Downside Risks Remain High for Global Stock Markets

Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) fell below the lows of the previous 12-months. Weakness in Copper suggests doubts about the economic outlook.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below 12-month lows, reconfirming a major downtrend.

Energy Sector SPDR ETF Relative Strength Ratio (XLE/SPY) fell below 8-month lows, reconfirming a significant downtrend.

Materials Sector SPDR ETF Relative Strength Ratio (XLB/SPY) fell below 14-month lows, reconfirming a long-term downtrend.

Financial Sector SPDR ETF Relative Strength Ratio (XLF/SPY) fell below the lows of the previous 2-years, reconfirming a major long-term downtrend.

iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF /SPY) fell below 29-month lows, 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 28-month lows, reconfirming its preexisting bearish major trend.

The S&P 500 Composite (SPX, 1,202.09) fell 2.00 points or 0.17% on Tuesday September 20, 2011. SPX rose above the high of the previous 11 trading days by 11:15 a.m. but reversed in the final 2 hours to close with a small loss for the day.

Since April 29, 2011, the S&P 500 is down 11.85%. My analysis continues to indicate that downside risks remain high for global stock markets. I expect world stock markets to continue to move lower–probably substantially lower.

Minor upside reversals against the dominant bear trend lure short-term traders into trying to trade a bounce. Minor price corrections against the trend are normal and expected, of course, but playing minor 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 in recent weeks. And in a bear market, the big surprises come to the downside.

Typically, there is no safe place to hide in a Dow Theory Primary Tide Bear Market. Even those stocks that have held up relatively well through most of the Bear Market eventually succumb to the relentless tide of selling.
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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 rose above previous 10-year highs on 9/19/11 reconfirming a long-term uptrend. This means a long NASDAQ Composite and short S&P 500 hedge has been a winning trade. NASDAQ absolute price remains neutral below its 200-day SMA.

iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF /SPY) fell below 29-month lows on 9/20/11, 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 28-month lows on 9/20/11, reconfirming its preexisting bearish major trend. Absolute price broke down below 13-month lows on 8/8/11 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 14-month lows on 9/12/11 and remains bearishly below falling 50- and 200-day SMAs.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 6 weeks and broke below its 50-day SMA on 9/14/11, thereby confirming a minor downtrend. Longer term, OEX/SPX fell below 28-year lows on 5/26/11, reconfirming its preexisting bearish major trend.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below 12-month lows on 9/20/11, reconfirming a major downtrend. Absolute price has been weak since 5/2/11, broke down below 13-month lows on 8/8/11, and remains 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 3-weeks on 9/20/11, confirming a bearish minor trend. MDY/SPY fell below the lows of the previous 10-months on 8/8/11, confirming a bearish major trend.

Advisory Service Sentiment: There were 35.5% Bulls versus 40.9% Bears as of 9/14/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 0.87, down from 1.03, the previous week. The Bull/Bear Ratio is now the lowest since August, 2010, more than 1 standard deviation below the 20-year average. The 20-year median is 1.56 and the mean is 1.64.

VIX Fear Index remains stuck in its 5-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 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 S&P 500 Composite (SPX, 1,202.09) fell 2.00 points or 0.17% on Tuesday September 20, 2011.

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
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

S&P 500 Cash Index Potential Support
1136.07, low of 9/12/2010
1101.54, low of 8/9/2010
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
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Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price rose above the highs of the previous 2 years on 9/19/11, reconfirming a major uptrend. Support 111.25, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 115.19, 116.92, 120.45, and 123.15.

Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price consolidated gains after rising above the highs of the previous 4 trading days on 9/19/11 and confirming a short-term rebound. Longer term, IEF rose above all-time highs on 9/9/11, reconfirming its preexisting major uptrend. Many investors have been anticipating a Fed “Operation Twist” to be announced after the Fed meeting on 9/21/11, where the central bank would attempt to lower longer-term interest rates, in order to stimulate the economy, by selling short-term debt instruments on its balance sheet and using the proceeds to buy 7-10 year Treasuries. Support 103.55, 102.50, and 102.38. Resistance 105.29.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) remains bearish according to my objective 50/200 SMA system. Short term, JNK/LQD fell below 4-week lows on 9/9/11. Long term, JNK/LQD fell below 2-year lows on 8/10/11.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) remains bearish according to my objective 50/200 SMA system. TIP/IEF has been weak since peaking on 4/8/11 and fell below 11-month lows on 9/19/11. 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 rose above the high of the previous 4 trading days on 9/19/11, suggesting renewed upside momentum. UUP rose above the highs of the previous 6 months on 9/12/11, confirming a major price uptrend. Support 21.56, 21.42, and 20.84. Resistance 22.05, 22.21, and 22.63.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below the lows of the previous 5 weeks on 9/19/11, reconfirming a minor downtrend within a larger downtrend. On 8/9/11, DBA traded below 8-month lows, confirming a long-term downtrend.

Crude Oil, United States Oil ETF (USO) price broke down from a Bearish Rising Wedge pattern on 9/19/11, thereby signaling renewed bearish momentum. USO fell below the lows of the previous 2 years on 8/9/11, confirming a major downtrend. Support 33.55, 33.25, 32.60, 31.45, 30.31, 26.28, 22.74. Resistance 35.08, 35.14, 39.25, 40.74, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) price signaled an Inside Day consolidation on 9/20/11, suggesting no change in the minor short-term down trend. Gold rose above all-time highs on 9/6/11, reconfirming its preexisting major uptrend. Although minor price consolidations and corrections are to be expected in any trend, the dominant trend remains persistently bullish. In a world of too much debt, weak currencies, and self-serving politicians running amok, investors around the globe seek the safety of gold as the only forever-true money. Support: 172.20, 165.88, 159.68, 156.11, 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 177.40, 185.85.

Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) whipsawed back above its falling 50-day SMA on 9/16/11 and remains below its falling 200-day SMA. GDX/GLD fell below 29-month lows on 8/8/11, confirming a bearish major trend for the long term. Absolute price of GDX is bullish, just not as bullish as GLD; investors prefer Gold bullion over Gold Miners.

Silver, iShares Silver Trust ETF (SLV) price signaled an Inside Day consolidation on 9/20/11, suggesting no change in the minor short-term down trend. SLV fell back below its 50-day SMA on 9/19/11 and, therefore, turned neutral again according to my objective 50/200 SMA system. Support 36.04, 35.29, 34.02, and 31.97. Resistance: 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.

Silver/Gold ETFs Ratio (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-Idx ETN (JJC ) remains bearish. JJC fell below the lows of the previous 12-months on 9/20/11. Weakness in Copper suggests doubts about the economic outlook, while strength in Copper suggests confidence.
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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
5.48% , NEM , NEWMONT MINING
1.29% , IXJ , Healthcare Global, IXJ
8.26% , IPG , INTERPUBLIC GRP
5.75% , KBH , KB HOME
5.05% , CCL , CARNIVAL STK A
2.99% , BF.B , BROWN FORMAN STK B
1.14% , IDU , Utilities DJ, IDU
2.46% , LIZ , LIZ CLAIRBORNE
1.45% , XLU , Utilities SPDR, XLU
2.71% , APC , ANADARKO PETRO
3.01% , HGSI , Human Genome Sciences Inc
2.97% , PHM , PULTE HOMES
3.84% , TUR , Turkey MSCI iS, TUR
1.73% , D , DOMINION RSCS
0.77% , PUI , Utilities, PUI
2.06% , PPL , PPL
0.67% , IEV , Europe 350 S&P Index, IEV
2.12% , DGX , QUEST DIAG
2.21% , SNI , Scripps Networks Interactive
1.82% , ETR , ENTERGY
1.02% , DUK , DUKE ENERGY
1.46% , TWX , TIME WARNER INC
2.43% , FE , FIRSTENERGY
0.37% , ITF , Japan LargeCap Blend TOPIX 150, ITF
1.68% , NEE , NextEra Energy Resources LLC
1.42% , PX , PRAXAIR
1.37% , PEG , PUBL SVC ENTER
1.52% , TJX , TJX
2.20% , MDT , MEDTRONIC
1.34% , HD , HOME DEPOT
0.67% , PJP , Pharmaceuticals, PJP
1.44% , SIL , Silver Miners Global X, SIL
0.73% , CHD , Church & Dwight

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.86% , IGN , Networking, IGN
-0.75% , RPG , Growth S&P 500, RPG
-4.53% , XLNX , XILINX
-1.57% , PIC , Insurance, PIC
-1.13% , FRN , Frontier Markets Guggenheim , FRN
-1.72% , JKK , Growth SmallCap iS M, JKK
-2.38% , PXQ , Networking, PXQ
-2.94% , TEVA , Teva Pharmaceutical Industries Limited
-6.44% , CLF , CLIFFS NATURAL RESOURCES, CLF
-2.07% , CBE , COOPER INDS STK A
-1.61% , PMR , Retail, PMR
-3.56% , QLGC , QLOGIC
-2.58% , EWW , Mexico Index, EWW
-4.05% , CECO , CAREER EDUCATION CORP
-3.70% , XME , Metals & Mining SPDR, XME
-7.45% , PWER , POWER ONE
-2.31% , WOR , WORTHINGTON INDS
-1.58% , IYM , Basic Materials DJ US, IYM
-2.99% , HUM , HUMANA
-1.71% , CAG , CONAGRA FOODS
-0.69% , PWO , OTC Dynamic PS, PWO
-1.27% , PEJ , Leisure & Entertainment, PEJ
-3.64% , ROK , ROCKWELL AUTOMAT
-0.33% , IWF , Growth 1000 Russell, IWF
-3.07% , EMC , EMC
-1.62% , AM , AMER GREETINGS STK A
-4.15% , FCX , FREEPRT MCMORAN STK B
-1.09% , IDX , Indonesia MV, IDX
-2.80% , NOV , NATIONAL OILWELL VARC0
-1.40% , RFG , Growth MidCap S&P 400, RFG
-1.99% , PMCS , PMC SIERRA
-0.64% , EPP , Pacific ex-Japan, EPP
-4.46% , NYT , NY TIMES STK A
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.84% Turkey MSCI iS, TUR
1.88% Sweden Index, EWD
1.45% Utilities SPDR, XLU
1.44% Silver Miners Global X, SIL
1.43% Gold Shares S.T., GLD
1.22% Thailand MSCI iS, THD
1.11% Utilities VIPERs, VPU
1.07% Germany Index, EWG
1.05% European VIPERs, VGK
1.03% United Kingdom Index, EWU
0.92% Health Care SPDR, XLV
0.67% Oil Fund PowerShares, DBO
0.67% Europe 350 S&P Index, IEV
0.61% India PS, PIN
0.50% South Korea Index, EWY
0.47% Silver Trust iS, SLV
0.45% India Earnings WTree, EPI
0.43% Bond, TIPS, TIP
0.42% Oil, Crude, U.S. Oil Fund, USO
0.42% Bond, 20+ Years Treasury, TLT
0.42% Growth EAFE MSCI, EFG
0.40% EAFE Index, EFA
0.36% Dividend High Yield Equity PS, PEY
0.36% Belgium Index, EWK
0.36% Value EAFE MSCI, EFV
0.30% Netherlands Index, EWN
0.26% Dividend DJ Select, DVY
0.23% Global 100, IOO
0.22% Biotech SPDR, XBI
0.21% EMU Europe Index, EZU
0.21% Dividend International, PID
0.20% Bond, Aggregate, AGG
0.20% Consumer Staples SPDR, XLP
0.16% Realty Cohen & Steers, ICF
0.16% Bond, High-Yield Corporate, HYG
0.14% DIAMONDS (DJIA), DIA
0.13% Bond, 10 Year Treasury, IEF
0.10% Bond Muni ATM-Free S&P iS, MUB
0.08% Italy Index, EWI
0.08% Global ex US ACWI iS, ACWX
0.05% Bond EmrgMkt JPM iS, EMB
0.04% Bond, Corp, LQD
0.02% Dividend Appreciation Vipers, VIG
0.02% Dividend SPDR, SDY
0.00% Value LargeCap Dynamic PS, PWV
0.00% Switzerland Index, EWL
0.00% Russia MV, RSX
0.00% Bond, High-Yield Junk, JNK
0.00% Bond Treasury Short-Term iS, SHV
-0.04% Value VIPERs, VTV
-0.05% Bond, 1-3 Year Treasury, SHY
-0.05% France Index, EWQ
-0.05% REIT VIPERs, VNQ
-0.07% Canada Index, EWC
-0.08% Value 1000 Russell, IWD
-0.08% Singapore Index, EWS
-0.09% Financial Services DJ, IYG
-0.09% Value S&P 500 B, IVE
-0.09% LargeCap Blend S&P 100, OEF
-0.09% Agriculture DB PS, DBA
-0.10% Japan Index, EWJ
-0.11% Preferred Stock iS, PFF
-0.12% S&P 500 iS LargeCap Blend, IVV
-0.12% S&P 500 SPDRs LargeCap Blend, SPY
-0.12% LargeCap 1000 R, IWB
-0.12% Financial Preferred, PGF
-0.12% Spain Index, EWP
-0.15% Growth S&P 500/BARRA, IVW
-0.16% REIT Wilshire, RWR
-0.18% Commodity Tracking, DBC
-0.19% Bond Ex-US Treas, BWX
-0.22% LargeCap VIPERs, VV
-0.24% Technology SPDR, XLK
-0.25% Financial DJ US, IYF
-0.26% Financials VIPERs, VFH
-0.29% Real Estate US DJ, IYR
-0.32% Chile MSCI iS, ECH
-0.32% Financial SPDR, XLF
-0.32% LargeCap Blend Russell 3000, IWV
-0.32% Telecom DJ US, IYZ
-0.33% Energy Global, IXC
-0.33% Growth 1000 Russell, IWF
-0.35% Blend Total Market VIPERs, VTI
-0.36% Pacific VIPERs, VPL
-0.37% Hong Kong Index, EWH
-0.37% Emerging VIPERs, VWO
-0.38% Emerging 50 BLDRS, ADRE
-0.42% LargeCap Blend S&P=Weight R, RSP
-0.44% QQQ Nasdaq 100 Trust, QQQ
-0.44% Growth VIPERs, VUG
-0.48% Technology DJ US, IYW
-0.53% Consumer Discretionary SPDR, XLY
-0.54% China 25 iS, FXI
-0.55% Small Cap EAFE MSCI iS, SCZ
-0.58% Value MidCap Russell, IWS
-0.59% Australia Index, EWA
-0.59% Info Tech VIPERs, VGT
-0.60% Energy & Nat Res iS GS, IGE
-0.60% Energy DJ, IYE
-0.62% Taiwan Index, EWT
-0.62% Energy SPDR, XLE
-0.64% Pacific ex-Japan, EPP
-0.65% MidCap Russell, IWR
-0.70% Austria Index, EWO
-0.73% Industrial SPDR, XLI
-0.74% Emerging Markets, EEM
-0.76% Homebuilders SPDR, XHB
-0.80% Energy VIPERs, VDE
-0.85% Capital Markets KWB ST, KCE
-0.93% Growth MidCap Russell, IWP
-0.97% Latin Am 40, ILF
-1.00% Malaysia Index, EWM
-1.09% Indonesia MV, IDX
-1.13% Brazil Index, EWZ
-1.13% Frontier Markets Guggenheim , FRN
-1.15% South Africa Index, EZA
-1.18% Materials SPDR, XLB
-1.19% Growth MidCap 400 B, IJK
-1.22% MidCap S&P 400 SPDRs, MDY
-1.22% Value MidCap S&P 400 B, IJJ
-1.27% MidCap S&P 400 iS, IJH
-1.29% Semiconductor iS IGW, SOXX
-1.29% Transportation Av DJ, IYT
-1.34% Value SmallCap VIPERS, VBR
-1.42% Value SmallCap Russell 2000, IWN
-1.52% Small Cap VIPERs, VB
-1.52% Value SmallCap S&P 600 B, IJS
-1.55% SmallCap Russell 2000, IWM
-1.58% Basic Materials DJ US, IYM
-1.65% Semiconductor SPDR, XSD
-1.70% SmallCap S&P 600, IJR
-1.72% Water Resources, PHO
-1.73% Growth SmallCap R 2000, IWO
-1.73% Growth SmallCap VIPERs, VBK
-1.75% Growth BARRA Small Cap 600, IJT
-1.78% Microcap Russell, IWC
-1.86% Networking, IGN
-2.21% China LargeCap Growth G D H USX PS, PGJ
-2.58% Mexico Index, EWW
-3.21% WilderHill Clean Energy PS, PBW
-3.70% Metals & Mining SPDR, XME