The S&P 500 Composite (SPX, 1,225.38) rose 24.52 points or 2.04% on Tuesday, October 18, 2011.
SPX probed the top end of its 10-week trading range. The stock market is overbought for the short term.
Sensitive price momentum indicators recovered partially on Tuesday, after falling sharply on Monday, but remain below their recent peaks. Momentum is not confirming price, so there remains a bearish price momentum divergence for the very short term. This divergence could lead to a deeper price pullback in days ahead.
On 10/18/11, the Dow-Jones Transportation Average closed above its closing price highs of the previous 10 weeks but the Dow-Jones Industrial Average did not.
The Dow Theory signaled nothing more than an upward Ripple on 10/14/11, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 10 weeks. Ripples are the very minor day-to-day fluctuations that are of concern only to short-term traders and not at all to Dow Theorists.
Much more significantly, the Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both Averages closed below their closing price lows of the previous 11 months. This Bear Market was confirmed on 10/3/11 by lower closing price lows for both Averages.
A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated. The median Bear Market in history lasts 16 months and takes stock prices down 34%.
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Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio has consolidated gains over the past 3 weeks. The Ratio rose above previous 10-year highs on 9/23/11, reconfirming a major long-term uptrend. The Ratio is rising again, following a correction in late September.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below 31-month lows on 10/4/11, reconfirming a major long-term downtrend. This basket of the stocks of Brazil, Russia, India and China is in a relatively bearish major trend.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) broke down below 29-month lows on 9/22/11, reconfirming its preexisting bearish major trend.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) broke down below 7-year lows on 9/19/11, reconfirming its preexisting bearish major trend. Absolute price has been bearish since 5/2/11 and broke down below 2-year lows on 10/4/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) OEX/SPX corrected and consolidated gains since peaking on 10/3/11. The Ratio rose above 50-day and 200-day SMAs on 9/21/11, which was a RELATIVELY bullish sign of the OEX outperforming the SPX. Large Caps tend to outperform Mid Caps and Small Caps in bearish markets as investors seek the perceived relative safety of large size.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below the lows of the previous 20-months on 10/3/11, thereby reconfirming a major downtrend.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) broke down below the lows of the previous 18-months on 10/3/11, reconfirming a bearish long-term major trend.
Advisory Service Sentiment: There were 34.4% Bulls versus 46.3% Bears as of 10/12/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 0.74, which is the lowest level since the big bear market of 2007- 2009. The Bull/Bear Ratio is now more 1 standard deviation below the 20-year average. It was more than 2 standard deviations above the 20-year average at the end of April, 2011. The 20-year median is 1.56 and the mean is 1.64. Sentiment is not so easy to interpret. Contrary to what many contrarians seem to believe, when advisors turn this bearish, stocks sometimes have much further to fall. Examples include similar levels of bearish sentiment in April 1973 and in July 2008, after which stock prices fell much further.
VIX Fear Index fell to 28.08 on 10/14/11, down from a high of 48.00 on 8/8/11. Fear has decreased. 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 S&P 500 Composite (SPX: 1,225.38) 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
1307.28, Fibonacci 78.6% of 2011 range
1258.07, low of 6/16/11
1257.58, Fibonacci 61.8% of 2011 range
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
1233.10, high of 10/18/2011
S&P 500 Composite (SPX: 1,225.38) Potential Support
1222.68, Fibonacci 50% of 2011 range
1204.49, Fibonacci 23.6% of 2009-11 range
1190.58, low of 10/13/2011
1187.77, Fibonacci 38.2% of 2011 range
1144.38, Fibonacci 23.6% of 2011 range
1101.73, Fibonacci 38.2% of 2009-11 range
1074.77, low of 10/4/2011
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1018.69, Fibonacci 50% of 2009-11 range
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
935.64, Fibonacci 61.8% of 2009-11 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
817.40, Fibonacci 78.6% of 2009-11 range
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
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price reversed to the upside on 10/17/11, possibly ending its big 9-day shakeout in its major price uptrend. Support 21.62, 21.56, 21.42, and 20.84. Resistance 22.63.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price reversed to the downside on 10/17/11, possibly ending its big 9-day bounce in its major price downtrend. DBA fell below the lows of the previous 10 months on 10/3/11, which reconfirmed a major long-term downtrend.
Crude Oil, United States Oil ETF (USO) price has bounced since falling below 17-month lows on 10/4/11, which reconfirmed a major long-term downtrend. USO is entering resistance zone, however. Support 29.10, 26.28, and 22.74. Resistance 34.45, 35.08, 35.14, 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price broke down below 6-day lows on 10/18/11, turning the short-term trend bearish. The medium-term trend still appears doubtful. Support: 154.19, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 164.00, 165.72, 170.32, 177.40, and 185.85.
Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) remains bearishly below its falling 50-day and 200-day SMAs. GDX/GLD fell below 29-month lows on 8/8/11, reconfirming a bearish major trend for the long term. Investors still prefer Gold bullion over Gold Miners.
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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
0.78% , BDH , Broadband H, BDH
2.34% , IGN , Networking, IGN
1.44% , PID , Dividend International, PID
13.96% , HGSI , Human Genome Sciences Inc
2.21% , FRN , Frontier Markets Guggenheim , FRN
9.13% , MTG , MGIC INVESTMENT
2.39% , FDV , Value 40 Large Low P/E FT DB, FDV
11.61% , KBH , KB HOME
0.73% , TTH , Telecom H, TTH
5.94% , XHB , Homebuilders SPDR, XHB
10.12% , BAC , BANK OF AMERICA
9.27% , LEN , Lennar Corp. (LEN)
11.01% , DHI , D.R. HORTON, DHI
8.00% , MBI , MBIA
4.19% , LNCR , Lincare Holdings Inc
8.54% , SWK , Stanley Black & Decker
5.42% , IYG , Financial Services DJ, IYG
7.23% , GWW , WW GRAINGER
11.22% , PHM , PULTE HOMES
10.69% , STT , STATE STREET
0.98% , IXJ , Healthcare Global, IXJ
1.94% , EWP , Spain Index, EWP
4.01% , PIC , Insurance, PIC
1.95% , PPA , Aerospace & Defense, PPA
5.78% , EMC , EMC
1.73% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
5.52% , GS , GOLDMAN SACHS
2.04% , JKH , MidCap Growth iS M, JKH
9.05% , MS , MORGAN STANLEY
2.16% , IYY , LargeCap Blend Total Market DJ, IYY
4.22% , PXJ , Oil & Gas, PXJ
7.62% , BK , BANK OF NEW YORK
10.69% , RF , REGIONS FINAN
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-21.01% , HSP , HOSPIRA
-39.38% , CROX , CROCS Inc., CROX
-7.04% , HOG , HARLEY DAVIDSON
-2.70% , UNH , UNITEDHEALTH GRP
-2.36% , WLP , WELLPOINT HEALTH
-4.12% , IBM , IBM
-4.08% , SDS , Short 200% S&P 500 PS, SDS
-2.92% , DXD , Short 200% Dow 30 PS, DXD
-3.24% , DYN , DYNEGY
-0.96% , FMCN , Focus Media, FMCN
-1.64% , CHD , Church & Dwight
-4.25% , LO , Lorillard, Inc. LO
-0.89% , HUM , HUMANA
-1.99% , SH , Short 100% S&P 500, SH
-2.44% , QID , Short 200% QQQ PS, QID
-2.06% , DISH , EchoStar Communications
-0.94% , CI , CIGNA
-1.04% , AET , AETNA
-2.05% , FRX , FOREST LABS STK A
-1.22% , PSQ , Short 100% QQQ, PSQ
-2.39% , BIDU , Baidu, Inc., BIDU
-1.46% , DOG , Short 100% Dow 30, DOG
-2.00% , MPEL , Melco Crown Entertainment, MPEL
-1.47% , YHOO , YAHOO
-0.39% , CEG , CONSTELL ENERGY
-0.48% , GLD , Gold Shares S.T., GLD
-1.06% , NEM , NEWMONT MINING
-0.16% , TLH , Bond 10-20 Year US Treas, TLH
-0.51% , PEG , PUBL SVC ENTER
-4.76% , NFLX , Netflix, NFLX
-0.37% , IAU , Gold COMEX iS, IAU
-0.62% , TLT , Bond, 20+ Years Treasury, TLT
-0.14% , PGJ , China LargeCap Growth G D H USX PS, PGJ
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
5.94% Homebuilders SPDR, XHB
5.42% Financial Services DJ, IYG
4.76% Turkey MSCI iS, TUR
4.75% Financial SPDR, XLF
4.65% Financials VIPERs, VFH
4.43% Financial DJ US, IYF
4.39% Capital Markets KWB ST, KCE
4.11% Metals & Mining SPDR, XME
3.84% Realty Cohen & Steers, ICF
3.57% REIT Wilshire, RWR
3.53% REIT VIPERs, VNQ
3.48% Value SmallCap S&P 600 B, IJS
3.43% Sweden Index, EWD
3.31% Mexico Index, EWW
3.30% Real Estate US DJ, IYR
3.25% Italy Index, EWI
3.21% Energy SPDR, XLE
3.17% Russia MV, RSX
3.16% Energy VIPERs, VDE
3.11% Value MidCap S&P 400 B, IJJ
3.11% Value SmallCap VIPERS, VBR
3.09% Microcap Russell, IWC
3.08% Value SmallCap Russell 2000, IWN
3.01% Energy DJ, IYE
2.94% South Africa Index, EZA
2.93% Transportation Av DJ, IYT
2.90% Energy & Nat Res iS GS, IGE
2.88% Industrial SPDR, XLI
2.81% WilderHill Clean Energy PS, PBW
2.78% Thailand MSCI iS, THD
2.73% Semiconductor SPDR, XSD
2.69% Brazil Index, EWZ
2.68% MidCap S&P 400 SPDRs, MDY
2.67% Emerging Markets, EEM
2.65% SmallCap Russell 2000, IWM
2.64% Energy Global, IXC
2.64% Value VIPERs, VTV
2.63% South Korea Index, EWY
2.63% Value S&P 500 B, IVE
2.60% MidCap S&P 400 iS, IJH
2.59% Small Cap VIPERs, VB
2.57% Latin Am 40, ILF
2.57% Materials SPDR, XLB
2.56% Emerging VIPERs, VWO
2.52% SmallCap S&P 600, IJR
2.51% Basic Materials DJ US, IYM
2.49% Austria Index, EWO
2.49% Germany Index, EWG
2.49% Value MidCap Russell, IWS
2.48% Netherlands Index, EWN
2.45% Value 1000 Russell, IWD
2.38% LargeCap Blend S&P=Weight R, RSP
2.34% Networking, IGN
2.31% Dividend SPDR, SDY
2.29% MidCap Russell, IWR
2.26% Growth MidCap 400 B, IJK
2.24% Growth SmallCap VIPERs, VBK
2.24% Indonesia MV, IDX
2.21% Growth SmallCap R 2000, IWO
2.21% Frontier Markets Guggenheim , FRN
2.16% LargeCap Blend Russell 3000, IWV
2.16% EMU Europe Index, EZU
2.15% Oil, Crude, U.S. Oil Fund, USO
2.13% European VIPERs, VGK
2.04% LargeCap VIPERs, VV
2.03% Consumer Discretionary SPDR, XLY
2.02% Blend Total Market VIPERs, VTI
2.01% Semiconductor iS IGW, SOXX
1.99% S&P 500 iS LargeCap Blend, IVV
1.96% Growth MidCap Russell, IWP
1.96% LargeCap 1000 R, IWB
1.95% S&P 500 SPDRs LargeCap Blend, SPY
1.95% Oil Fund PowerShares, DBO
1.95% Dividend Appreciation Vipers, VIG
1.94% Spain Index, EWP
1.91% Biotech SPDR, XBI
1.90% Dividend High Yield Equity PS, PEY
1.83% Emerging 50 BLDRS, ADRE
1.83% Small Cap EAFE MSCI iS, SCZ
1.82% LargeCap Blend S&P 100, OEF
1.71% Growth BARRA Small Cap 600, IJT
1.70% China 25 iS, FXI
1.66% Growth VIPERs, VUG
1.64% Canada Index, EWC
1.62% Europe 350 S&P Index, IEV
1.61% Water Resources, PHO
1.57% Belgium Index, EWK
1.54% Growth EAFE MSCI, EFG
1.53% Silver Miners Global X, SIL
1.52% Growth 1000 Russell, IWF
1.52% Dividend DJ Select, DVY
1.52% Global ex US ACWI iS, ACWX
1.50% Australia Index, EWA
1.49% Value LargeCap Dynamic PS, PWV
1.45% Growth S&P 500/BARRA, IVW
1.44% Dividend International, PID
1.43% EAFE Index, EFA
1.43% Taiwan Index, EWT
1.41% DIAMONDS (DJIA), DIA
1.39% Pacific ex-Japan, EPP
1.37% Singapore Index, EWS
1.35% Financial Preferred, PGF
1.35% Global 100, IOO
1.35% Malaysia Index, EWM
1.34% Telecom DJ US, IYZ
1.26% Chile MSCI iS, ECH
1.25% France Index, EWQ
1.24% QQQ Nasdaq 100 Trust, QQQ
1.18% United Kingdom Index, EWU
1.17% Value EAFE MSCI, EFV
1.16% India PS, PIN
1.15% Info Tech VIPERs, VGT
1.06% Switzerland Index, EWL
0.94% Japan Index, EWJ
0.93% Silver Trust iS, SLV
0.92% Pacific VIPERs, VPL
0.91% Technology DJ US, IYW
0.90% Technology SPDR, XLK
0.83% Utilities VIPERs, VPU
0.80% Bond, High-Yield Junk, JNK
0.75% Consumer Staples SPDR, XLP
0.74% Health Care SPDR, XLV
0.71% Utilities SPDR, XLU
0.68% India Earnings WTree, EPI
0.64% Preferred Stock iS, PFF
0.55% Commodity Tracking, DBC
0.54% Bond, High-Yield Corporate, HYG
0.48% Bond, TIPS, TIP
0.35% Bond, Corp, LQD
0.32% Bond Muni ATM-Free S&P iS, MUB
0.25% Bond Ex-US Treas, BWX
0.19% Bond EmrgMkt JPM iS, EMB
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.06% Hong Kong Index, EWH
-0.11% Bond, 10 Year Treasury, IEF
-0.11% Bond, Aggregate, AGG
-0.13% Agriculture DB PS, DBA
-0.14% China LargeCap Growth G D H USX PS, PGJ
-0.48% Gold Shares S.T., GLD
-0.62% Bond, 20+ Years Treasury, TLT
