S&P 500: A Bearish Engulfing Candlestick Pattern

by

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above its highs of the previous 2 years, reconfirming its preexisting major bullish trend. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative safety of large size.

Technology stock sector price whipsawed back down below its 50-day SMA, thereby turning systematically neutral again.

Industrial stock sector price whipsawed back down below its 50-day SMA and 200-day SMA.

Materials stock sector price whipsawed back down below its 50-day SMA and 200-day SMA, turning systematically bearish again.

Energy stock sector price whipsawed back down below its 50-day SMA, turning systematically bearish again.

The S&P 500 (SPX: 1,341.47) fell 10.99 points or 0.81% on Tuesday, breaking down below the lows of the previous 6 trading days with a Bearish Engulfing Candlestick Pattern.

NYSE volume rose 19% to confirm the stock price breakdown. For months, I have been noting here a general tendency for rising volume on price declines and shrinking volume on price advances. This is a divergence that suggests a bearish demand-supply balance for stocks.

Risk of a further downside price correction probably exceeds upside potential for the short term.

For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report --
click here.

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Hedge funds and equity mutual funds both lost money last year, 2011, and many were down again in the June 2012 quarter just ended.

Meanwhile, one money manager made gains for 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).


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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
1374.81, high of 7/3/2012
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1344.56, Fibonacci 50% of April-June 2012 range

The S&P 500 Composite Potential Support
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1337.10, 50-day SMA
1335.52, high of 6/11/2012
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
1306.62, low of 6/12/2012
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
1304.72, 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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Tangible Assets, Commodities

U.S. dollar ETF (UUP) price remains systematically bullish: above its 50-day SMA, above its 200-day SMA, and with the 50-day SMA above the 200-day SMA. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.02, 23.52, 25.84, 27.19, 28.97.

CRB Commodity Price Index whipsawed back above its 50-day SMA on 7/2/12, thereby turning systematically neutral again. CRB remains below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/18/11.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) rose above its 200-day SMA on 7/3/12 and remains neutral: above its 50-day SMA, above its 200-day SMAs, and the 50-day SMA has been consistently below the 200-day SMA every day since 8/8/11.

Crude Oil, United States Oil ETF (USO) turned systematically bearish on 6/7/12, when the 50-day SMA fell below the 200-day SMA. USO remains below its 50-day and 200-day SMAs. Support 29.02, 26.28, and 22.74. Resistance 33.08, 33.66, 34.76, 35.19, 36.97, 40.29, 41.38, 42.30, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) whipsawed back down below its 50-day SMA again on 7/6/12, thereby turning systematically bearish again. GLD remains below its 200-day SMA, and its 50-day SMA remains below its 200-day SMA. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) whipsawed back down below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.

Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 19 months on 6/28/12, thereby confirming its preexisting major bearish trend. SLV remains systematically bearish: below its 50-day and 200-day SMAs, and with the 50-day SMA below the 200-day SMA every day since 10/27/11. Support 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 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 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD remains systematically bearish: below its 50-day SMA, below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) whipsawed back down below its 50-day SMA on 7/5/12, thereby turning systematically bearish again. JJC remains below its 200-day SMA, and its 50-day SMA remains below its 200-day SMA. In addition, 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.
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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

6.38% , PWER , POWER ONE
4.22% , LUV , SOUTHWEST AIRLS
3.06% , HOG , HARLEY DAVIDSON
1.06% , PIN , India PS, PIN
3.00% , SVU , SUPERVALU
0.58% , TUR , Turkey MSCI iS, TUR
1.07% , MWV , MEADWESTVACO
2.05% , TGT , TARGET
1.62% , DDS , DILLARD STK A
1.06% , WFM.O , Whole Foods Market Inc
0.98% , SRCL , Stericycle, SRCL
1.71% , SDS , Short 200% S&P 500 PS, SDS
0.85% , TLAB , TELLABS
1.09% , NIHD , NII Holdings, Inc.
1.88% , QID , Short 200% QQQ PS, QID
1.43% , AN , AUTONATION
1.49% , URBN , Urban Outfitters Inc.
0.71% , HOLX , Hologic, Inc., HOLX
0.26% , CTAS , CINTAS
1.32% , HNZ , HJ HEINZ
1.41% , FII , FED INVESTORS STK B
0.51% , EFX , EQUIFAX
0.92% , SWY , SAFEWAY
0.74% , BLL , BALL
0.88% , MKC , MCCORMICK
2.42% , VFC , VF
0.68% , K , KELLOGG
1.80% , ESRX , EXPRESS SCRIPTS
0.96% , BLK , BlackRock Inc.
0.74% , WAG , WALGREEN
0.50% , MCD , MCDONALDS
0.98% , PSQ , Short 100% QQQ, PSQ
0.66% , DOG , Short 100% Dow 30, DOG

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

-2.46% , XSD , Semiconductor SPDR, XSD
-8.94% , CMI , CUMMINS
-11.21% , AMD , ADV MICRO DEV
-8.95% , MBI , MBIA
-4.33% , MJN , Mead Johnson Nutrition
-6.57% , SNV , SYNOVUS
-4.05% , TXT , TEXTRON
-5.76% , JCP , JC PENNEY
-3.02% , PCAR , PACCAR
-1.55% , EPU , Peru MSCI iS, EPU
-0.79% , VTV , Value VIPERs, VTV
-0.80% , EZA , South Africa Index, EZA
-2.16% , FISV , FISERV
-1.62% , XLI , Industrial SPDR, XLI
-4.23% , SNDK , SanDisk Corporation
-0.87% , IXG , Financials Global LargeCap Value, IXG
-4.99% , LPX , LOUISIANA PAC
-1.04% , ISI , LargeCap Blend S&P 1500 iS, ISI
-3.45% , CAT , CATERPILLAR
-6.94% , FMCN , Focus Media, FMCN
-3.15% , XME , Metals & Mining SPDR, XME
-5.08% , MU.O , MICRON TECH
-2.49% , VIA.O , VIACOM INC. (New)
-2.72% , AMAT , APPLIED MATERIAL
-3.67% , ETN , EATON
-1.04% , PPA , Aerospace & Defense, PPA
-1.12% , JKJ , SmallCap Core iS M, JKJ
-1.17% , JKG , MidCap Blend Core iS M, JKG
-1.99% , XHB , Homebuilders SPDR, XHB
-2.64% , LBTYA , Liberty Global Inc. (LBTYA)
-2.00% , GRMN , GARMIN LTD
-4.11% , AA , ALCOA
-1.96% , SIAL , SIGMA ALDRICH
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

2.21% Agriculture DB PS, DBA
1.84% Oil, Crude, U.S. Oil Fund, USO
1.78% Commodity Tracking, DBC
1.65% Oil Fund PowerShares, DBO
0.91% Silver Trust iS, SLV
0.88% Bond, 20+ Years Treasury, TLT
0.84% Mexico Index, EWW
0.66% Italy Index, EWI
0.64% Malaysia Index, EWM
0.53% Health Care SPDR, XLV
0.51% Austria Index, EWO
0.28% Bond, 10 Year Treasury, IEF
0.26% Bond Ex-US Treas, BWX
0.23% Realty Cohen & Steers, ICF
0.22% Financial Preferred, PGF
0.22% Biotech SPDR, XBI
0.21% Gold Shares S.T., GLD
0.20% REIT Wilshire, RWR
0.20% Real Estate US DJ, IYR
0.20% Bond, Aggregate, AGG
0.19% Bond, TIPS, TIP
0.18% Telecom DJ US, IYZ
0.16% Bear, Short S&P 500, SH
0.14% Bond Muni ATM-Free S&P iS, MUB
0.11% REIT VIPERs, VNQ
0.10% Bond, High-Yield Junk, JNK
0.08% Taiwan Index, EWT
0.07% Bond, Corp, LQD
0.04% Sweden Index, EWD
0.04% EMU Europe Index, EZU
0.03% Bond, High-Yield Corporate, HYG
0.02% European VIPERs, VGK
0.01% Netherlands Index, EWN
0.00% Bond EmrgMkt JPM iS, EMB
0.00% Bond Treasury Short-Term iS, SHV
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Dividend International, PID
0.00% LargeCap Blend S&P 100, OEF
-0.05% Growth 1000 Russell, IWF
-0.05% France Index, EWQ
-0.06% Industrial SPDR, XLI
-0.06% Europe 350 S&P Index, IEV
-0.06% Chile MSCI iS, ECH
-0.07% Growth S&P 500/BARRA, IVW
-0.07% Growth VIPERs, VUG
-0.08% S&P 500 iS LargeCap Blend, IVV
-0.10% Germany Index, EWG
-0.11% Dividend High Yield Equity PS, PEY
-0.11% Consumer Staples SPDR, XLP
-0.12% Value LargeCap Dynamic PS, PWV
-0.12% United Kingdom Index, EWU
-0.12% Growth BARRA Small Cap 600, IJT
-0.12% Belgium Index, EWK
-0.13% S&P 500 SPDRs LargeCap Blend, SPY
-0.13% Switzerland Index, EWL
-0.14% Financial SPDR, XLF
-0.15% LargeCap VIPERs, VV
-0.16% SmallCap S&P 600, IJR
-0.18% Preferred Stock iS, PFF
-0.19% QQQ Nasdaq 100 Trust, QQQ
-0.20% LargeCap 1000 R, IWB
-0.20% Growth SmallCap VIPERs, VBK
-0.21% Technology SPDR, XLK
-0.22% Growth SmallCap R 2000, IWO
-0.22% EAFE Index, EFA
-0.23% Australia Index, EWA
-0.24% India PS, PIN
-0.24% LargeCap Blend Russell 3000, IWV
-0.24% Latin Am 40, ILF
-0.24% Blend Total Market VIPERs, VTI
-0.25% Value VIPERs, VTV
-0.26% DIAMONDS (DJIA), DIA
-0.27% Canada Index, EWC
-0.28% Value SmallCap S&P 600 B, IJS
-0.28% Dividend Appreciation Vipers, VIG
-0.28% Dividend DJ Select, DVY
-0.30% Global ex US ACWI iS, ACWX
-0.31% Dividend SPDR, SDY
-0.31% Value S&P 500 B, IVE
-0.31% Financial DJ US, IYF
-0.31% Growth MidCap 400 B, IJK
-0.33% Small Cap VIPERs, VB
-0.33% Utilities SPDR, XLU
-0.33% Small Cap EAFE MSCI iS, SCZ
-0.33% Water Resources, PHO
-0.34% Russia MV, RSX
-0.34% Utilities VIPERs, VPU
-0.35% MidCap S&P 400 SPDRs, MDY
-0.36% Financials VIPERs, VFH
-0.36% Pacific VIPERs, VPL
-0.36% Emerging Markets, EEM
-0.37% Energy DJ, IYE
-0.37% Technology DJ US, IYW
-0.37% Value 1000 Russell, IWD
-0.37% MidCap S&P 400 iS, IJH
-0.37% Microcap Russell, IWC
-0.38% SmallCap Russell 2000, IWM
-0.40% Global 100, IOO
-0.42% Turkey MSCI iS, TUR
-0.43% Transportation Av DJ, IYT
-0.43% Growth EAFE MSCI, EFG
-0.44% Info Tech VIPERs, VGT
-0.45% Value MidCap S&P 400 B, IJJ
-0.45% Energy SPDR, XLE
-0.45% Emerging VIPERs, VWO
-0.46% Value SmallCap VIPERS, VBR
-0.47% India Earnings WTree, EPI
-0.47% Growth MidCap Russell, IWP
-0.47% Energy Global, IXC
-0.48% Hong Kong Index, EWH
-0.48% Thailand MSCI iS, THD
-0.49% Energy VIPERs, VDE
-0.50% Value EAFE MSCI, EFV
-0.51% Homebuilders SPDR, XHB
-0.51% Pacific ex-Japan, EPP
-0.51% MidCap Russell, IWR
-0.52% Value MidCap Russell, IWS
-0.52% Value SmallCap Russell 2000, IWN
-0.54% Japan Index, EWJ
-0.54% Energy & Nat Res iS GS, IGE
-0.55% Consumer Discretionary SPDR, XLY
-0.56% Emerging 50 BLDRS, ADRE
-0.57% LargeCap Blend S&P=Weight R, RSP
-0.58% South Africa Index, EZA
-0.63% Materials SPDR, XLB
-0.65% Spain Index, EWP
-0.66% Indonesia MV, IDX
-0.66% Financial Services DJ, IYG
-0.67% South Korea Index, EWY
-0.77% Brazil Index, EWZ
-0.88% Singapore Index, EWS
-0.91% Frontier Markets Guggenheim , FRN
-0.92% WilderHill Clean Energy PS, PBW
-0.94% Capital Markets KWB ST, KCE
-1.07% Basic Materials DJ US, IYM
-1.20% China 25 iS, FXI
-1.28% Semiconductor SPDR, XSD
-1.33% Semiconductor iS IGW, SOXX
-1.48% Metals & Mining SPDR, XME
-1.78% Networking, IGN
-1.86% China LargeCap Growth G D H USX PS, PGJ

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About the Author

Robert W. Colby, CMT, is Chairman and Chief Investment Strategist at Robert W. Colby Asset Management, Inc., a New York Registered Investment Advisory firm. His primary objective is to outperform the S&P 500 Index over the long term while taking much less risk by using actively adaptive strategies to effectively manage Rewards and Risks.  His unique Bear Market Protection Systems protect clients when stock prices fall persistently in bearish market trends. Robert is the author of The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill, 2003, which has become the standard reference for indicator and trading systems design. In his 44 years on Wall Street, Robert has worked as a portfolio manager, a research consultant to institutional and private investors and traders, proprietary trader, technical analyst, and fundamental analyst.  For a free trial to his extensive weekly analytical report, see:

http://www.colbyassetmanagement.com/

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