Stocks: Price Momentum Stalled Out and Turned Down

The S&P 500 Composite (SPX, 1,155.46) fell 9.51 points or 0.82% on Friday, October 7, 2011.

Price momentum stalled out and turned down on Friday. There was a potential double top intraday, and urgent selling into the close, probably motivated by caution about weekend news risk. A break below Friday’s low could confirm a bearish change in direction for the Daily Fluctuation.

Markets are likely to remain volatile, with large daily swings in both directions. Fundamentally, timing of the Daily Fluctuations may depend on the next overnight news headline about the debt crisis in Europe, since that crisis appears to be a key driver of Daily Fluctuations. Over the past 2 months, there have been 10 bounces lasting 1 to 5 trading days. Such minor bounces tend to be fickle and fleeting and difficult to trade. Last week’s 3-day stock price recovery appears to be a typical minor bounce of little significance. Daily upside reversals against the dominant bear trend lure short-term traders into trying to trade a bounce. Daily price corrections against the larger trends are normal and expected, of course, but playing brief counter-trend bounces is risky. The mood can switch from “risk on” to “risk off” overnight, leaving the too-clever trader suddenly holding the bag, as we have seen repeatedly over the past 2 months. And in a Dow Theory Primary Tide Bear Market, the big surprises come to the downside.

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 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.
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Includes Top Ten ETFs, Major Trend Relative Strength Rankings, charts, support and resistance levels, and much more.
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Stock Market Indicators

NASDAQ Composite/S&P 500 Relative Strength Ratio fell below the lows of the previous 4 weeks on 10/3/11, confirming a minor downside correction. The Ratio rose above previous 10-year highs on 9/23/11, reconfirming a major long-term uptrend. A long NASDAQ Composite and short S&P 500 hedge was a winning trade from 10/8/2002 to 9/23/11, and that major trend probably will resume–in time. NASDAQ absolute price remains bearish, falling below 52-week price lows and below declining 50-day and 200-day SMAs on 10/4/11.

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. Absolute price broke down below 2-year lows on 10/4/11 and remains bearishly below falling 50- and 200-day SMAs.

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 broke down below 2-year lows on 10/4/11 and remains bearishly below falling 50- and 200-day SMAs.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) OEX/SPX rose above 50-day and 200-day SMAs on 9/21/11, which was a RELATIVELY bullish sign of the OEX outperforming the SPX. Absolute price of OEX remains bearish, however.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below 20-month lows on 10/3/11, reconfirming a major downtrend. Absolute price has been weak since 5/2/11, broke down below 13-month lows on 10/4/11, and remains bearishly below falling 50- and 200-day SMAs.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below the lows of the previous 18-months on 10/3/11, reconfirming a bearish long-term major trend. MDY/SPY fell below the lows of the previous 13-months on 10/4/11, reconfirming a bearish long-term major trend.

Advisory Service Sentiment: There were 34.4% Bulls versus 45.2% Bears as of 10/5/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 0.76, 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 cautious, 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 remains stuck in its 8-week, relatively high level trading range, from a low of 30.16 to a high of 48.00. 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: 1,155.46) 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
1230.71, high of 8/31/11
1171.40, high of 10/7/2011

S&P 500 Cash Index (SPX: 1,155.46) Potential Support
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
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
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Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price pulled back but held above the previous week’s low, so the bullish pattern of higher highs and higher lows is still intact. TLT rose above all-time highs on 10/4/11, reconfirming a long-term, major uptrend. Support 115.76, 114.05, 111.25, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 125.03.

Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below 5-week lows on 10/8/11, suggesting a correction or downside shakeout. Support 102.50 and 102.38. Resistance 106.66.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below 29-month lows on 10/3/11, reconfirming a bearish long-term major trend.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below 13-month lows on 9/30/11, reconfirming a bearish long-term major trend. This bearish trend means that fixed-income investors have been choosing the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. So, fixed-income investors may be more worried about deflation than inflation.
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Tangible Assets, Commodities

U.S. dollar ETF (UUP) price pulled back last week after rising above the highs of the previous 8 months on 10/4/11, and thereby reconfirming a major price uptrend. After the collapse of gold and the Swiss Franc, the U.S. dollar may be the last refuge for risk-averse investors. Support 22.08, 21.94, 21.75, 21.56, 21.42, and 20.84. Resistance 22.63.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below the lows of the previous 10 months on 10/3/11, reconfirming a major long-term downtrend.

Crude Oil, United States Oil ETF (USO) price broke down below 17-month lows on 10/4/11, reconfirming a major long-term downtrend. Support 28.10, 26.28, and 22.74. Resistance 32.83, 32.91, 35.08, 35.14, 39.25, 40.74, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) price consolidated losses since breaking down below 9-week lows on 9/26/11 and confirming a significant downtrend. Support: 154.19, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 162.29, 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.

Silver, iShares Silver Trust ETF (SLV) price consolidated losses since breaking down below the lows of the previous 7 months on 9/26/11, and confirming a bearish major trend for the long term. SLV fell back below its 50-day SMA on 9/19/11 and fell below its 200-day SMA on 9/22/11. Support 27.41, 26.03, and 24.44. Resistance: 32.62, 34.51, 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) broke down below the lows of the previous 11 months on 9/30/11, reconfirming a bearish major trend for the long term. 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-Index ETN (JJC) price consolidated losses since breaking down below the lows of the previous 14 months on 10/5/11, and reconfirming a bearish major trend for the long term. Major trend weakness in Copper suggests serious concerns about the economic outlook.
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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
0.86% , FPX , IPOs, First Tr IPOX-100, FPX
0.60% , BWX , Bond Ex-US Treas, BWX
2.10% , BBY , BEST BUY
1.51% , MYY , Short 100% MidCap 400, MYY
2.27% , PLL , PALL
1.48% , IIH , Internet Infrastructure H, IIH
1.61% , DLTR , Dollar Tree Stores Inc
1.90% , TLAB , TELLABS
1.97% , SBUX , STARBUCKS
2.34% , NVLS , NOVELLUS SYS
1.85% , LLY , ELI LILLY
2.00% , RHT , Red Hat Inc.
1.78% , MO , ALTRIA, MO
4.47% , DISH , EchoStar Communications
0.13% , EWU , United Kingdom Index, EWU
0.82% , NEE , NextEra Energy Resources LLC
1.80% , WMT , WAL MART STORES
1.62% , HD , HOME DEPOT
1.27% , PAYX , PAYCHEX
1.02% , GD , GENERAL DYNAMICS
0.87% , RHI , ROBERT HALF
1.77% , CEG , CONSTELL ENERGY
1.47% , TBT , 200% Short US T Bond, TBT
2.08% , EL , Estee Lauder
0.28% , HHH , Internet H, HHH
1.43% , EWH , Hong Kong Index, EWH
0.61% , EWA , Australia Index, EWA
1.87% , DRI , DARDEN REST
1.28% , WLP , WELLPOINT HEALTH
1.30% , SDS , Short 200% S&P 500 PS, SDS
1.07% , ETR , ENTERGY
1.97% , RAI , Reynolds American
1.52% , GIS , GENERAL MILLS

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-19.93% , S , SPRINT NEXTEL
-0.81% , NYC , LargeCap Blend NYSE Composite iS, NYC
-9.45% , BMC.O , BMC SOFTWARE
-7.99% , WAT , WATERS
-1.15% , EWK , Belgium Index, EWK
-5.93% , TMO , THERMO ELECTRON
-1.23% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
-2.81% , SIAL , SIGMA ALDRICH
-8.29% , PKI , PERKINELMER
-4.89% , HOG , HARLEY DAVIDSON
-2.22% , IJT , Growth BARRA Small Cap 600, IJT
-2.75% , IJS , Value SmallCap S&P 600 B, IJS
-6.47% , A , AGILENT TECH
-0.95% , EZU , EMU Europe Index, EZU
-0.73% , TMW , Wilshire 5000 ST TM, TMW
-0.70% , PUI , Utilities, PUI
-2.45% , RZV , Value SmallCap S&P 600, RZV
-2.47% , SNI , Scripps Networks Interactive
-0.79% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-0.54% , BDH , Broadband H, BDH
-3.57% , KCE , Capital Markets KWB ST, KCE
-1.43% , IWS , Value MidCap Russell, IWS
-2.84% , IWN , Value SmallCap Russell 2000, IWN
-1.81% , RFMD , RF Micro Devices Inc
-2.35% , JKJ , SmallCap Core iS M, JKJ
-1.38% , JKI , Value MidCap iS M, JKI
-2.98% , LM , LEGG MASON
-1.28% , IWP , Growth MidCap Russell, IWP
-2.47% , IWO , Growth SmallCap R 2000, IWO
-5.70% , CMA , COMERICA
-1.64% , RYAAY , Ryanair Holdings plc
-5.96% , HGSI , Human Genome Sciences Inc
-3.68% , FII , FED INVESTORS STK B
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.43% Hong Kong Index, EWH
0.87% Financial Preferred, PGF
0.61% Australia Index, EWA
0.60% Bond Ex-US Treas, BWX
0.60% Pacific ex-Japan, EPP
0.57% Consumer Staples SPDR, XLP
0.46% Semiconductor iS IGW, SOXX
0.42% Utilities SPDR, XLU
0.37% Preferred Stock iS, PFF
0.27% Bond Muni ATM-Free S&P iS, MUB
0.21% Utilities VIPERs, VPU
0.19% Oil, Crude, U.S. Oil Fund, USO
0.17% Bond, High-Yield Junk, JNK
0.13% United Kingdom Index, EWU
0.08% Bond, High-Yield Corporate, HYG
0.08% Malaysia Index, EWM
-0.01% Bond Treasury Short-Term iS, SHV
-0.04% Bond, 1-3 Year Treasury, SHY
-0.06% DIAMONDS (DJIA), DIA
-0.08% Consumer Discretionary SPDR, XLY
-0.09% Bond, Corp, LQD
-0.09% Health Care SPDR, XLV
-0.12% Dividend DJ Select, DVY
-0.12% Oil Fund PowerShares, DBO
-0.20% Bond, Aggregate, AGG
-0.22% Frontier Markets Guggenheim , FRN
-0.22% Pacific VIPERs, VPL
-0.23% Industrial SPDR, XLI
-0.24% Italy Index, EWI
-0.25% Bond EmrgMkt JPM iS, EMB
-0.27% South Korea Index, EWY
-0.28% Value LargeCap Dynamic PS, PWV
-0.34% Bond, TIPS, TIP
-0.34% Dividend Appreciation Vipers, VIG
-0.36% Spain Index, EWP
-0.36% Semiconductor SPDR, XSD
-0.37% Technology SPDR, XLK
-0.44% Value EAFE MSCI, EFV
-0.45% Growth EAFE MSCI, EFG
-0.45% Commodity Tracking, DBC
-0.47% LargeCap Blend S&P 100, OEF
-0.51% Growth S&P 500/BARRA, IVW
-0.52% Austria Index, EWO
-0.52% Bond, 10 Year Treasury, IEF
-0.52% Technology DJ US, IYW
-0.52% Global 100, IOO
-0.53% Japan Index, EWJ
-0.63% Singapore Index, EWS
-0.66% Growth VIPERs, VUG
-0.66% QQQ Nasdaq 100 Trust, QQQ
-0.67% S&P 500 SPDRs LargeCap Blend, SPY
-0.69% EAFE Index, EFA
-0.70% Agriculture DB PS, DBA
-0.70% Growth 1000 Russell, IWF
-0.71% S&P 500 iS LargeCap Blend, IVV
-0.71% Info Tech VIPERs, VGT
-0.74% Bond, 20+ Years Treasury, TLT
-0.75% LargeCap VIPERs, VV
-0.77% Russia MV, RSX
-0.77% Global ex US ACWI iS, ACWX
-0.78% Dividend SPDR, SDY
-0.81% Energy Global, IXC
-0.81% India Earnings WTree, EPI
-0.82% Chile MSCI iS, ECH
-0.82% Gold Shares S.T., GLD
-0.84% Europe 350 S&P Index, IEV
-0.85% Dividend International, PID
-0.89% Netherlands Index, EWN
-0.89% LargeCap 1000 R, IWB
-0.89% LargeCap Blend Russell 3000, IWV
-0.89% Germany Index, EWG
-0.90% France Index, EWQ
-0.91% Blend Total Market VIPERs, VTI
-0.95% EMU Europe Index, EZU
-0.96% Value S&P 500 B, IVE
-0.96% Small Cap EAFE MSCI iS, SCZ
-0.97% Value VIPERs, VTV
-0.98% Thailand MSCI iS, THD
-1.02% South Africa Index, EZA
-1.10% Value 1000 Russell, IWD
-1.12% LargeCap Blend S&P=Weight R, RSP
-1.15% Belgium Index, EWK
-1.19% Emerging Markets, EEM
-1.22% Taiwan Index, EWT
-1.23% Growth MidCap 400 B, IJK
-1.23% Energy SPDR, XLE
-1.25% Emerging VIPERs, VWO
-1.27% China 25 iS, FXI
-1.27% European VIPERs, VGK
-1.28% Growth MidCap Russell, IWP
-1.30% MidCap Russell, IWR
-1.30% Energy VIPERs, VDE
-1.33% Energy DJ, IYE
-1.34% India PS, PIN
-1.36% Switzerland Index, EWL
-1.36% Transportation Av DJ, IYT
-1.38% Brazil Index, EWZ
-1.42% Dividend High Yield Equity PS, PEY
-1.43% Value MidCap Russell, IWS
-1.51% MidCap S&P 400 SPDRs, MDY
-1.52% Materials SPDR, XLB
-1.56% MidCap S&P 400 iS, IJH
-1.64% Homebuilders SPDR, XHB
-1.67% Sweden Index, EWD
-1.68% Canada Index, EWC
-1.70% Networking, IGN
-1.71% Telecom DJ US, IYZ
-1.72% Emerging 50 BLDRS, ADRE
-1.79% Energy & Nat Res iS GS, IGE
-1.83% Biotech SPDR, XBI
-1.83% Mexico Index, EWW
-1.86% Value MidCap S&P 400 B, IJJ
-1.89% Basic Materials DJ US, IYM
-1.95% Latin Am 40, ILF
-1.96% Water Resources, PHO
-1.97% Growth SmallCap VIPERs, VBK
-2.12% Indonesia MV, IDX
-2.22% Growth BARRA Small Cap 600, IJT
-2.23% Small Cap VIPERs, VB
-2.29% China LargeCap Growth G D H USX PS, PGJ
-2.35% SmallCap S&P 600, IJR
-2.37% Turkey MSCI iS, TUR
-2.44% SmallCap Russell 2000, IWM
-2.47% Growth SmallCap R 2000, IWO
-2.47% Value SmallCap VIPERS, VBR
-2.60% Silver Miners Global X, SIL
-2.75% Value SmallCap S&P 600 B, IJS
-2.78% REIT Wilshire, RWR
-2.79% REIT VIPERs, VNQ
-2.80% Realty Cohen & Steers, ICF
-2.82% Real Estate US DJ, IYR
-2.84% Value SmallCap Russell 2000, IWN
-2.91% Microcap Russell, IWC
-3.11% Silver Trust iS, SLV
-3.11% Metals & Mining SPDR, XME
-3.50% Financial DJ US, IYF
-3.57% Capital Markets KWB ST, KCE
-3.59% Financial SPDR, XLF
-3.61% Financials VIPERs, VFH
-3.78% Financial Services DJ, IYG
-4.22% WilderHill Clean Energy PS, PBW