Weak Demand for Stocks

Highlights based on trading on Friday, June 8, 2012:

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 5 months. JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since JJC peaked at 51.41 on 2/9/12. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this weakness may be suggesting rising doubts about prospects going forward.

VIX Fear Index fell steeply to 20.29 intraday on 6/8/12, down from an intraday peak of 27.73 on 6/4/12. This suggests a rapid shift from concern toward bullish complacency.

The S&P 500 (SPX: 1,325.66) rose 10.67 points or 0.81% on Friday. Stocks gapped lower on the open but soon reversed to the upside in reaction to media reports that Europe’s leaders will bailout Spain’s failing banking system on Saturday. The market seems to like bailouts, one after the other, never ending…

NYSE volume fell 18%, suggesting relatively weak demand for stocks. Volume patterns generally have been bearish for months, with a tendency toward lower volume on rallies and higher volume on declines, indicating the dominance of selling pressure over buying pressure. Note on the chart (For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report — click here.) that NYSE Cumulative Up-Down Volume still shows a bearish divergence: it is below its 200-day SMA, while the S&P 500 price index is above its 200-day SMA.

SPX rose 4 of the past 5 days. The extent and duration of any further recovery attempt seems highly uncertain, however, because last week’s price bounce may not be in harmony with the trend in the next larger time frame, which appears more bearish than bullish since the SPX peak at 1,422.38 on 4/2/12. Look for resistance near recent highs around the 1329-1335 zone on the SPX.
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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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Stock Market Indicators

The Dow Theory confirmed a Primary Tide Bear Market on 6/4/12 when both Industrials and Transports closed below their closing price lows of the previous 5 months. The Dow Theory first 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 Averages gave an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Again on 5/1/12, the Industrials rose to a higher closing price high while the Transports failed to rise to a higher closing price high, thereby indicating a non-confirmation and bearish divergence.

NASDAQ Composite/S&P 500 Relative Strength Ratio fell below its lows of the previous 3 months on 5/18/12 after falling below its 50-day SMA on 4/30/12. Confirming this downtrend, absolute price fell below its lows of the previous 4 months and fell below its 200-day SMA on 6/1/12–this after falling below its 50-day SMA on 5/3/12. Looks like a significant downside correction, at least.

iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below its lows of the previous 3 years on 5/24/12, reconfirming its bearish trend. Systematically, BKF/SPY remains bearish below its 50-day SMA, below its 200-day SMA, and with the 50-day SMA 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 3 years on 5/25/12, reconfirming its bearish trend. EEM/SPY remains below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained below the 200-day SMA every day since 2/3/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) reconfirmed a bearish major trend when it fell below its lows of the previous 8 years on 5/30/12. Systematically, EFA/SPY remains bearish 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 50-day SMA on 5/30/12, turning systematically bullish. OEX/SPX remains above its 200-day SMA, and the 50-day SMA remains above the 200-day SMA. 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) fell below its lows of the previous 5 months on 5/22/12, reconfirming renewed downside momentum. Systematically, IWM/SPY returned to bearish status again on 4/20/12 when the 50-day SMA crossed below the 200-day SMA. Longer term, IWM/SPY has been relatively weak for more than a year, since 4/5/11.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) turned systematically bearish on 6/6/12 when its 50-day SMA crossed below its 200-day SMA. MDY/SPY remains below its 50-day SMA and 200-day SMA.
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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
1440.24, high of 5/19/2008
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
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
1362.93, Fibonacci 61.8% of April-June 2012 range
1356.92, 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
1334.93, high of 5/31/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range

The S&P 500 Composite Potential Support
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
1,288.41, 200-day SMA
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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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
1.24% , IGN , Networking, IGN
8.76% , S , SPRINT NEXTEL
3.63% , FDO , FAMILY DLR STRS
3.86% , NIHD , NII Holdings, Inc.
4.17% , MDP , MEREDITH
1.88% , FRX , FOREST LABS STK A
0.79% , IWP , Growth MidCap Russell, IWP
1.65% , MVV , Ultra MidCap400 Double, MVV
1.15% , PXN , Nanotech Lux, PXN
3.57% , WMT , WAL MART STORES
0.98% , UIS , UNISYS
2.13% , LPX , LOUISIANA PAC
1.35% , HSY , HERSHEY FOODS
1.40% , RWR , REIT Wilshire, RWR
0.65% , PFM , Dividend Achievers PS, PFM
3.03% , KLAC , KLA TENCOR
4.82% , DYN , DYNEGY
1.14% , DUK , DUKE ENERGY
1.48% , DGX , QUEST DIAG
1.88% , STI , SUNTRUST BANKS
0.80% , IYY , LargeCap Blend Total Market DJ, IYY
2.01% , BLL , BALL
1.04% , KMX , CarMax
1.18% , PX , PRAXAIR
2.23% , MOLX , MOLEX
2.28% , TER , TERADYNE
0.77% , TMW , Wilshire 5000 ST TM, TMW
1.17% , IYT , Transportation Av DJ, IYT
1.89% , YHOO , YAHOO
0.83% , PPL , PPL
0.48% , PBE , Biotech & Genome, PBE
3.28% , TGT , TARGET
2.74% , CCL , CARNIVAL STK A

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.59% , ADRA , Asia 50 BLDRS, ADRA
-3.26% , YUM , YUM BRANDS
-1.17% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-3.82% , X , US STEEL CORP
-2.95% , ATI , ALLEGHENY TECH
-3.13% , NTAP , NETWK APPLIANCE
-0.50% , ADRD , Developed 100 BLDRS, ADRD
-0.26% , EWQ , France Index, EWQ
-1.12% , TLAB , TELLABS
-2.17% , BHI , BAKER HUGHES
-1.47% , CECO , CAREER EDUCATION CORP
-0.85% , PXJ , Oil & Gas, PXJ
-0.79% , SLE , SARA LEE
-0.71% , MCD , MCDONALDS
-1.06% , TIF , TIFFANY
-0.81% , CTSH , Cognizant Technology Solutions
-0.81% , DOG , Short 100% Dow 30, DOG
-0.74% , EWC , Canada Index, EWC
-0.91% , RSH , RADIOSHACK
-2.02% , HP , Helmerich & Payne HP
-1.60% , SVU , SUPERVALU
-0.41% , MCO , MOODYS CORP
-0.78% , KR , KROGER
-0.38% , BBBY , BED BATH BEYOND
-0.38% , FHN , First Horizon National
-0.07% , VDE , Energy VIPERs, VDE
-0.30% , ITT , ITT INDS
-0.65% , SCZ , Small Cap EAFE MSCI iS, SCZ
-0.21% , PST , 200% Short Bond 7-10 Yr T, PST
-0.23% , PKI , PERKINELMER
-0.25% , PGJ , China LargeCap Growth G D H USX PS, PGJ
-0.13% , EWL , Switzerland Index, EWL
-1.42% , EWZ , Brazil Index, EWZ
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
2.54% Spain Index, EWP
2.46% Turkey MSCI iS, TUR
2.00% Homebuilders SPDR, XHB
1.71% Biotech SPDR, XBI
1.46% Telecom DJ US, IYZ
1.42% REIT VIPERs, VNQ
1.42% Microcap Russell, IWC
1.40% REIT Wilshire, RWR
1.37% Realty Cohen & Steers, ICF
1.36% SmallCap Russell 2000, IWM
1.32% Value SmallCap S&P 600 B, IJS
1.32% Financial Services DJ, IYG
1.31% Semiconductor SPDR, XSD
1.25% Real Estate US DJ, IYR
1.24% Networking, IGN
1.24% Growth SmallCap R 2000, IWO
1.22% Value SmallCap Russell 2000, IWN
1.21% Mexico Index, EWW
1.20% Financial SPDR, XLF
1.17% Transportation Av DJ, IYT
1.15% Chile MSCI iS, ECH
1.15% Small Cap VIPERs, VB
1.14% SmallCap S&P 600, IJR
1.12% Financial DJ US, IYF
1.11% Technology SPDR, XLK
1.09% Growth SmallCap VIPERs, VBK
1.04% Semiconductor iS IGW, SOXX
1.02% Technology DJ US, IYW
1.00% Value SmallCap VIPERS, VBR
1.00% Value LargeCap Dynamic PS, PWV
0.98% Financials VIPERs, VFH
0.97% Info Tech VIPERs, VGT
0.96% QQQ Nasdaq 100 Trust, QQQ
0.93% Growth BARRA Small Cap 600, IJT
0.92% Value MidCap S&P 400 B, IJJ
0.91% Water Resources, PHO
0.88% Value 1000 Russell, IWD
0.88% Consumer Discretionary SPDR, XLY
0.87% Dividend SPDR, SDY
0.87% Blend Total Market VIPERs, VTI
0.87% Dividend High Yield Equity PS, PEY
0.87% Value S&P 500 B, IVE
0.86% Consumer Staples SPDR, XLP
0.85% MidCap S&P 400 iS, IJH
0.84% LargeCap Blend Russell 3000, IWV
0.83% Growth MidCap 400 B, IJK
0.83% MidCap S&P 400 SPDRs, MDY
0.83% LargeCap VIPERs, VV
0.83% LargeCap Blend S&P 100, OEF
0.81% LargeCap 1000 R, IWB
0.80% Growth VIPERs, VUG
0.80% Value VIPERs, VTV
0.80% S&P 500 SPDRs LargeCap Blend, SPY
0.79% Growth 1000 Russell, IWF
0.79% Growth MidCap Russell, IWP
0.77% LargeCap Blend S&P=Weight R, RSP
0.76% Value MidCap Russell, IWS
0.75% Industrial SPDR, XLI
0.75% S&P 500 iS LargeCap Blend, IVV
0.73% DIAMONDS (DJIA), DIA
0.73% MidCap Russell, IWR
0.70% Growth S&P 500/BARRA, IVW
0.70% Dividend Appreciation Vipers, VIG
0.67% Materials SPDR, XLB
0.64% Russia MV, RSX
0.64% Dividend DJ Select, DVY
0.62% Oil Fund PowerShares, DBO
0.60% Health Care SPDR, XLV
0.59% Thailand MSCI iS, THD
0.55% Basic Materials DJ US, IYM
0.52% Frontier Markets Guggenheim , FRN
0.47% WilderHill Clean Energy PS, PBW
0.45% Global 100, IOO
0.43% Austria Index, EWO
0.38% Bond, High-Yield Corporate, HYG
0.37% Bond, Corp, LQD
0.35% Bond EmrgMkt JPM iS, EMB
0.35% Utilities VIPERs, VPU
0.32% Commodity Tracking, DBC
0.28% Sweden Index, EWD
0.26% Bond, High-Yield Junk, JNK
0.25% Oil, Crude, U.S. Oil Fund, USO
0.23% Financial Preferred, PGF
0.22% European VIPERs, VGK
0.22% Utilities SPDR, XLU
0.16% Preferred Stock iS, PFF
0.15% Gold Shares S.T., GLD
0.15% Bond Muni ATM-Free S&P iS, MUB
0.14% Dividend International, PID
0.12% Indonesia MV, IDX
0.10% Germany Index, EWG
0.08% Energy DJ, IYE
0.07% Bond, TIPS, TIP
0.07% Bond, 10 Year Treasury, IEF
0.04% EMU Europe Index, EZU
0.02% Energy SPDR, XLE
0.01% Bond Treasury Short-Term iS, SHV
0.00% Europe 350 S&P Index, IEV
0.00% Bond, 1-3 Year Treasury, SHY
-0.02% Bond, 20+ Years Treasury, TLT
-0.04% Agriculture DB PS, DBA
-0.05% Bond, Aggregate, AGG
-0.06% Energy & Nat Res iS GS, IGE
-0.06% India Earnings WTree, EPI
-0.07% Energy VIPERs, VDE
-0.09% Netherlands Index, EWN
-0.09% Belgium Index, EWK
-0.10% Bond Ex-US Treas, BWX
-0.12% United Kingdom Index, EWU
-0.13% Switzerland Index, EWL
-0.14% Australia Index, EWA
-0.14% Silver Trust iS, SLV
-0.20% Capital Markets KWB ST, KCE
-0.25% China LargeCap Growth G D H USX PS, PGJ
-0.26% France Index, EWQ
-0.28% Italy Index, EWI
-0.33% EAFE Index, EFA
-0.34% Value EAFE MSCI, EFV
-0.35% Growth EAFE MSCI, EFG
-0.36% India PS, PIN
-0.39% Energy Global, IXC
-0.44% Metals & Mining SPDR, XME
-0.52% Global ex US ACWI iS, ACWX
-0.54% Latin Am 40, ILF
-0.63% Pacific ex-Japan, EPP
-0.65% Small Cap EAFE MSCI iS, SCZ
-0.69% Pacific VIPERs, VPL
-0.72% South Africa Index, EZA
-0.74% Canada Index, EWC
-0.79% Malaysia Index, EWM
-0.80% South Korea Index, EWY
-0.82% Bear, Short S&P 500, SH
-0.83% Emerging VIPERs, VWO
-0.86% Emerging Markets, EEM
-0.89% Japan Index, EWJ
-1.02% Singapore Index, EWS
-1.11% Emerging 50 BLDRS, ADRE
-1.42% Brazil Index, EWZ
-1.43% Taiwan Index, EWT
-1.79% Hong Kong Index, EWH
-2.84% China 25 iS, FXI