Technology (XLK) stock sector Relative Strength Ratio (XLK/SPY) turned systematically bearish (from neutral) again on 5/7/13, when it whipsawed back down below the 50-day SMA.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) turned systematically bullish (from neutral) on 5/7/13 when it rose above the 50-day SMA. Absolute price rose to a new high on 5/7/13.
U.S. stocks opened moderately higher, chopped up and down for 50 minutes, then rallied from 10:20 a.m. to 3:02 p.m. ET. Prices then drifted into the close but still managed to hold nearly all of their gains.
The S&P 500 Composite Index (SPX: 1,625.96) finished up 0.52% at a new high close, the Nasdaq Composite Index rose 0.11% to a 12-year high, the Dow Jones Industrial Average advanced by 0.58% to a new high, and the Dow Jones Transportation Average rose 1.58% to a new high.
NYSE total volume rose 8% to a level 1% below its 200-day SMA. Rising volume on a price rise confirms that price rise, while falling volume on a price rise may indicate diminishing buying power behind that advance.
Breadth was positive, with 2,909 Advances and 1,129 Declines. In addition, Advancing/Declining Volume was positive, with 2.4 billion Advancing Stock Volume versus 1.1 billion 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 confirmed a Primary Tide Bull Market on 5/6/13, when the Dow-Jones Transportation Average followed the lead of the Dow-Jones Industrial Average by finally closing at a new price high.
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. Absolute price rose to a new high on 5/6/13.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) turned systematically bullish (from neutral) on 5/7/13 when it rose above the 50-day SMA. Absolute price rose to a new high on 5/7/13.
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 66.99 on 5/7/13 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 15.24 on 5/7/13. 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 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) turned systematically bearish (from neutral) on 5/6/13, when the 50-day SMA crossed below the 200-day SMA. 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 down 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
19.02% , ININ , Interactive Intelligence ININ
4.83% , URBN , Urban Outfitters Inc.
6.06% , ZEUS , Olympic Steel, ZEUS
7.66% , EOG , EOG RESOURCES
3.76% , LBTYA , Liberty Global Inc. (LBTYA)
3.58% , YHOO , YAHOO
0.77% , IYM , Basic Materials DJ US, IYM
2.13% , ECL , ECOLAB
3.24% , LTD , LIMITED BRANDS
2.04% , JBL , JABIL CIRCUIT
2.01% , CR , CRANE
1.63% , WLP , WELLPOINT HEALTH
3.42% , FDX , FEDEX
4.31% , HOG , HARLEY DAVIDSON
3.86% , BC , BRUNSWICK
2.51% , CAT , CATERPILLAR
1.09% , WFM.O , Whole Foods Market Inc
1.15% , ADRE , Emerging 50 BLDRS, ADRE
0.59% , IVE , Value S&P 500 B, IVE
0.87% , EWH , Hong Kong Index, EWH
0.73% , IWR , MidCap Russell, IWR
0.78% , SDY , Dividend SPDR, SDY
1.90% , VLO , VALERO ENERGY
1.66% , COH , COACH
1.86% , UPS , UNITED PARCEL STK B
1.32% , WFC , WELLS FARGO
0.73% , DTE , DTE ENERGY
1.41% , LO , Lorillard, Inc. LO
0.85% , VAW , Materials VIPERs, VAW
1.97% , ROK , ROCKWELL AUTOMAT
1.60% , IYT , Transportation Av DJ, IYT
2.82% , WAG , WALGREEN
1.16% , PEY , Dividend High Yield Equity PS, PEY
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Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.46% , BAX , BAXTER INTL
-1.64% , PBW , WilderHill Clean Energy PS, PBW
-2.95% , HOLX , Hologic, Inc., HOLX
-1.85% , MRVL , MARVELL TECHNOLOGY
-1.87% , OMX , OFFICEMAX INC., OMX
-1.76% , HRB , H&R BLOCK
-4.81% , BBRY , BlackBerry (BBRY)
-1.91% , ADBE , ADOBE SYS
-1.01% , EWA , Australia Index, EWA
-2.07% , CSCO , CISCO SYSTEMS
-0.45% , DBO , Oil Fund PowerShares, DBO
-1.30% , NVDA , NVIDIA
-1.29% , EMR , EMERSON ELECTRIC
-1.46% , DISCA , Discovery Communications
-0.49% , TAP , ADOLPH COORS STK B, TAP
-1.00% , APC , ANADARKO PETRO
-0.39% , EPP , Pacific ex-Japan, EPP
-1.13% , MPEL , Melco Crown Entertainment, MPEL
-1.20% , KSS , KOHLS
-0.86% , WMB , WILLIAMS
-2.03% , ODP , OFFICE DEPOT
-0.10% , VPL , Pacific VIPERs, VPL
-0.55% , LLY , ELI LILLY
-0.48% , DVN , DEVON ENERGY
-0.26% , EMB , Bond EmrgMkt JPM iS, EMB
-0.17% , IGM , Technology GS, IGM
-2.39% , GILD , Gilead Sciences Inc
-0.05% , UIS , UNISYS
-0.22% , WYN , Wyndham Worldwide
-0.28% , MSI , Motorola Solutions, MSI
-0.08% , LQD , Bond, Corp, LQD
-0.13% , TIF , TIFFANY
-0.18% , PRU , PRUDENTIAL FINL
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.70% , Russia MV, RSX
1.60% , Transportation Av DJ, IYT
1.52% , Brazil Index, EWZ
1.28% , Mexico Index, EWW
1.22% , Latin Am 40, ILF
1.22% , Italy Index, EWI
1.16% , Dividend High Yield Equity PS, PEY
1.15% , Emerging 50 BLDRS, ADRE
1.10% , China 25 iS, FXI
1.08% , SmallCap Value S&P 600 iS, IJS
1.05% , Indonesia MV, IDX
1.01% , Value SmallCap VIPERS, VBR
0.98% , Utilities VIPERs, VPU
0.97% , Utilities SPDR, XLU
0.96% , SmallCap Blend S&P 600 iS, IJR
0.96% , SmallCap Growth S&P 600 iS, IJT
0.95% , Materials SPDR, XLB
0.92% , Industrial SPDR, XLI
0.92% , SmallCap Value Russell 2000 iS, IWN
0.91% , MidCap Value S&P 400 iS, IJJ
0.90% , MidCap Blend S&P 400 iS, IJH
0.88% , MidCap Growth S&P 400 iS, IJK
0.87% , Hong Kong Index, EWH
0.87% , Dividend U.S. DJ iS, DVY
0.85% , Financial Services DJ, IYG
0.84% , Consumer Discretionary SPDR, XLY
0.84% , Malaysia Index, EWM
0.82% , SmallCap Blend Russell 2000 iS, IWM
0.81% , Energy DJ, IYE
0.81% , Small Cap VIPERs, VB
0.81% , Water Resources, PHO
0.79% , SmallCap Growth Russell 2000 iS, IWO
0.79% , MidCap S&P 400 SPDRs, MDY
0.78% , Emerging VIPERs, VWO
0.78% , Dividend SPDR, SDY
0.77% , Energy SPDR, XLE
0.77% , Basic Materials DJ US, IYM
0.76% , Consumer Staples SPDR, XLP
0.75% , Growth MidCap Russell, IWP
0.74% , India Earnings WTree, EPI
0.73% , MidCap Russell, IWR
0.73% , Dividend Appreciation Vipers, VIG
0.71% , Emerging Markets MSCI iS, EEM
0.70% , Germany Index, EWG
0.69% , Energy VIPERs, VDE
0.69% , India PS, PIN
0.68% , Financials VIPERs, VFH
0.67% , Value LargeCap Dynamic PS, PWV
0.65% , Growth SmallCap VIPERs, VBK
0.64% , Microcap Russell, IWC
0.63% , LargeCap Blend S&P=Weight R, RSP
0.63% , Value MidCap Russell, IWS
0.61% , LargeCap Value Russell 1000 iS, IWD
0.61% , Financial DJ US, IYF
0.60% , LargeCap Blend Russell 3000 iS, IWV
0.59% , LargeCap Value S&P 500 iS, IVE
0.58% , Real Estate US DJ iS, IYR
0.58% , Energy & Nat Res iS GS, IGE
0.56% , LargeCap Blend Russell 1000 iS, IWB
0.56% , DIAMONDS (DJIA), DIA
0.55% , REIT VIPERs, VNQ
0.55% , Blend Total Market VIPERs, VTI
0.55% , Global 100, IOO
0.54% , EMU Europe Index, EZU
0.54% , Energy Global, IXC
0.54% , Belgium Index, EWK
0.53% , Financial Preferred, PGF
0.53% , Value VIPERs, VTV
0.53% , Telecom DJ US, IYZ
0.53% , Switzerland Index, EWL
0.52% , Financial SPDR, XLF
0.51% , LargeCap Blend S&P 500 iS, IVV
0.51% , S&P 500 SPDRs LargeCap Blend, SPY
0.50% , REIT Wilshire, RWR
0.49% , Global ex U.S. LargeCap Blend, ACWX
0.48% , Thailand MSCI iS, THD
0.47% , LargeCap VIPERs, VV
0.45% , Sweden Index, EWD
0.45% , Dividend International, PID
0.44% , LargeCap Blend S&P 100, OEF
0.43% , Europe 350 S&P Index, IEV
0.43% , Realty Cohen & Steers, ICF
0.43% , Canada Index, EWC
0.43% , Capital Markets KWB ST, KCE
0.42% , LargeCap Growth S&P 500 iS, IVW
0.40% , Growth VIPERs, VUG
0.39% , South Korea Index, EWY
0.38% , Global LargeCap Blend MSCI iS, ACWI
0.37% , LargeCap Growth Russell 1000 iS, IWF
0.35% , Homebuilders SPDR, XHB
0.34% , Preferred Stock iS, PFF
0.33% , SmallCap Blend EAFE MSCI iS, SCZ
0.32% , Frontier Markets Guggenheim , FRN
0.32% , France Index, EWQ
0.32% , Spain Index, EWP
0.32% , Health Care SPDR, XLV
0.31% , European VIPERs, VGK
0.28% , Taiwan Index, EWT
0.26% , Value EAFE MSCI, EFV
0.21% , Singapore Index, EWS
0.17% , Japan Index, EWJ
0.17% , Austria Index, EWO
0.16% , Foreign LargeCap EAFE MSCI iS, EFA
0.14% , Growth EAFE MSCI, EFG
0.10% , United Kingdom Index, EWU
0.09% , Netherlands Index, EWN
0.08% , Semiconductor iS IGW, SOXX
0.08% , Agriculture DB PS, DBA
0.00% , Bond Treasury Short-Term iS, SHV
0.00% , Bond, 1-3 Year Treasury, SHY
-0.01% , Bond, TIPS U.S. Treasury iS, TIP
-0.02% , Chile MSCI iS, ECH
-0.02% , Bond, High-Yield Junk, JNK
-0.05% , Bond, Intermediate US Aggregate iS, AGG
-0.06% , QQQ Nasdaq 100 Trust, QQQ
-0.06% , Technology SPDR, XLK
-0.07% , Bond, High Yield Corp iBoxx iS, HYG
-0.08% , Bond, Long-Term Corp iBoxx iS, LQD
-0.10% , Pacific VIPERs, VPL
-0.12% , Turkey MSCI iS, TUR
-0.12% , Info Tech VIPERs, VGT
-0.14% , Bond, 10 Year Treasury, IEF
-0.17% , Bond, Muni S&P ATM-Free iS, MUB
-0.25% , Bond Ex-US Treas, BWX
-0.26% , Bond, Emerging Mkt JPM iS, EMB
-0.30% , China LargeCap Growth G D H USX PS, PGJ
-0.33% , Dividend ex-U.S. DJ iS, IDV
-0.34% , Commodity Tracking, DBC
-0.35% , Technology DJ US, IYW
-0.35% , Silver Trust iS, SLV
-0.38% , Oil, Crude, U.S. Oil Fund, USO
-0.39% , Bond, 20+ Years Treasury, TLT
-0.39% , Pacific ex-Japan, EPP
-0.45% , Oil Fund PowerShares, DBO
-0.47% , Bear, Short S&P 500, SH
-0.58% , Semiconductor SPDR, XSD
-0.64% , Metals & Mining SPDR, XME
-0.84% , Biotech SPDR, XBI
-1.01% , Australia Index, EWA
-1.22% , South Africa Index, EZA
-1.25% , Gold Shares S.T., GLD
-1.30% , Networking, IGN
-1.64% , WilderHill Clean Energy PS, PBW
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The S&P 500 Composite Potential Resistance
1626.03, intraday high of 5/7/2013
The S&P 500 Composite Potential Support
1562.76, 50-day SMA
1536.03, low of 4/18/2013
1485.01, low of 2/26/2013
1474.51, high of 9/14/2012
1466.69, 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
