iS, IVW
1.07% , Financial SPDR, XLF
1.07% , Info Tech VIPERs, VGT
1.07% , Pacific VIPERs, VPL
1.04% , Growth MidCap Russell, IWP
1.04% , LargeCap Growth Russell 1000 iS, IWF
1.03% , LargeCap Blend Russell 3000 iS, IWV
1.02% , Growth EAFE MSCI, EFG
1.01% , LargeCap Blend Russell 1000 iS, IWB
1.01% , LargeCap Value S&P 500 iS, IVE
1.01% , S&P 500 SPDRs LargeCap Blend, SPY
0.99% , LargeCap Blend S&P 500 iS, IVV
0.98% , LargeCap VIPERs, VV
0.95% , Value LargeCap Dynamic PS, PWV
0.95% , Financial DJ US, IYF
0.95% , Global ex U.S. LargeCap Blend, ACWX
0.95% , LargeCap Value Russell 1000 iS, IWD
0.95% , Dividend ex-U.S. DJ iS, IDV
0.95% , DIAMONDS (DJIA), DIA
0.94% , Global 100, IOO
0.94% , Technology SPDR, XLK
0.94% , Blend Total Market VIPERs, VTI
0.89% , Hong Kong Index, EWH
0.88% , China 25 iS, FXI
0.88% , Pacific ex-Japan, EPP
0.87% , LargeCap Blend S&P 100, OEF
0.87% , Financials VIPERs, VFH
0.87% , Value VIPERs, VTV
0.86% , Dividend U.S. DJ iS, DVY
0.84% , South Africa Index, EZA
0.83% , Emerging Markets MSCI iS, EEM
0.81% , South Korea Index, EWY
0.78% , Dividend International, PID
0.78% , Semiconductor iS IGW, SOXX
0.74% , Emerging 50 BLDRS, ADRE
0.69% , Emerging VIPERs, VWO
0.68% , Health Care SPDR, XLV
0.57% , Taiwan Index, EWT
0.54% , Canada Index, EWC
0.46% , Switzerland Index, EWL
0.44% , Consumer Staples SPDR, XLP
0.42% , WilderHill Clean Energy PS, PBW
0.40% , REIT VIPERs, VNQ
0.33% , Biotech SPDR, XBI
0.24% , Brazil Index, EWZ
0.21% , REIT Wilshire, RWR
0.17% , Realty Cohen & Steers, ICF
0.16% , Bond, High Yield Corp iBoxx iS, HYG
0.12% , Preferred Stock iS, PFF
0.12% , Gold Shares S.T., GLD
0.10% , Bond, High-Yield Junk, JNK
0.08% , Real Estate US DJ iS, IYR
0.08% , Telecom DJ US, IYZ
0.05% , Frontier Markets Guggenheim , FRN
0.05% , China LargeCap Growth G D H USX PS, PGJ
0.03% , Turkey MSCI iS, TUR
0.01% , Bond Treasury Short-Term iS, SHV
0.00% , India Earnings WTree, EPI
0.00% , Financial Preferred, PGF
-0.04% , Bond, 1-3 Year Treasury, SHY
-0.07% , Utilities VIPERs, VPU
-0.11% , India PS, PIN
-0.19% , Bond, Muni S&P ATM-Free iS, MUB
-0.19% , Malaysia Index, EWM
-0.20% , Utilities SPDR, XLU
-0.25% , Bond, Emerging Mkt JPM iS, EMB
-0.28% , Bond Ex-US Treas, BWX
-0.34% , Agriculture DB PS, DBA
-0.37% , Bond, Intermediate US Aggregate iS, AGG
-0.68% , Bond, TIPS U.S. Treasury iS, TIP
-0.69% , Singapore Index, EWS
-0.85% , Bond, 10 Year Treasury, IEF
-0.94% , Bond, Long-Term Corp iBoxx iS, LQD
-0.96% , Indonesia MV, IDX
-0.97% , Bear, Short S&P 500, SH
-0.98% , Thailand MSCI iS, THD
-2.36% , Bond, 20+ Years Treasury, TLT
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The S&P 500 Composite Potential Resistance
1618.46, intraday high of 5/3/2013
The S&P 500 Composite Potential Support
1557.96, 50-day SMA
1536.03, low of 4/18/2013
1485.01, low of 2/26/2013
1474.51, high of 9/14/2012
1464.15, 200-day SMA
1463.76, low of 1/15/2013
1451.64, low on 1/8/13
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
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
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
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
