to Risk-On for the Short Term?

Popular demand appears to be increasing for more and greater quantitative easing at the next Federal Open Market Committee (FOMC) meeting on September 20-21, 2011.

It appears popular to assume that stocks and commodities might rally for several months following Fed quantitative easing, like they did last year.

Conditions seem different enough that a repeat performance may not be guaranteed–even if there is some form of quantitative easing ahead.

There are problems abroad. Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) remains bearish. The EFA/SPY Ratio broke down below 6-year lows on 8/30/11.

The S&P 500 Composite (SPX, 1,212.92) rose 2.84 points or 0.23% on Tuesday, August 30, 2011.

It was the third consecutive daily price advance. Three days up is typical of a minor counter trend upside correction.

SPX rose further above its 20-day SMA but remains below its more significant 50- and 200-day SMAs (simple moving averages), so trends are still bearish in medium- and long-term time frames.

Minor price consolidations and corrections against the trend are normal and expected. Playing minor counter trend bounces is risky, however. The mood can switch from “risk on” to “risk off” overnight, leaving the too-clever trader suddenly holding the bag.

We keep in mind that the dominant trend remains persistently bearish. That is the bias. In a bear market, surprises come to the downside.

Typically, there is no safe place to hide in a Dow Theory Primary Tide Bear Market. Even those stocks that have held up relatively well through most of the Bear Market eventually succumb to the relentless tide of selling.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
There is a strategy that gained this month and the past 3 months, while most other strategies lost —
NOW WITH A NO-RISK FREE TRIAL.

The Colby Global Markets Report
(click here for a no-risk free trial)

Includes Top Ten ETFs and Major Trend Relative Strength Rankings.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock Market Indicators

NASDAQ Composite/S&P 500 Relative Strength Ratio rose above the highs of the previous 2 weeks on 8/30/11, suggesting a minor uptrend. On 8/29/11, the Ratio crossed slightly above 20-, 50-, and 200-day SMAs, which have converged together. Absolute price rose above the highs of the previous 3 weeks on 8/30/11, suggesting a minor uptrend within a larger downtrend. Closing price broke down below 10-month closing price lows on 8/19/11.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) remains bearish. The EEM/SPY Ratio has been in a downtrend since peaking on 10/14/10. EEM/SPY broke down below 6-month lows on 8/25/11, remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 13-month lows on 8/8/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) remains bearish. The EFA/SPY Ratio broke down below 6-year lows on 8/30/11. Absolute price has been weak since 5/2/11 and broke down below 11-month lows on 8/8/11.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 4 weeks on 8/30/11, suggesting a minor downtrend. Longer term, OEX/SPX fell below 28-year lows on 5/26/11, confirming a bearish major trend.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) remains bearish for the major trend. IWM/SPY fell below 11-month lows on 8/22/11.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) remains bearish for the major trend. MDY/SPY fell below 11-month lows on 8/8/11, confirming a bearish major trend.

Advisory Service Sentiment: There were 40.9% Bulls versus 33.3% Bears as of 8/24/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 1.23, down from 1.95 the previous week. The 20-year median is 1.56 and the mean is 1.64.

VIX Fear Index rose to 48.00 on 8/8/11, its highest level in 14 months, since 5/21/10. VIX is in an uptrend, and it is possible for VIX to rise much higher: VIX was 89.53 on 10/24/08 during the financial crisis. Options players tend to grow more fearful as stock prices decline, and the trend of stock prices is down. VIX is a market estimate of expected constant 30-day volatility, calculated by weighting S&P 500 Index CBOE option bid/ask quotes spanning a wide range of strike prices for the two nearest expiration dates.

The Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed below their closing price lows of June, 2011.

The S&P 500 Composite (SPX, 1,212.92) rose 2.84 points or 0.23% on Tuesday, August 30, 2011.

S&P 500 Cash Index 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
1406.32, high of 5/29/2008
1381.50, Fibonacci 78.6% of 2007-2009 range
1370.58, high of 5/2/11
1359.44, high of 5/10/11
1356.48, high of 7/7/11
1347.00, high of 7/21/11
1258.07, low of 6/16/11
1249.05, low of 3/16/11
1246.73, high of 12/13/10
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1234.56, low of 8/3/11
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10

S&P 500 Cash Index Potential Support
1101.54, low of 8/9/2010
1091.15, low of 9/7/2010
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
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
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
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) turned choppy and corrective in recent days and looks uncertain for the short term. Longer term, TLT rose above the highs of the previous 2 years on 8/18/11, confirming a major uptrend. Although minor price consolidations and corrections are to be expected in bullish price trends, the dominant trend remains bullish. Support 108.10, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 116.92, and 123.15.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) rose above the highs of the previous 3 weeks on 8/30/11, suggesting a short-term recovery attempt. JNK/LQD fell below 2-year lows and below its 50-, and 200-day simple moving averages on 8/10/11, confirming a bearish major trend.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below 10-month lows on 8/24/11. TIP/IEF has been weak since peaking on 4/8/11 and remains below 3 key SMAs, of 20, 50, and 200 days. This means fixed-income investors have been choosing the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Fixed-income investors are not worried about inflation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tangible Assets, Commodities

U.S. dollar ETF (UUP) fell below 3-month lows on 8/17/11, suggesting a medium-term downtrend. The sideways Continuation Pattern (which suggests that the previous major long-term downtrend may resume) since the low of 20.84 on 5/4/11 recently appeared to be “rolling over”, that is, showing a bearish bias. Support 20.84. Resistance 21.41, 21.74, 21.86, and 22.21.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) rose above the highs of the previous 3 months on 8/29/11, confirming a short-term uptrend. Keep in mind that on 8/9/11, DBA traded below 8-month lows, confirming a medium-term downtrend. Too many whipsaw reversals make this a difficult market to trade.

Crude Oil, United States Oil ETF (USO) rose above the highs of the previous 9 trading days on 8/30/11. Oil fell below the lows of the previous 2 years on 8/9/11, confirming a major downtrend. Support 31.45, 30.31, 26.28, 22.74. Resistance 34.63, 35.14, 39.25, 40.74, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) rose above the highs of the previous 4 trading days on 8/30/11. Gold rose above all-time highs on 8/22/11, confirming its major long-term uptrend. Although minor price consolidations and corrections are to be expected in any trend, the dominant trend remains persistently bullish. In a world of too much debt, weak currencies, and self-serving politicians running amok, investors around the globe seek the safety of gold as the only forever-true money. Support: 165.88. 159.68, 156.11, 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 184.82.

Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) rose above 3-week highs on 8/29/11, suggesting a minor rally attempt for the short term. GDX/GLD fell below 29-month lows on 8/8/11, confirming a bearish major trend for the long term.

Silver, iShares Silver Trust ETF (SLV) rose above the highs of the previous 4 trading days on 8/30/11. Silver rose above 3-month highs on 8/22/11, confirming a medium-term price uptrend. Support 38.05, 36.04, 35.29, 34.02, and 31.97. Resistance: 42.78, 44.71 and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) has been mostly weak since peaking on 4/28/11. This means investors prefer Gold over Silver.

Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) rose above the highs of the previous 16 days on 8/30/11, suggesting a minor recovery attempt. But JJC fell below the lows of the previous 8 months on 8/10/11, again confirming a significant downtrend. Weakness in Copper suggests doubts about the economic outlook, while strength in Copper suggests confidence. Support 52.88, 50.59, and 49.00. Resistance: 56.64, 57.48, 59.06, 60.04, and 61.69.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

1.82% , RFV , Value MidCap S&P 400, RFV
1.65% , FRN , Frontier Markets Guggenheim , FRN
11.84% , EK , EASTMAN KODAK
2.75% , CLX , CLOROX
7.14% , PHM , PULTE HOMES
5.92% , RIMM , RESEARCH IN MOTION LTD
7.67% , KBH , KB HOME
1.70% , PEJ , Leisure & Entertainment, PEJ
3.93% , PSTL , Steel Global PS ETF, PSTL
3.42% , COL , ROCKWELL COLLINS
4.34% , WYNN , Wynn Resorts L
0.59% , JKG , MidCap Blend Core iS M, JKG
0.51% , RPV , Value S&P 500, RPV
1.15% , DBO , Oil Fund PowerShares, DBO
0.79% , PWO , OTC Dynamic PS, PWO
1.18% , PIC , Insurance, PIC
2.27% , UIS , UNISYS
4.20% , FDO , FAMILY DLR STRS
2.60% , S , SPRINT NEXTEL
2.71% , DHI , D.R. HORTON, DHI
2.54% , SIL , Silver Miners Global X, SIL
0.85% , NYC , LargeCap Blend NYSE Composite iS, NYC
1.78% , PGJ , China LargeCap Growth G D H USX PS, PGJ
4.04% , CIEN.O , CIENA
2.35% , MOLX , MOLEX
1.49% , RZV , Value SmallCap S&P 600, RZV
2.33% , CBS , CBS CORP.
0.54% , IGM , Technology GS, IGM
1.73% , NSC , NORFOLK SOUTHERN
1.48% , AGN , ALLERGAN
2.03% , EPU , Peru MSCI iS, EPU
1.38% , CCE , COCA COLA ENTER
2.21% , BA , BOEING

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name

-0.90% , EIS , Israel MSCI iS, EIS
-0.41% , IXG , Financials Global LargeCap Value, IXG
-2.18% , KSS , KOHLS
-0.89% , EWI , Italy Index, EWI
-1.99% , SPLS , STAPLES
-2.45% , NKE , NIKE STK B
-3.71% , HBAN , HUNTINGTON
-2.13% , LVLT , LEVEL 3 COMMUNICATIONS
-1.65% , MCHP , Microchip Technology Incorporated
-1.66% , GLW , CORNING
-0.05% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-0.96% , EWG , Germany Index, EWG
-2.58% , LRCX , LAM RESEARCH CORP
-3.25% , TBT , 200% Short US T Bond, TBT
-0.77% , EZU , EMU Europe Index, EZU
-0.76% , CMS , CMS ENERGY
-1.24% , KR , KROGER
-2.02% , AES , AES
-1.03% , EWD , Sweden Index, EWD
-0.09% , RTH , Retail H, RTH
-2.67% , KEY , KEYCORP
-2.14% , NVLS , NOVELLUS SYS
-0.57% , K , KELLOGG
-1.71% , GNW , GENWORTH FINANCIAL
-0.90% , EMR , EMERSON ELECTRIC
-1.33% , QID , Short 200% QQQ PS, QID
-1.08% , EMC , EMC
-1.28% , SCHW.K , CHARLES SCHWAB, SCHW.O
-2.25% , LOW , LOWES
-2.10% , LNC , LINCOLN NATL
-1.25% , ADSK , AUTODESK
-0.70% , WMT , WAL MART STORES
-3.17% , MU.O , MICRON TECH
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

3.00% Gold Shares S.T., GLD
2.54% Silver Miners Global X, SIL
1.78% China LargeCap Growth G D H USX PS, PGJ
1.71% Silver Trust iS, SLV
1.65% Frontier Markets Guggenheim , FRN
1.61% Bond, 20+ Years Treasury, TLT
1.46% Networking, IGN
1.41% Oil, Crude, U.S. Oil Fund, USO
1.41% Brazil Index, EWZ
1.38% Biotech SPDR, XBI
1.37% Transportation Av DJ, IYT
1.36% Commodity Tracking, DBC
1.24% Metals & Mining SPDR, XME
1.15% Oil Fund PowerShares, DBO
1.13% Homebuilders SPDR, XHB
0.90% Basic Materials DJ US, IYM
0.89% Canada Index, EWC
0.85% Industrial SPDR, XLI
0.84% Materials SPDR, XLB
0.83% Energy & Nat Res iS GS, IGE
0.83% Growth SmallCap VIPERs, VBK
0.79% Growth MidCap Russell, IWP
0.76% Growth SmallCap R 2000, IWO
0.71% Growth MidCap 400 B, IJK
0.70% Latin Am 40, ILF
0.70% Water Resources, PHO
0.69% Bond, 10 Year Treasury, IEF
0.67% Chile MSCI iS, ECH
0.66% QQQ Nasdaq 100 Trust, QQQ
0.63% Telecom DJ US, IYZ
0.62% Growth BARRA Small Cap 600, IJT
0.59% Energy SPDR, XLE
0.59% Bond, TIPS, TIP
0.58% Growth S&P 500/BARRA, IVW
0.58% SmallCap Russell 2000, IWM
0.54% Energy VIPERs, VDE
0.54% Energy DJ, IYE
0.53% Emerging 50 BLDRS, ADRE
0.53% Bond, Corp, LQD
0.52% Financial Preferred, PGF
0.52% South Africa Index, EZA
0.50% Growth VIPERs, VUG
0.50% MidCap Russell, IWR
0.47% Small Cap VIPERs, VB
0.46% Growth 1000 Russell, IWF
0.46% Consumer Discretionary SPDR, XLY
0.44% MidCap S&P 400 iS, IJH
0.44% MidCap S&P 400 SPDRs, MDY
0.42% LargeCap Blend S&P=Weight R, RSP
0.41% WilderHill Clean Energy PS, PBW
0.41% Technology SPDR, XLK
0.40% REIT Wilshire, RWR
0.39% Value SmallCap S&P 600 B, IJS
0.39% Real Estate US DJ, IYR
0.38% SmallCap S&P 600, IJR
0.38% Realty Cohen & Steers, ICF
0.33% Health Care SPDR, XLV
0.33% Value MidCap Russell, IWS
0.32% Energy Global, IXC
0.32% Microcap Russell, IWC
0.31% Bond, Aggregate, AGG
0.31% LargeCap VIPERs, VV
0.31% Russia MV, RSX
0.31% Info Tech VIPERs, VGT
0.29% Hong Kong Index, EWH
0.28% LargeCap 1000 R, IWB
0.28% REIT VIPERs, VNQ
0.27% Blend Total Market VIPERs, VTI
0.27% LargeCap Blend Russell 3000, IWV
0.26% S&P 500 SPDRs LargeCap Blend, SPY
0.26% Consumer Staples SPDR, XLP
0.23% Value SmallCap VIPERS, VBR
0.22% Dividend DJ Select, DVY
0.22% Value MidCap S&P 400 B, IJJ
0.22% Semiconductor SPDR, XSD
0.21% Dividend SPDR, SDY
0.21% Technology DJ US, IYW
0.21% S&P 500 iS LargeCap Blend, IVV
0.19% Dividend Appreciation Vipers, VIG
0.18% Bond, High-Yield Corporate, HYG
0.18% DIAMONDS (DJIA), DIA
0.17% Value SmallCap Russell 2000, IWN
0.15% India Earnings WTree, EPI
0.14% Emerging Markets, EEM
0.14% Emerging VIPERs, VWO
0.14% LargeCap Blend S&P 100, OEF
0.13% Preferred Stock iS, PFF
0.11% Value LargeCap Dynamic PS, PWV
0.10% Dividend High Yield Equity PS, PEY
0.07% Taiwan Index, EWT
0.04% Utilities SPDR, XLU
0.04% Value S&P 500 B, IVE
0.03% Value VIPERs, VTV
0.02% Bond, 1-3 Year Treasury, SHY
0.02% Bond Muni ATM-Free S&P iS, MUB
0.02% Bond EmrgMkt JPM iS, EMB
-0.02% Semiconductor iS IGW, SOXX
-0.03% Bond Treasury Short-Term iS, SHV
-0.04% Singapore Index, EWS
-0.05% Value 1000 Russell, IWD
-0.05% India PS, PIN
-0.06% Turkey MSCI iS, TUR
-0.06% Bond Ex-US Treas, BWX
-0.08% China 25 iS, FXI
-0.08% Belgium Index, EWK
-0.08% Utilities VIPERs, VPU
-0.09% Australia Index, EWA
-0.11% Pacific ex-Japan, EPP
-0.13% Bond, High-Yield Junk, JNK
-0.13% Dividend International, PID
-0.21% Growth EAFE MSCI, EFG
-0.23% Pacific VIPERs, VPL
-0.23% Small Cap EAFE MSCI iS, SCZ
-0.23% Agriculture DB PS, DBA
-0.25% South Korea Index, EWY
-0.28% Netherlands Index, EWN
-0.33% Global 100, IOO
-0.34% Financial DJ US, IYF
-0.36% Japan Index, EWJ
-0.38% Global ex US ACWI iS, ACWX
-0.39% Financials VIPERs, VFH
-0.43% United Kingdom Index, EWU
-0.44% Austria Index, EWO
-0.45% France Index, EWQ
-0.50% Malaysia Index, EWM
-0.54% Capital Markets KWB ST, KCE
-0.59% EAFE Index, EFA
-0.67% Mexico Index, EWW
-0.68% Financial SPDR, XLF
-0.70% Financial Services DJ, IYG
-0.71% Spain Index, EWP
-0.73% Indonesia MV, IDX
-0.75% Value EAFE MSCI, EFV
-0.77% EMU Europe Index, EZU
-0.78% Europe 350 S&P Index, IEV
-0.79% Switzerland Index, EWL
-0.83% European VIPERs, VGK
-0.89% Italy Index, EWI
-0.96% Germany Index, EWG
-1.03% Sweden Index, EWD
-1.47% Thailand MSCI iS, THD