Rising Inflation Expectations

Gold, SPDR Gold Shares ETF (GLD), and Silver, iShares Silver Trust ETF (SLV), prices both rose above their highs of the previous 7 months on 10/1/12, suggesting rising inflation expectations.

The S&P 500 (SPX: 1,444.49) rose 3.82 points or 0.27% on Monday.

SPX declined 8 of the past 11 trading days, but it is not oversold. RSI(14) based on SPX, now in the neutral zone at 55.42, still appears be working off its recent extreme overbought condition. RSI(14) closed at 74.74 on 9/14/12, which was nearly 2 standard deviations above its 20-year average.

On-Balance Volume for the SPX increased only slightly after falling to its lowest level in 7 weeks on 9/28/12. OBV remains far below its highs for the year, 2012, thereby demonstrating relative weakness and bearish divergence.

NYSE volume fell 1% to a level 7% below its 200-day SMA on Monday. Average volume has been trending down for more than 6 years, since 6/30/2006, and fell further in September, 2012, reflecting diminishing enthusiasm for stocks. NYSE Volume 50-day SMA and 200-day SMA both fell to their lowest levels in 13 years on Tuesday 9/11/12, and both are still trending downward.

The technical condition of the stock market does not support the excessive optimism of the bullish majority of stock investors and traders. Fed and ECB plans to buy bonds in unlimited quantities (with fiat currencies printed out of thin air and backed by nothing but a theory and a hope) do not guarantee that stock prices will continue to rise, especially now that the news is out. Typically, action is followed by reaction, and so a downside correction seems overdue. Choosing safety over risk still appears to be the most reasonable approach for conservative traders and investors.

*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 some are down again this year as well.

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

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Stock Market Indicators

The Dow Theory 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 Dow-Jones Industrial Average rose above its closing price highs of the previous 4-years on 9/20/12, but on 9/28/12 the Dow-Jones Transportation Average closed down below its lows of the previous 16-weeks, the lowest since 6/5/28/12, thereby demonstrating non confirmation and bearish divergence.

NASDAQ 100/S&P 500 Relative Strength Ratio (QQQ/SPY) whipsawed back down below its 50-day SMA on 9/28/12, thereby turning systematically neutral again, but only by a small margin. QQQ/SPY remains above its 200-day SMA, and its 50-day SMA has been above its 200-day SMA since 8/5/11.
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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
1474.51, high of 9/14/2012

The S&P 500 Composite Potential Support
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1428.98, low of 9/10/2012
1426.68, high of 8/21/2012
1422.38, high of 4/2/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012
1413.72, 50-day SMA
1396.56, low of 9/4/2012
1391.04, low of 8/6/2012
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
1380.39, high of 7/19/2012
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
1360.20, 200-day SMA
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
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
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
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
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) fell below its lows of the previous 10 months on 9/14/12. UUP closed below its 50-day SMA on 8/3/12, turning systematically neutral. UUP fell below its 200-day SMA on 8/31/12. UUP’s 50-day SMA has remained above its 200-day SMA every day since 10/26/11. The 50-200 spread is narrowing rapidly, however, and the odds are that the 2 SMAs will cross bearishly in days ahead. Support 21.57, 21.07, and 20.84. Resistance 21.93, 22.36, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.

CRB Commodity Price Index whipsawed back above its 50-day SMA on 9/27/12, thereby turning systematically bullish again. CRB remains above its 200-day SMA, and its 50-day SMA crossed above its 200-day SMA on 9/13/12.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) turned systematically neutral suddenly on 9/17/12 when price crossed below its 50-day SMA. DBA remains above its 200-day SMA, and its 50-day SMA remains above its 200-day SMA.

Crude Oil, United States Oil ETF (USO) turned systematically bearish on 9/19/12, when price suddenly and sharply fell below its 50-day SMA. USO fell below its 200-day SMA on 9/17/12. USO’s 50-day SMA remains below its 200-day SMA, although that 50-200 spread has been narrowed since 8/3/12. Support 32.98, 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) turned systematically bullish on 9/20/12, when its 50-day SMA rose above its 200-day SMA. GLD price rose above its highs of the previous 7 months on 10/1/12, rose above its 200-day SMA on 8/22/12, and rose above its 50-day SMA on 8/3/12. Support: 168.34, 166.30, 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 174.00, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) rose above its 50-day SMA on 8/16/12, thereby turning systematically neutral. GDX/GLD rose above its 200-day SMA on 9/13/12 . The GDX/GLD 50-day SMA has remained below its 200-day SMA every day since 2/22/11, although that 50-200 spread is beginning to narrow.

Silver, iShares Silver Trust ETF (SLV) price rose above its highs of the previous 7 months on 10/1/12. SLV price rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. SLV price rose above its 200-day SMA on 8/31/12. The price 50-day SMA has remained below its 200-day SMA every day since 10/27/11, but the 50-200 SMA spread is narrowing, and a bullish crossover appears probable in a day or two. Support 31.46, 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 34.08, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) rose above its 50-day SMA on 8/16/12, thereby turning systematically neutral. SLV/GLD rose above its 200-day SMA on 8/31/12. SLV/GLD remains systematically neutral because its 50-day SMA has stayed below its 200-day SMA every day since 8/30/11. The 50-200 SMA spread has been narrowing since 8/22/12, however, and a bullish crossover seems possible in weeks ahead if the SLV/GLD ratio remains strong.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price rose above its 50-day SMA on 8/21/12, thereby turning systematically neutral. Price rose above its 200-day SMA on 9/7/12. JJC remains systematically neutral because its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. The 50-200 SMA spread has begun to narrow over the past few weeks, however. “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy.
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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 later revealed to be deal stocks 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
18.30% , MTG , MGIC INVESTMENT
3.27% , BMC.O , BMC SOFTWARE
0.92% , IYG , Financial Services DJ, IYG
1.30% , PXE , Energy Exploration & Prod, PXE
3.35% , THC , TENET HEALTHCARE
0.68% , VDC , Consumer Staples VIPERs, VDC
0.73% , ADRU , Europe 100 BLDRS, ADRU
0.59% , KCE , Capital Markets KWB ST, KCE
2.36% , LLTC , LINEAR TECH
0.49% , MYY , Short 100% MidCap 400, MYY
0.53% , IGE , Energy & Nat Res iS GS, IGE
0.23% , PWC , LargeCap Blend Dynamic PS, PWC
3.73% , FAST , Fastenal Company
2.96% , NFLX , Netflix, NFLX
0.40% , IWC , Microcap Russell, IWC
1.13% , EZU , EMU Europe Index, EZU
1.80% , CR , CRANE
1.06% , ADRD , Developed 100 BLDRS, ADRD
0.97% , IXJ , Healthcare Global, IXJ
1.48% , MPEL , Melco Crown Entertainment, MPEL
2.14% , SNI , Scripps Networks Interactive
1.71% , RYAAY , Ryanair Holdings plc
0.71% , EWG , Germany Index, EWG
0.26% , VPL , Pacific VIPERs, VPL
0.58% , IXC , Energy Global, IXC
0.92% , EPP , Pacific ex-Japan, EPP
1.64% , IFF , INTL FLAV & FRAG
0.60% , SIL , Silver Miners Global X, SIL
0.47% , IJS , Value SmallCap S&P 600 B, IJS
1.73% , NOC , NORTHROP GRUMMAN
2.80% , GS , GOLDMAN SACHS
0.56% , SSO , Ultra S&P500 Double, SSO
2.34% , HAR , Harman International

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.01% , MVV , Ultra MidCap400 Double, MVV
-4.95% , TAP , ADOLPH COORS STK B, TAP
-2.76% , RTN , RAYTHEON
-0.36% , IJH , MidCap S&P 400 iS, IJH
-0.97% , IGV , Software, IGV
-0.61% , PSJ , Software, PSJ
-2.99% , CHKP , Check Point Software Technologies Ltd
-1.92% , CPWR , COMPUWARE
-0.25% , IXP , Telecommunications Global, IXP
-2.06% , PETM , PETsMART Inc
-2.23% , ISIL , INTERSIL CORP
-1.54% , LM , LEGG MASON
-2.49% , SVU , SUPERVALU
-1.74% , PAYX , PAYCHEX
-2.67% , AMD , ADV MICRO DEV
-2.92% , CTL , CENTURYTEL
-1.37% , MDP , MEREDITH
-1.37% , SYK , STRYKER
-0.55% , JKK , Growth SmallCap iS M, JKK
-0.35% , VGT , Info Tech VIPERs, VGT
-1.94% , PCL , PLUM CREEK TIMB
-0.29% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.38% , IYW , Technology DJ US, IYW
-1.89% , SNPS , Synopsys Inc
-6.16% , S , SPRINT NEXTEL
-1.15% , PMTC.O , PARAMETRIC
-0.53% , MDY , MidCap S&P 400 SPDRs, MDY
-0.33% , PST , 200% Short Bond 7-10 Yr T, PST
-0.03% , VOX , Telecom Services VIPERs, VOX
-0.77% , RDC , ROWAN COMPANIES
-0.84% , ITT , ITT INDS
-1.29% , NCR , NCR
-0.74% , VNQ , REIT VIPERs, VNQ
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.52% Agriculture DB PS, DBA
0.81% India PS, PIN
0.60% Commodity Tracking, DBC
0.59% China LargeCap Growth G D H USX PS, PGJ
0.48% India Earnings WTree, EPI
0.48% Thailand MSCI iS, THD
0.46% Utilities SPDR, XLU
0.44% Bear, Short S&P 500, SH
0.44% Utilities VIPERs, VPU
0.34% Bond, Emerg Mkt JPM iS, EMB
0.26% Water Resources, PHO
0.22% Bond, Long-Term Corp iBoxx iS, LQD
0.21% Bond, Muni S&P ATM-Free iS, MUB
0.16% Financial Preferred, PGF
0.14% Bond, Intermediate US Aggregate iS, AGG
0.11% Indonesia MV, IDX
0.06% Bond, 20+ Years Treasury, TLT
0.05% Bond, 1-3 Year Treasury, SHY
0.04% Oil Fund PowerShares, DBO
0.01% Bond Treasury Short-Term iS, SHV
0.00% Bond, 10 Year Treasury, IEF
-0.03% Hong Kong Index, EWH
-0.05% Mexico Index, EWW
-0.07% Bond, TIPS U.S. Treasury iS, TIP
-0.08% Preferred Stock iS, PFF
-0.09% Oil, Crude, U.S. Oil Fund, USO
-0.10% Dividend U.S. DJ iS, DVY
-0.14% Realty Cohen & Steers, ICF
-0.15% Frontier Markets Guggenheim , FRN
-0.16% REIT VIPERs, VNQ
-0.17% Malaysia Index, EWM
-0.17% Dividend SPDR, SDY
-0.19% Biotech SPDR, XBI
-0.19% REIT Wilshire, RWR
-0.21% Chile MSCI iS, ECH
-0.22% Bond, High-Yield Junk, JNK
-0.23% Real Estate US DJ iS, IYR
-0.24% Growth MidCap Russell, IWP
-0.26% Taiwan Index, EWT
-0.26% Gold Shares S.T., GLD
-0.27% Financials VIPERs, VFH
-0.29% MidCap Growth S&P 400 iS, IJK
-0.30% MidCap Russell, IWR
-0.30% Silver Trust iS, SLV
-0.31% Value MidCap Russell, IWS
-0.32% Value LargeCap Dynamic PS, PWV
-0.32% Financial SPDR, XLF
-0.32% LargeCap Blend S&P=Weight R, RSP
-0.33% Dividend Appreciation Vipers, VIG
-0.34% Financial DJ US, IYF
-0.35% Consumer Staples SPDR, XLP
-0.35% LargeCap Value S&P 500 iS, IVE
-0.40% MidCap Value S&P 400 iS, IJJ
-0.40% Capital Markets KWB ST, KCE
-0.40% China 25 iS, FXI
-0.41% DIAMONDS (DJIA), DIA
-0.41% Industrial SPDR, XLI
-0.41% Dividend High Yield Equity PS, PEY
-0.41% LargeCap Value Russell 1000 iS, IWD
-0.42% Growth SmallCap VIPERs, VBK
-0.42% MidCap S&P 400 SPDRs, MDY
-0.43% Consumer Discretionary SPDR, XLY
-0.43% Health Care SPDR, XLV
-0.44% Bond Ex-US Treas, BWX
-0.44% Value VIPERs, VTV
-0.45% LargeCap VIPERs, VV
-0.46% Energy VIPERs, VDE
-0.46% Blend Total Market VIPERs, VTI
-0.46% S&P 500 SPDRs LargeCap Blend, SPY
-0.46% SmallCap Growth S&P 600 iS, IJT
-0.47% Energy SPDR, XLE
-0.47% Energy DJ, IYE
-0.47% Bond, High Yield Corp iBoxx iS, HYG
-0.48% Growth VIPERs, VUG
-0.49% LargeCap Blend Russell 1000 iS, IWB
-0.50% LargeCap Growth S&P 500 iS, IVW
-0.51% MidCap Blend S&P 400 iS, IJH
-0.52% Small Cap VIPERs, VB
-0.55% LargeCap Growth Russell 1000 iS, IWF
-0.57% Materials SPDR, XLB
-0.57% LargeCap Blend Russell 3000 iS, IWV
-0.59% SmallCap Growth Russell 2000 iS, IWO
-0.60% Emerging VIPERs, VWO
-0.60% LargeCap Blend S&P 100, OEF
-0.60% Energy & Nat Res iS GS, IGE
-0.61% Emerging Markets MSCI iS, EEM
-0.63% LargeCap Blend S&P 500 iS, IVV
-0.66% SmallCap Blend S&P 600 iS, IJR
-0.66% Value SmallCap VIPERS, VBR
-0.71% Technology SPDR, XLK
-0.71% SmallCap Blend Russell 2000 iS, IWM
-0.71% South Africa Index, EZA
-0.72% Info Tech VIPERs, VGT
-0.73% Financial Services DJ, IYG
-0.73% Canada Index, EWC
-0.73% Emerging 50 BLDRS, ADRE
-0.75% Microcap Russell, IWC
-0.76% Basic Materials DJ US, IYM
-0.80% Pacific ex-Japan, EPP
-0.80% Semiconductor iS IGW, SOXX
-0.81% South Korea Index, EWY
-0.81% Singapore Index, EWS
-0.82% Technology DJ US, IYW
-0.82% QQQ Nasdaq 100 Trust, QQQ
-0.84% Homebuilders SPDR, XHB
-0.85% Telecom DJ US, IYZ
-0.88% SmallCap Value S&P 600 iS, IJS
-0.92% Transportation Av DJ, IYT
-0.92% SmallCap Blend EAFE MSCI iS, SCZ
-0.92% SmallCap Value Russell 2000 iS, IWN
-1.02% Networking, IGN
-1.08% Global LargeCap Blend MSCI iS, ACWI
-1.11% Dividend International, PID
-1.12% Australia Index, EWA
-1.16% Energy Global, IXC
-1.21% Switzerland Index, EWL
-1.21% Metals & Mining SPDR, XME
-1.23% Latin Am 40, ILF
-1.28% Brazil Index, EWZ
-1.30% Global 100, IOO
-1.42% WilderHill Clean Energy PS, PBW
-1.47% United Kingdom Index, EWU
-1.57% Turkey MSCI iS, TUR
-1.58% Pacific VIPERs, VPL
-1.64% Russia MV, RSX
-1.68% Dividend ex-U.S. DJ iS, IDV
-1.72% Germany Index, EWG
-1.72% Global ex U.S. LargeCap Blend, ACWX
-1.79% Semiconductor SPDR, XSD
-1.83% Growth EAFE MSCI, EFG
-1.87% Belgium Index, EWK
-1.93% Japan Index, EWJ
-1.98% Foreign LargeCap EAFE MSCI iS, EFA
-2.01% Value EAFE MSCI, EFV
-2.04% Austria Index, EWO
-2.16% European VIPERs, VGK
-2.22% Europe 350 S&P Index, IEV
-2.27% Netherlands Index, EWN
-2.32% Sweden Index, EWD
-2.53% EMU Europe Index, EZU
-3.01% Spain Index, EWP
-3.05% France Index, EWQ
-3.68% Italy Index, EWI