Dow Theory Reconfirming Pre-existing Major Uptrend

Industrial stock sector absolute price rose above 2-year highs on 12/14/10 and remains bullish.

Consumer Staples stock sector absolute price rose above 2-year highs on 12/14/10 and remains bullish.

The Dow Theory reconfirmed a Primary Tide Bull Market as of 12/14/10, when the Dow-Jones Industrial Average closed above 2-year closing price highs, thereby confirming the new high in the Dow-Jones Transportation Average set on 12/10/10. The Dow Theory originally signaled the current Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. Many other analysts were fooled into calling “Bear Market” by the big downside Secondary Reaction in May and June 2010, but my interpretation has been steadily Bullish on the Primary Trend.

S&P 500 Composite (SPX, 1,241.59) closed higher again on 12/14/10, reaching its highest closing price level in more than 2 years, thereby reconfirming its preexisting major uptrend. Momentum indicators have remained bullish. Over the past month, SPX tested and held above 1173.00, the low of 11/16/10, and the 50-day SMA now at 1195.59 and rising. And SPX held well above the 200-day SMA, now at 1139.82 and rising.
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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
6.70% , AIG , AMER INTL GROUP
4.90% , AMGN , AMGEN
1.66% , TTH , Telecom H, TTH
4.26% , CSC , COMPUTER SCIENCE
0.32% , EIS , Israel MSCI iS, EIS
4.09% , BCR , C R BARD
5.78% , VMC , VULCAN MATERIALS
2.77% , WHR , WHIRLPOOL
2.86% , BAX , BAXTER INTL
3.14% , CMCSA , COMCAST HOLDINGS STK A
1.16% , CR , CRANE
2.76% , TBT , 200% Short US T Bond, TBT
1.96% , STJ , ST JUDE MEDICAL
1.26% , VOX , Telecom Services VIPERs, VOX
1.34% , IGT , INTL GAME TECH
2.57% , JBL , JABIL CIRCUIT
0.67% , SCZ , Small Cap EAFE MSCI iS, SCZ
3.37% , EK , EASTMAN KODAK
2.24% , WPI , WATSON PHARM
2.33% , SLE , SARA LEE
1.13% , PJP , Pharmaceuticals, PJP
1.04% , IYZ , Telecom DJ US, IYZ
2.69% , CTB , COOPER TIRE
0.49% , PBJ , Food & Beverage, PBJ
2.04% , BBH , Biotech H, BBH
0.40% , DGT , Global Titans, DGT
1.34% , FII , FED INVESTORS STK B
1.14% , VHT , Health Care VIPERs, VHT
2.41% , ZMH , ZIMMER HLDGS
1.57% , LNCR , Lincare Holdings Inc
1.09% , PBE , Biotech & Genome, PBE
0.47% , EWA , Australia Index, EWA
2.23% , IR , INGER RAND

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.39% , BDH , Broadband H, BDH
-14.82% , BBY , BEST BUY
-0.95% , XSD , Semiconductor SPDR, XSD
-0.63% , PXE , Energy Exploration & Prod, PXE
-3.31% , LXK , LEXMARK INTL STK A
-5.37% , HBAN , HUNTINGTON
-4.30% , FHN , FIRST TENNESSEE
-1.37% , IDX , Indonesia MV, IDX
-3.02% , RSH , RADIOSHACK
-0.39% , GVI , Bond Interm U.S. Gov, GVI
-4.12% , OMX , OFFICEMAX INC., OMX
-4.05% , DYN , DYNEGY
-1.00% , IYG , Financial Services DJ, IYG
-1.46% , TLH , Bond 10-20 Year US Treas, TLH
-2.64% , ZEUS , Olympic Steell, ZEUS
-0.72% , PSTL , Steel Global PS ETF, PSTL
-0.22% , PZJ , SmallCap PS Zacks, PZJ
-2.38% , KBH , KB HOME
-0.29% , IAH , Internet Architecture H, IAH
-1.02% , IYR , Real Estate US DJ, IYR
-2.06% , PGR , PROGRESSIVE OHIO
-0.51% , PXN , Nanotech Lux, PXN
-1.46% , TLT , Bond, 20+ Years Treasury, TLT
-2.60% , PLD , PROLOGIS TRUST
-0.97% , PXJ , Oil & Gas, PXJ
-1.00% , RKH , Bank Regional H, RKH
-0.28% , PIC , Insurance, PIC
-1.27% , NEE , NextEra Energy Resources LLC
-0.61% , RPV , Value S&P 500, RPV
-2.23% , GLW , CORNING
-1.74% , MUB , Bond Muni ATM-Free S&P iS, MUB
-2.19% , HOT , STARWOOD HOTELS
-3.37% , MI , MARSHAL & ILSLEY

9 major U.S. stock sectors ranked in order of long-term relative strength:

Energy (XLE) Bullish, Over Weight. The Relative Strength Ratio (XLE/SPY) rose further above 12-month highs on 12/6/10 and remains bullish. Absolute price rose further above 2-year highs on 12/6/10 and remains bullish. Support 60.96, 60.21, 57.70, 55.68, 53.22, 50.33, 48.56, 46.16, and 43.66. Resistance 67.00, 69.95, and 78.10.

Consumer Discretionary (XLY) Bullish, Over Weight. The Relative Strength Ratio (XLY/SPY) rose above 12-year highs on 11/26/10 and remains bullish. XLY has been at the top of my sector rankings for more than a year and has outperformed substantially. Absolute price rose above 3-year highs on 12/7/10 and remains bullish. Support 35.32, 35.02, 34.78, 33.94, 33.11, 32.66, 31.70, 29.80, 28.64, 28.21, and 26.62. Resistance 37.88, 38.25, and 39.09.

Industrial (XLI) Bullish, Over Weight. The Relative Strength Ratio (XLI/SPY) rose above 2-year highs on 12/7/10 and remains bullish. Absolute price rose above 2-year highs on 12/14/10 and remains bullish. Support 31.82, 31.58, 30.79, 30.51, 30.32, 29.77, and 27.67. Resistance 34.43, 35.00, and 36.16.

Materials (XLB) Bullish, Over Weight. The Relative Strength Ratio (XLB/SPY) rose above 11-month highs on 12/7/10 and remains bullish. Absolute price rose above 2-year highs on 12/7/10 and remains bullish. Support 34.20, 33.70, 32.36, 29.88, 29.43, and 27.67. Resistance 37.61 and 39.00.

Technology (XLK) Bullish, Over Weight. The Relative Strength Ratio (XLK/SPY) rose above 8-year highs on 11/3/10, which was a bullish confirmation of the major trend. Absolute price of XLK rose above 2-year highs on 11/4/10 and remains bullish. Support 23.74, 23.64, 23.56, 22.68, 22.53, 21.60, 20.01, and 19.51. Resistance 25.28 and 25.69.

Consumer Staples (XLP) Bearish, Under Weight. The Relative Strength Ratio (XLP/SPY) fell further below 7-month lows on 12/10/10 and remains bearish. Absolute price rose above 2-year highs on 12/14/10 and remains bullish. Support 28.22, 28.04, 27.76, 27.63, 27.46, 26.34, 25.30, and 24.95. Resistance 30.29.

Financial (XLF) Neutral, Market Weight. The Relative Strength Ratio (XLF/SPY) rose above its 50-day SMA on 12/8/10, thereby turning neutral. Absolute price of XLF rose above 7-mont highs on 12/10/10. The 50-day SMA of price is rising up toward the 200-day SMA and could turn bullish in weeks ahead, even though the XLF price model is technically neutral at this time. Support 15.08, 14.36, 14.25, 14.20, 13.29, and 13.08. Resistance 16.13, 16.90, 17.12, 17.16, and 17.87.

Health Care (XLV) Bearish, Under Weight. The Relative Strength Ratio (XLV/SPY) fell below 2-year lows on 12/9/10 and remains bearish, as it has been most of the time since peaking on 2/23/09. Thanks to a bounce over the past 3-days, absolute price of XLV is technically bullish. Support 30.14, 30.11, 29.87, 28.00, 27.49. Resistance 31.74, 32.05, 32.18, 32.42, 32.69, 33.16, 33.37 and 33.74.

Utilities (XLU) Bearish, Under Weight. The Relative Strength Ratio (XLU/SPY) fell below 7-month lows on 12/10/10 and remains bearish. Absolute price of XLU fell below 13-week lows on 11/29/10. Support 30.51, 29.66, 27.91, 27.44, and 25.76. Resistance 32.11 and 32.40.
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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) broke down below 3-month lows on 11/26/10 and remains neutral.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) broke down below 5-month lows on 11/30/10 and remains neutral.

NASDAQ Composite/S&P 500 Relative Strength Ratio rose above 9-year highs on 11/26/10 and remains bullish for the long term. This RS Ratio has been in an uptrend for nearly 2 years, since 12/2/08. Absolute price rose above 2-year highs on 12/7/10 and remains bullish.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below 28-year lows on 12/3/10. This RS Ratio has been trending lower since 8/3/10. Longer term, big caps have been relatively out of favor for more than 10 years, since 3/29/2000.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) rose above 20-year highs on 12/10/10 and remains bullish. Absolute price rose above 2-year highs on 12/10/10 and remains bullish.

The S&P MidCap 400/Large Cap Relative Strength Ratio (MDY/SPY) rose above 15-year highs on 12/7/10 and remains bullish. Absolute price rose above 2-year highs on 12/10/10 and remains bullish.

Crude Oil nearest futures contract price eased since 12/7/10, following a strong 2-week price runup. I see no significant damage to the uptrend. Longer term, Oil rose further above 2-year highs on 12/6/10, again confirming a bullish major trend. Support 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 90.76, 98.65, and 102.84.

Gold nearest futures contract price rose above 4-day highs on 12/14/10, confirming a bullish trend for the short-term. Longer term, Gold rose above previous all-time highs on 12/6/10, again confirming the bullish major trend. Support 1352.6, 1329.0, 1325.5, 1317.5, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: 1432.5.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) rose above 12-month highs on 12/6/10 and remains bullish. Absolute price of GDX rose above 4-year highs on 12/6/10.

Silver nearest futures contract price rose above 4-day highs on 12/14/10, confirming a short-term bullish trend. Longer term, Silver rose above previous 30-year highs on 12/6/10, confirming the preexisting bullish major trend.

Silver/Gold Ratio rose above 3-year highs on 12/6/10, again confirming a bullish trend. Silver has outperformed Gold substantially since 8/20/10.

Copper nearest futures contract price rose above the previous 2-year highs on 12/14/10. Copper remains in a bullish major trend. Strength in Copper suggests confidence about prospects for the world economy, while weakness in Copper suggests doubts. Support 3.9795, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance 4.27.

U.S. Treasury Bond nearest futures contract price fell below the lows of the previous 7 months on 12/14/10, confirming a bearish major trend. Support 118.24, 118.12, 115.15, 114.06. 113.04, and 112.15. Resistance 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) rose above 7-month highs on 12/8/10 and remains bullish. Absolute price has been firming moderately since 11/23/10.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) has firmed up moderately since making a low on 8/24/10, even as absolute price of TIP has declined. A rising RS ratio implies that fixed-income investors have been selling inflation protected Notes at a relatively more subdued pace compared to the U.S. Treasury 7-10 Year Note (IEF) over the past 3 months.

The U.S. dollar nearest futures contract price fell below 3-week lows on 12/14/10 before reversing to close slightly higher. USD appears to have entered a correction phase since peaking on 11/30/10. USD rose 6.25% over 27 calendar days from low to high in November, but that bounce recovered less than half the loss in the 149 calendar days from the year’s high at 88.80 set on 6/7/10 to the year’s low at 75.235 on 11/3/10. A rally that recovers less than half the loss is relatively weak. USD is down in December, so far: USD fell below the lows of the previous 6 days and broke down below a 4-week uptrend line on 12/3/10, both confirming a short-term downtrend. USD may have found resistance near its 200-day SMA, which stands near chart resistance at 81.525 to 82.02. Longer term, USD fell below 11-month lows on 11/3/10, thereby confirming a bearish long-term price trend. Support 78.01, 75.23, 74.27, and 70.80. Resistance 81.525, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.

Advisory Service Sentiment: There were 56.2% Bulls versus 21.3% Bears as of 12/8/10, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear ratio stands at 2.64, which is between one and two standard deviations above the long-term mean. This is not overly excessive bullish sentiment in the second year of a bull market. The 20-year range is 0.41 to 3.74, the median is 1.54, and the mean is 1.61.

VIX Fear Index fell below 7-month lows to 16.68 on 12/13/10, reflecting diminishing fear among options players. The trend is down and VIX could drop further: it was as low as 15.23 on 4/12/10. 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 reconfirmed a Primary Tide Bull Market as of 12/14/10, when the Dow-Jones Industrial Average closed above 2-year closing price highs, thereby confirming the new high in the Dow-Jones Transportation Average set on 12/10/10. The Dow Theory originally signaled the current Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. Many other analysts were fooled into calling “Bear Market” by the big downside Secondary Reaction in May and June 2010, but my interpretation has been steadily Bullish on the Primary Trend.

S&P 500 Composite (SPX, 1,241.59) closed higher again on 12/14/10, reaching its highest closing price level in more than 2 years, thereby reconfirming its preexisting major uptrend. Momentum indicators have remained bullish. Over the past month, SPX tested and held above 1173.00, the low of 11/16/10, and the 50-day SMA now at 1195.59 and rising. And SPX held well above the 200-day SMA, now at 1139.82 and rising.

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
1366.59, high of 6/17/2008
1335.63, high of 6/25/2008
1313.15, high of 8/11/2008
1274.42, high of 9/8/2008
1255.09, high of 9/12/2008

S&P 500 Cash Index Potential Support
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1173.00, low of 11/16/10
1171.70, low of 10/27/10
1166.74, low of 10/20/10
1159.71, low of 10/19/10
1,151.41, low of 10/7/10
1,131.87, low of 10/4/10
1122.79, low of 9/23/2010
1114.63, low of 9/15/2010
1110.88, low of 9/10/2010
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

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

1.06% Sweden Index, EWD
1.04% Telecom DJ US, IYZ
1.02% India Earnings WTree, EPI
1.01% Health Care SPDR, XLV
0.98% India PS, PIN
0.94% Switzerland Index, EWL
0.87% Russia MV, RSX
0.74% Biotech SPDR, XBI
0.70% South Korea Index, EWY
0.70% Chile MSCI iS, ECH
0.67% Small Cap EAFE MSCI iS, SCZ
0.57% Value SmallCap S&P 600, RZV
0.57% Dividend High Yield Equity PS, PEY
0.50% Bond, High-Yield Junk, JNK
0.49% Bond, High-Yield Corporate, HYG
0.48% Consumer Staples SPDR, XLP
0.47% Australia Index, EWA
0.46% Industrial SPDR, XLI
0.45% DIAMONDS (DJIA), DIA
0.44% Japan Index, EWJ
0.43% Pacific VIPERs, VPL
0.43% Thailand MSCI iS, THD
0.43% Malaysia Index, EWM
0.40% Dividend Appreciation Vipers, VIG
0.39% Dividend International, PID
0.39% Dividend SPDR, SDY
0.38% Dividend DJ Select, DVY
0.35% Taiwan Index, EWT
0.31% Growth EAFE MSCI, EFG
0.27% Value EAFE MSCI, EFV
0.27% Utilities SPDR, XLU
0.27% Value LargeCap Dynamic PS, PWV
0.25% Global ex US ACWI iS, ACWX
0.25% South Africa Index, EZA
0.25% Mexico Index, EWW
0.24% Utilities VIPERs, VPU
0.21% Water Resources, PHO
0.20% Value SmallCap S&P 600 B, IJS
0.20% LargeCap Blend S&P 100, OEF
0.18% Growth LargeCap NASDAQ 100, QQQQ
0.17% Pacific ex-Japan, EPP
0.16% Technology SPDR, XLK
0.15% EAFE Index, EFA
0.15% Europe 350 S&P Index, IEV
0.15% Emerging Markets, EEM
0.14% Global 100, IOO
0.13% LargeCap 1000 R, IWB
0.12% Growth 1000 Russell, IWF
0.12% Value S&P 500 B, IVE
0.10% S&P 500 iS LargeCap Blend, IVV
0.10% Emerging VIPERs, VWO
0.10% Gold Shares S.T., GLD
0.10% Value VIPERs, VTV
0.09% Brazil Index, EWZ
0.09% S&P 500 SPDRs LargeCap Blend, SPY
0.09% LargeCap VIPERs, VV
0.08% Growth VIPERs, VUG
0.08% Growth S&P 500/BARRA, IVW
0.08% Value MidCap S&P 400 B, IJJ
0.04% LargeCap Blend Russell 3000, IWV
0.03% Value 1000 Russell, IWD
0.03% Blend Total Market VIPERs, VTI
0.03% Oil, Crude, U.S. Oil Fund, USO
0.02% Emerging 50 BLDRS, ADRE
0.02% Bond Treasury Short-Term iS, SHV
0.02% Growth MidCap Russell, IWP
0.00% Bond EmrgMkt JPM iS, EMB
0.00% LargeCap Blend S&P=Weight R, RSP
-0.02% European VIPERs, VGK
-0.03% Consumer Discretionary SPDR, XLY
-0.04% Basic Materials DJ US, IYM
-0.04% Germany Index, EWG
-0.04% Value SmallCap Russell 2000, IWN
-0.05% Bond, 1-3 Year Treasury, SHY
-0.05% SmallCap Russell 2000, IWM
-0.06% Small Cap VIPERs, VB
-0.06% EMU Europe Index, EZU
-0.06% Latin Am 40, ILF
-0.06% SmallCap S&P 600, IJR
-0.06% MidCap Russell, IWR
-0.06% Metals & Mining SPDR, XME
-0.06% Growth SmallCap VIPERs, VBK
-0.07% Canada Index, EWC
-0.07% Value SmallCap VIPERS, VBR
-0.07% MidCap S&P 400 SPDRs, MDY
-0.08% Belgium Index, EWK
-0.08% Materials SPDR, XLB
-0.08% Growth SmallCap R 2000, IWO
-0.10% Growth MidCap 400 B, IJK
-0.10% MidCap S&P 400 iS, IJH
-0.10% Hong Kong Index, EWH
-0.10% Energy Global, IXC
-0.11% Technology DJ US, IYW
-0.11% Info Tech VIPERs, VGT
-0.11% United Kingdom Index, EWU
-0.12% France Index, EWQ
-0.13% Turkey MSCI iS, TUR
-0.15% Netherlands Index, EWN
-0.15% Singapore Index, EWS
-0.17% Microcap Russell, IWC
-0.18% Italy Index, EWI
-0.18% Value MidCap Russell, IWS
-0.21% China 25 iS, FXI
-0.21% Silver Trust iS, SLV
-0.25% Growth BARRA Small Cap 600, IJT
-0.26% Commodity Tracking, DBC
-0.32% Natural Resource iS GS, IGE
-0.33% Spain Index, EWP
-0.34% Energy DJ, IYE
-0.39% Transportation Av DJ, IYT
-0.40% Energy VIPERs, VDE
-0.47% Energy SPDR, XLE
-0.55% Agriculture DB PS, DBA
-0.56% Bond, Aggregate, AGG
-0.58% Homebuilders SPDR, XHB
-0.61% Bond, Corp, LQD
-0.65% Capital Markets KWB ST, KCE
-0.66% Semiconductor iS IGW, SOXX
-0.71% Financials VIPERs, VFH
-0.73% Financial Preferred, PGF
-0.74% Austria Index, EWO
-0.74% Preferred Stock iS, PFF
-0.77% Financial DJ US, IYF
-0.85% China LargeCap Growth G D H USX PS, PGJ
-0.88% Bond Ex-US Treas, BWX
-0.89% Financial SPDR, XLF
-0.95% Semiconductor SPDR, XSD
-0.95% Bond, TIPS, TIP
-0.97% WilderHill Clean Energy PS, PBW
-0.98% REIT VIPERs, VNQ
-1.00% Financial Services DJ, IYG
-1.02% Real Estate US DJ, IYR
-1.06% Bond, 10 Year Treasury, IEF
-1.12% Networking, IGN
-1.14% REIT Wilshire, RWR
-1.16% Realty Cohen & Steers, ICF
-1.37% Indonesia MV, IDX
-1.46% Bond, 20+ Years Treasury, TLT
-1.74% Bond Muni ATM-Free S&P iS, MUB