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Monday, March 2, 2009

Picture of the bear

Every week we scan and test all the stocks on the major exchanges as part of our Alert HQ process. A byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also at least 1% above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

TrendLeaders paint depressing picture of a bear market --

This week we have 61 stocks and ETFs on the list. The total number has been declining steadily over the last few weeks. The nature of the securities comprising this week's list show how badly stocks in general are performing - more than half of our Trend Leaders are inverse ETFs.

Not only do we have a bunch of the usual ProShares ETFs on the list but we see that the Direxion Bear 3X ETFs are well represented as are a number of Rydex Inverse 2X ETFs.

Here is the list of inverse ETFs. Prices are as of the close last Friday; I suspect they are all up nicely after today's market rout.

SymbolETF NameLastPrice
BGZDirexion Large Cap Bear 3X Shares90.58
DOGProShares Short Dow3083.03
DPKDeveloped Markets Bear 3x Shares106.53
DXDProShares UltraShort Dow3077.09
EFUProShares UltraShort MSCI EAFE135.18
EFZProShares Short MSCI EAFE105.7
EWVProShares UltraShort MSCI Japan105.716
MWNDirexion Mid Cap Bear 3X Shares94.01
MYYProShares Short MidCap40079.145
MZZProShares UltraShort MidCap40075.46
PSQProShares Short QQQ77.34
QIDProShares UltraShort QQQ62.65
RFNRydex Inverse 2x S&P Select Sector Financial58.331
RHORydex Inverse 2x S&P Select Sector Health69.97
RRZRydex Inverse 2x Russell 2000131.06
RSWRydex Inverse 2x S&P 500158.97
RWMProShares Short Russell200080.73
RXDProShares UltraShort Health Care74.04
SCCProShares UltraShort Consumer Services108.68
SDDProShares UltraShort SmallCap60095.26
SDKProShares UltraShort Russell MidCap Growth93.22
SDSProShares UltraShort S&P50098.72
SFKProShares UltraShort Russell1000 Growth97.77
SHProShares Short S&P50085.95
SIJProShares UltraShort Industrials89.55
SJFProShares UltraShort Russell1000 Value160.73
SJHProShares UltraShort Russell2000 Value104.46
SJLProShares UltraShort Russell MidCap Value117.71
SKFProShares UltraShort Financials177.85
SKKProShares UltraShort Russell2000 Growth84.21
SZKProShares UltraShort Consumer Goods99.07
TWMProShares UltraShort Russell200091.91
TZADirexion Small Cap Bear 3X Shares80.5

A few stocks still fight the bear --

What other stocks complete this picture of the bear?

Well, there are several gold stocks, for example: Gammon Gold (GRS), Central Gold Trust (GTU) and Seabridge Gold (SA). With the whole stock market and gold itself down today, these stocks all took a hit; nevertheless, their charts are still looking a lot more attractive than most.

There has been much written about people "trading down" and shopping at Walmart. It appears the same thing is taking place with respect to food. Dinner at fancy restaurants is out but pizza is in. Take a look at Papa John's (PZZA) - they were one of the few stocks to register a gain today.

Italians have always known that pasta helps stretch the food budget. Perhaps that explains why American Italian Pasta Company (AIPC) is doing well lately.

Finally, special situations always get investor attention. As a result, Genentech (DNA), the object of a takeover bid, is on the list. Unfortunately, the stock plunged 4.6% today and fell below its 50-day and 200-day moving averages. Perhaps investors were betting that Roche will not be able to accomplish their buyout of DNA.

Conclusion --

The bear, it seems, is firmly charge again. Our TrendLeaders list started out with a couple of hundred stocks and only a few ETFs. Now the list is dominated by inverse ETFs and a dwindling number of stocks that fit the recessionary mood.

There have been a number of blog posts that suggested that when inverse ETFs become especially popular it is a sign of a market bottom. Lately, though, the market looks bottomless. This is a situation only a contrarian could love.

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