Waning Bullish Momentum

U.S. dollar ETF (UUP) fell further below its lows of the previous 3 weeks and fell further below its 50-day SMA, thereby reconfirming a bearish trend for the short-term.

Large capitalization stocks are outperforming small caps and mid caps. The stocks of the biggest companies tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size.

The S&P 500 Composite (SPX: 1,408.47) has stalled out over the past 2 weeks. A variety of technical indicators show waning bullish momentum. A downside correction seems due.

The S&P 500 chart remains within a Potential Bearish Rising Wedge. A breakdown below the lower boundary line currently rising just above the recent intraday low of 1386.87 would be a bearish chart signal.

RSI(14) based on SPX fell below its lows of the previous 3 weeks on 3/29/12–and this after showing bearish divergences at the March highs: the 73.15 high on 319/12 was less than the 75.38 high set on 2/9/12.

MACD based on SPX fell below the levels of the past 2 weeks, fell further below its signal line, and fell further below its high set on 2/9/12, which appears to have been the momentum peak for the rally.

On-Balance Volume for the SPX shows a bearish divergence: it peaked on 3/19/12, made a lower high on 3/26/12, and fell below its two previous lows for the first time this year on 3/29/12.

The NYSE Cumulative Daily Advance-Decline Line shows a bearish divergence: it peaked on 3/13/12 and made a lower high on 3/26/12.

NYSE New Highs Minus New Lows peaked on 2/3/12 and have made a series of lower highs since.

Neither the Dow-Jones Industrials nor the Dow-Jones Transports confirmed higher closing prices for the SPX since 3/15/12. The Dow Theory may have given an earlier warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials.

It has been an exceptional year so far, with no downside pullbacks of as much as 3% in more than 3 months, since 12/19/12, based on SPX close prices. It is extremely unlikely that stocks can continue to go up like this much longer, however, without a significant downside correction. Odds are stocks will experience the usual ups and downs this year. After large price run ups, stocks become more vulnerable to sudden reversals. Therefore, Potential Reward relative to potential Risk appears unattractive for stocks.
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Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.
Hedge funds lost 5%, according to COO Connect.
Hedge funds suffered their second-worst year on record in 2011, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data. Some of the world’s largest and best-known hedge funds suffered huge losses, down 20% to 50%.

But not all money managers were down in 2011; see:
Robert W. Colby Asset Management, Inc. (click here).
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9 major U.S. stock sectors ranked in order of long-term relative strength:
Available by subscription only (click here).
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Stock Market Indicators

The Dow Theory may have given an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Neither the Dow-Jones Industrials nor the Dow-Jones Transports confirmed the higher high in the SPX on 3/26/12.

NASDAQ Composite/S&P 500 Relative Strength Ratio rose above its highs of the previous 11-years on 3/27/12, confirming a rising trend since its low on 12/29/12. This RS Ratio remains above its 50-day and 200-day SMAs, and the 50-day SMA has remained bullishly above the 200-day SMA every day since 2/24/12. Absolute price confirmed the uptrend for this RS Ratio.

iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 2 months on 3/29/12. BKF/SPY remains below its 50-day and 200-day SMAs. Longer term, the bias is bearish because the 50-day SMA has remained below the 200-day SMA every day since 1/13/11.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell below its lows of the previous 2 months on 3/28/12. EEM/SPY remains below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/3/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below its lows of the previous 2 months on 3/29/12. EFA/SPY remains below its 50-day and 200-day SMAs, and the 50-day SMA has remained below the 200-day SMA consistently every day since 1/14/11.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 22 months on 3/28/12, reconfirming its preexisting bullish trend. OEX/SPX remains above its 50-day and 200-day SMAs, and the 50-day SMA has remained bullishly above the 200-day SMA every day since 8/25/11. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative 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 prefer riskier and more volatile stocks.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) has been relatively weak since 4/5/11. IWM/SPY fell below the lows of the previous 3 weeks on 3/30/12, suggesting renewed downside momentum for the short term. Systematically, IWM/SPY remains technically neutral, below both its 50-day and 200-day SMAs but with the 50-day SMA slightly above the 200-day SMA.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) has been relatively weak since 4/5/11. MDY/SPY fell below its lows of the previous 2 months on 3/30/12, suggesting renewed downside momentum for the medium term. Systematically, MDY/SPY remains technically neutral, below both its 50-day and 200-day SMAs but with the 50-day SMA slightly above the 200-day SMA.
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Sentiment for Contrary Thinking

Recent sentiment data, detailed below, indicates alarming degrees of optimism and bullish complacency. When the majority of investors has been bullish for some time, we can assume that investors are already fully invested in the market. Once everyone who is going to buy has already bought, stocks are vulnerable to a downside shakeout. The pendulum of emotion tends to swing too far in one direction, but market mood always reverts to the mean….

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
1419.15, high of 3/27/2012

The S&P 500 Composite Potential Support
1391.56, low of 3/29/2012
1386.87, low of 3/23/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1378.04, high of 2/29/2012
1376.55, Fibonacci 100.0% projection 10/11 range
1370.58, high of 5/2/11
1362.91, 50-day SMA
1340.03, low of 3/6/2012
1337.35, low of 2/10/2012
1300.49, low of 1/30/2012
1277.58, low of 1/13/2012
1265.26, low of 1/5/2012
1262.30, low of 12/27/2011
1267.07, 200-day SMA
1257.46, low of 12/30/11
1257.58, Fibonacci 61.8% of 2011 range
1255.22, high of 12/22/2011
1248.64, low of 12/29/2011
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 11/3/11
1231.04, high of 12/16/11
1226.64, low of 11/9/2011
1222.68, Fibonacci 50% of 2011 range
1224.57, high of 12/19/11
1215.20, low of 12/16/11
1209.47, low of 12/14/2011
1209.43, low of 11/17/2011
1204.49, Fibonacci 23.6% of 2009-11 range
1202.37, low of 12/19/11
1187.77, Fibonacci 38.2% of 2011 range
1158.66, low of 11/25/2011
1144.38, Fibonacci 23.6% of 2011 range
1101.73, Fibonacci 38.2% of 2009-11 range
1074.77, low of 10/4/2011
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1018.69, Fibonacci 50% of 2009-11 range
1008.55, Fibonacci 38.2% of 2009-2010 range
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
943.29, Gann 50.0% of 2009-2010 range
935.64, Fibonacci 61.8% of 2009-11 range
878.04, Fibonacci 61.8% of 2009-2010 range
874.17, Gann 62.5% of 2009-2010 range
869.32, low of 7/8/2009
817.40, Fibonacci 78.6% of 2009-11 range
805.17, Gann 75.0% of 2009-2010 range
785.13, Fibonacci 78.6% of 2009-2010 range
666.79, intraday low of 3/6/2009
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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 revealed to be deal stocks, sooner or later, 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
12.93% , LIZ , LIZ CLAIRBORNE
8.18% , JNY , JONES APPAREL
7.06% , RIMM , RESEARCH IN MOTION LTD
0.65% , DGT , Global Titans, DGT
1.87% , MHP , MCGRAW HILL
4.52% , SIRI , Sirius Satellite
1.05% , FRN , Frontier Markets Guggenheim , FRN
1.70% , CR , CRANE
3.29% , CBS , CBS CORP.
2.02% , CPB , CAMPBELL SOUP
2.84% , PIN , India PS, PIN
0.22% , VCR , Consumer D. VIPERs, VCR
3.08% , WYN , Wyndham Worldwide
4.30% , HGSI , Human Genome Sciences Inc
5.31% , FDO , FAMILY DLR STRS
2.97% , AIG , AMER INTL GROUP
1.36% , XL , XL CAPITAL STK A
0.72% , WMB , WILLIAMS
1.50% , TUP , TUPPERWARE
1.25% , TJX , TJX
2.12% , EQR , EQUITY RESIDENT BEN INT
0.62% , KCE , Capital Markets KWB ST, KCE
1.91% , CNP , CENTERPNT ENERGY
2.66% , BLK , BlackRock Inc.
2.96% , EPI , India Earnings WTree, EPI
1.27% , YUM , YUM BRANDS
2.32% , EPU , Peru MSCI iS, EPU
2.41% , DISCA , Discovery Communications
2.26% , PM , Philip Morris, PM
0.98% , PCG , PG&E
1.87% , TROW , T ROWE PRICE GP
0.67% , FPX , IPOs, First Tr IPOX-100, FPX
0.50% , PEJ , Leisure & Entertainment, PEJ

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-3.71% , SVU , SUPERVALU
-2.00% , SPLS , STAPLES
-1.41% , LO , Lorillard, Inc. LO
-0.13% , RFV , Value MidCap S&P 400, RFV
-3.30% , VLO , VALERO ENERGY
-5.48% , ODP , OFFICE DEPOT
-0.28% , RPV , Value S&P 500, RPV
-1.16% , SWK , Stanley Black & Decker
-0.52% , PZI , Micro Cap Zachs, PZI
-1.67% , VFC , VF
-0.74% , HSP , HOSPIRA
-3.46% , DYN , DYNEGY
-0.59% , DOG , Short 100% Dow 30, DOG
-1.05% , VIA.O , VIACOM INC. (New)
-0.18% , IYZ , Telecom DJ US, IYZ
-1.47% , CECO , CAREER EDUCATION CORP
-1.22% , COF , CAPITAL ONE FNCL
-0.93% , MCK , MCKESSON CORP
-1.42% , BBBY , BED BATH BEYOND
-0.43% , IWC , Microcap Russell, IWC
-0.49% , ADBE , ADOBE SYS
-0.28% , IGM , Technology GS, IGM
-0.56% , QLGC , QLOGIC
-0.59% , CTB , COOPER TIRE
-1.54% , GNW , GENWORTH FINANCIAL
-3.86% , MU.O , MICRON TECH
-0.35% , PKB , Building & Construction, PKB
-0.97% , FII , FED INVESTORS STK B
-0.24% , LQD , Bond, Corp, LQD
-1.69% , TLT , Bond, 20+ Years Treasury, TLT
-1.12% , CSC , COMPUTER SCIENCE
-1.26% , GWW , WW GRAINGER
-1.69% , AAPL , APPLE COMPUTER
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.96% India Earnings WTree, EPI
2.84% India PS, PIN
2.51% Sweden Index, EWD
1.85% Agriculture DB PS, DBA
1.56% Indonesia MV, IDX
1.41% Turkey MSCI iS, TUR
1.32% Malaysia Index, EWM
1.21% Switzerland Index, EWL
1.20% South Africa Index, EZA
1.19% France Index, EWQ
1.17% Spain Index, EWP
1.17% Germany Index, EWG
1.15% Belgium Index, EWK
1.12% Commodity Tracking, DBC
1.11% Realty Cohen & Steers, ICF
1.10% European VIPERs, VGK
1.06% EMU Europe Index, EZU
1.05% Frontier Markets Guggenheim , FRN
1.05% Emerging VIPERs, VWO
1.03% Europe 350 S&P Index, IEV
1.02% Taiwan Index, EWT
1.01% China 25 iS, FXI
0.98% Small Cap EAFE MSCI iS, SCZ
0.94% Singapore Index, EWS
0.94% Mexico Index, EWW
0.90% EAFE Index, EFA
0.88% Growth EAFE MSCI, EFG
0.85% REIT Wilshire, RWR
0.85% Netherlands Index, EWN
0.84% Real Estate US DJ, IYR
0.84% Energy Global, IXC
0.82% REIT VIPERs, VNQ
0.82% Energy & Nat Res iS GS, IGE
0.82% Energy SPDR, XLE
0.75% Energy DJ, IYE
0.75% Health Care SPDR, XLV
0.75% China LargeCap Growth G D H USX PS, PGJ
0.73% Russia MV, RSX
0.72% Dividend International, PID
0.72% Emerging Markets, EEM
0.67% Global ex US ACWI iS, ACWX
0.66% Energy VIPERs, VDE
0.65% Global 100, IOO
0.62% Capital Markets KWB ST, KCE
0.62% Emerging 50 BLDRS, ADRE
0.61% Consumer Staples SPDR, XLP
0.58% United Kingdom Index, EWU
0.55% Utilities SPDR, XLU
0.54% Financial SPDR, XLF
0.54% South Korea Index, EWY
0.54% Italy Index, EWI
0.53% Value EAFE MSCI, EFV
0.53% Value LargeCap Dynamic PS, PWV
0.52% Gold Shares S.T., GLD
0.51% Australia Index, EWA
0.51% DIAMONDS (DJIA), DIA
0.47% Chile MSCI iS, ECH
0.47% Value VIPERs, VTV
0.46% Utilities VIPERs, VPU
0.45% Consumer Discretionary SPDR, XLY
0.44% Industrial SPDR, XLI
0.43% Value S&P 500 B, IVE
0.43% Austria Index, EWO
0.42% Biotech SPDR, XBI
0.42% Semiconductor iS IGW, SOXX
0.41% S&P 500 SPDRs LargeCap Blend, SPY
0.39% Dividend Appreciation Vipers, VIG
0.39% Pacific ex-Japan, EPP
0.39% Networking, IGN
0.38% Pacific VIPERs, VPL
0.37% Hong Kong Index, EWH
0.36% Financial DJ US, IYF
0.36% Value 1000 Russell, IWD
0.36% S&P 500 iS LargeCap Blend, IVV
0.35% Materials SPDR, XLB
0.33% LargeCap VIPERs, VV
0.32% LargeCap 1000 R, IWB
0.32% Bond Ex-US Treas, BWX
0.30% Financials VIPERs, VFH
0.30% Basic Materials DJ US, IYM
0.30% Japan Index, EWJ
0.29% Growth S&P 500/BARRA, IVW
0.29% LargeCap Blend S&P=Weight R, RSP
0.27% Growth MidCap Russell, IWP
0.26% Blend Total Market VIPERs, VTI
0.25% Dividend DJ Select, DVY
0.25% LargeCap Blend S&P 100, OEF
0.24% MidCap Russell, IWR
0.24% LargeCap Blend Russell 3000, IWV
0.24% Bond EmrgMkt JPM iS, EMB
0.21% Growth 1000 Russell, IWF
0.21% Growth VIPERs, VUG
0.21% Water Resources, PHO
0.19% Financial Services DJ, IYG
0.15% Preferred Stock iS, PFF
0.15% Value MidCap Russell, IWS
0.14% Canada Index, EWC
0.10% Silver Trust iS, SLV
0.08% Metals & Mining SPDR, XME
0.05% Dividend SPDR, SDY
0.04% Latin Am 40, ILF
0.04% Semiconductor SPDR, XSD
0.00% WilderHill Clean Energy PS, PBW
0.00% Bond Treasury Short-Term iS, SHV
-0.01% Growth MidCap 400 B, IJK
-0.01% Bond, 1-3 Year Treasury, SHY
-0.03% Small Cap VIPERs, VB
-0.04% Growth SmallCap R 2000, IWO
-0.05% Growth SmallCap VIPERs, VBK
-0.05% Bond Muni ATM-Free S&P iS, MUB
-0.07% MidCap S&P 400 iS, IJH
-0.08% MidCap S&P 400 SPDRs, MDY
-0.08% Financial Preferred, PGF
-0.10% Oil Fund PowerShares, DBO
-0.11% Dividend High Yield Equity PS, PEY
-0.11% Transportation Av DJ, IYT
-0.12% Value MidCap S&P 400 B, IJJ
-0.13% Value SmallCap VIPERS, VBR
-0.15% Growth BARRA Small Cap 600, IJT
-0.15% Oil, Crude, U.S. Oil Fund, USO
-0.15% Bond, Aggregate, AGG
-0.18% Telecom DJ US, IYZ
-0.19% QQQ Nasdaq 100 Trust, QQQ
-0.20% Bond, High-Yield Corporate, HYG
-0.24% Bond, Corp, LQD
-0.28% Info Tech VIPERs, VGT
-0.29% Technology DJ US, IYW
-0.30% Technology SPDR, XLK
-0.30% SmallCap S&P 600, IJR
-0.31% Bear, Short S&P 500, SH
-0.33% SmallCap Russell 2000, IWM
-0.33% Bond, High-Yield Junk, JNK
-0.33% Bond, TIPS, TIP
-0.34% Brazil Index, EWZ
-0.36% Value SmallCap S&P 600 B, IJS
-0.40% Value SmallCap Russell 2000, IWN
-0.40% Thailand MSCI iS, THD
-0.43% Microcap Russell, IWC
-0.49% Bond, 10 Year Treasury, IEF
-1.02% Homebuilders SPDR, XHB
-1.69% Bond, 20+ Years Treasury, TLT