a Deteriorating Economic Outlook
Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) fell below the lows of the previous 10-months.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below the lows of the previous 16 trading days.
Energy stock sector Relative Strength Ratio (XLE/SPY) fell below 4-month lows.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) broke down below 28-month lows.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 6 weeks.
NASDAQ Composite/S&P 500 Relative Strength Ratio rose above previous 10-year highs. But NASDAQ absolute price remains below 50- and 200-day SMAs, which is bearish.
Growth stocks are significantly outperforming Value stocks.
Consumer Discretionary Relative Strength Ratio (XLY/SPY) rose to a new high.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below 11-month lows.
The S&P 500 Composite (SPX, 1,188.68) rose 15.81 points or 1.35% on Wednesday, September 14, 2011.
NYSE volume rose 7%, but it was not a sign of stronger demand for stocks. Volume was relatively modest during the midsession price advance. The heaviest volume of the day came in the last 25 minutes as prices fell from their peak at 3:35 p.m.
SPX is between the lower and upper boundary lines of a Bear Flag Continuation Pattern. A break Monday’s low of 1,136.07, on higher volume would confirm a new and significant down leg in this ongoing Bear Market.
Longer-term, SPX fell below 11-month lows on 8/9/11 and remains bearishly below falling 20-, 50-, and 200-day SMAs.
Minor upside reversals 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.
We keep in mind that the dominant trend for the stock market remains persistently bearish. That is the bias. In a bear market, 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 and Major Trend Relative Strength Rankings.
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Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio rose above previous 10-year highs on 9/14/11. This means a long NASDAQ Composite and short S&P 500 hedge has been a winning trade. NASDAQ absolute price remains below 50- and 200-day SMAs, however, which is bearish.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF /SPY) fell below 29-month lows on 9/14/11. 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 9/14/11, confirming its bearish major trend. Absolute price has been weak since 5/2/11, 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 28- month lows on 9/13/11, confirming its bearish major trend. Absolute price broke down below 12-month lows on 9/9/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 6 weeks on 9/14/11, confirming a minor downtrend. Longer term, OEX/SPX fell below 28-year lows on 5/26/11, confirming a bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) remains bearish for the major trend. IWM/SPY fell below 11-month lows on 8/22/11, remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. 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 11-month lows on 8/8/11, confirming a bearish major trend. Both the MDY/SPY Ratio and the MDY price remain below 50- and 200-day SMAs, and the 50 is below the 200.
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 rose to 43.18 intraday on 9/12/11, up from 30.16 on 8/31/11. VIX hit 48.00 on 8/8/11, its highest level in 14 months, since 5/21/10. It could be possible for VIX to rise much higher: VIX was 89.53 on 10/24/08 during the financial crisis. Options players tend to grow more fearful as stock prices decline, and the trend of stock prices is down. 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, 1,188.68) rose 15.81 points or 1.35% on Wednesday, September 14, 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 fell below the lows of the previous 3 days on 9/14/11 but reversed to close higher. The minor price pullback may have ended. TLT rose above the highs of the previous 2 years on 9/6/11, again confirming a major uptrend. Support 111.31, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 114.93, 116.92, 120.45, and 123.15.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (TLT) price fell below the lows of the previous 3 days on 9/14/11 but reversed to close higher. The minor price pullback may have ended. IEF rose above all-time highs on 9/9/11, confirming a preexisting major uptrend. Investors are anticipating a Fed “Operation Twist” to be announced after the Fed meeting on 9/22/11; 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.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) remains bearish. 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) fell below 11-month lows on 9/14/11. TIP/IEF has been weak since peaking on 4/8/11 and remains below 3 key SMAs: 20, 50, and 200 days. This means fixed-income investors have been choosing the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Fixed-income investors are not worried about inflation.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price fell below the lows of the previous 2 days on 9/13/11, suggesting a minor price pullback. UUP rose above the highs of the previous 5 months, rose further above a 4-month Triangle boundary line, and rose above its 200-day SMA on 9/12/11. Support 21.67, 21.24 ,21.24, and 20.84. Resistance 21.98, 22.21, and 22.63.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below the lows of the previous 16 trading days on 9/13/11, suggesting 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 rose above the highs of the previous 5 weeks on 9/13/11, suggesting a minor uptrend. But USO fell below the lows of the previous 2 years on 8/9/11, confirming a major downtrend. Support 32.60, 31.45, 30.31, 26.28, 22.74. Resistance 35.00, 35.14, 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) has been consolidating gains within its major uptrend over the past 5 trading days. Gold rose above all-time highs intraday on 9/6/11. 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: 174.45, 165.88, 159.68, 156.11, 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 185.85.
Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell below its falling 50-day SMA on 9/12/11 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 over Gold Miners.
Silver, iShares Silver Trust ETF (SLV) rose above 3-month highs on 8/22/11, confirming a medium-term price uptrend, but has turned choppy and volatile since. SLV remains above key SMAs, so we assume the main trend is still bullish. Support 38.65,, 38.05, 36.04, 35.29, 34.02, and 31.97. Resistance: 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 10-months on 9/14/11. Weakness in Copper suggests doubts about the economic outlook, while strength in Copper suggests confidence. Support 49.00, 46.35, and 46.12. Resistance: 54.10, 54.94, 56.64, 57.48, 59.06, 60.04, and 61.69.
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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
1.65% , KCE , Capital Markets KWB ST, KCE
6.82% , SIRI , Sirius Satellite
2.25% , BBH , Biotech H, BBH
6.41% , TXT , TEXTRON
3.25% , EWP , Spain Index, EWP
4.36% , LIZ , LIZ CLAIRBORNE
9.77% , HGSI , Human Genome Sciences Inc
2.95% , PSJ , Software, PSJ
5.10% , CHKP , Check Point Software Technologies Ltd
2.08% , PZI , Micro Cap Zachs, PZI
2.05% , NYC , LargeCap Blend NYSE Composite iS, NYC
3.83% , DLTR , Dollar Tree Stores Inc
1.79% , EWK , Belgium Index, EWK
1.85% , EIS , Israel MSCI iS, EIS
2.16% , EWN , Netherlands Index, EWN
4.36% , SIAL , SIGMA ALDRICH
5.02% , RFMD , RF Micro Devices Inc
3.10% , XSD , Semiconductor SPDR, XSD
1.61% , PMR , Retail, PMR
3.42% , RL , Polo Ralph Lauren
3.58% , SPLS , STAPLES
5.16% , NVDA , NVIDIA
3.76% , MJN , Mead Johnson Nutrition
2.96% , EWQ , France Index, EWQ
1.37% , PJP , Pharmaceuticals, PJP
3.19% , BSX , BOSTON SCIENT
3.09% , CR , CRANE
4.28% , EWG , Germany Index, EWG
4.78% , HIG , HARTFORD FINL
0.69% , PBJ , Food & Beverage, PBJ
4.18% , SNDK , SanDisk Corporation
5.97% , ZEUS , Olympic Steel, ZEUS
1.77% , VBK , Growth SmallCap VIPERs, VBK
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-5.17% , IDX , Indonesia MV, IDX
-2.54% , CAG , CONAGRA FOODS
-4.34% , PSTL , Steel Global PS ETF, PSTL
-1.51% , THD , Thailand MSCI iS, THD
-1.44% , EPU , Peru MSCI iS, EPU
-0.83% , TUR , Turkey MSCI iS, TUR
-1.46% , PSQ , Short 100% QQQ, PSQ
-3.76% , MZZ , Short 200% MidCap 400 PS, MZZ
-2.60% , ESRX , EXPRESS SCRIPTS
-1.43% , SH , Short 100% S&P 500, SH
-1.17% , EWM , Malaysia Index, EWM
-1.49% , TBT , 200% Short US T Bond, TBT
-1.12% , VRSN , VeriSign Inc
-2.81% , THC , TENET HEALTHCARE
-0.87% , MDP , MEREDITH
-1.75% , MYY , Short 100% MidCap 400, MYY
-2.73% , QID , Short 200% QQQ PS, QID
-2.79% , SDS , Short 200% S&P 500 PS, SDS
-1.79% , RF , REGIONS FINAN
-0.31% , VIA , VIACOM INC. (New)
-0.67% , ECH , Chile MSCI iS, ECH
-1.71% , EQR , EQUITY RESIDENT BEN INT
-0.34% , ACE , ACE
-0.63% , EWY , South Korea Index, EWY
-1.12% , S , SPRINT NEXTEL
-0.30% , EZA , South Africa Index, EZA
-0.78% , SUN , SUNOCO
-0.31% , UNM , UNUMPROVIDENT
-1.36% , RIMM , RESEARCH IN MOTION LTD
-0.33% , HAL , HALLIBURTON
-2.65% , DXD , Short 200% Dow 30 PS, DXD
-0.86% , AIV , APT INV MNGMT
-0.30% , NTAP , NETWK APPLIANCE
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.28% Germany Index, EWG
3.36% Italy Index, EWI
3.36% EMU Europe Index, EZU
3.25% Spain Index, EWP
3.10% Semiconductor SPDR, XSD
2.96% France Index, EWQ
2.84% Homebuilders SPDR, XHB
2.58% Semiconductor iS IGW, SOXX
2.40% European VIPERs, VGK
2.38% Europe 350 S&P Index, IEV
2.16% Netherlands Index, EWN
1.96% Global 100, IOO
1.94% Transportation Av DJ, IYT
1.90% Financial Services DJ, IYG
1.87% Growth MidCap 400 B, IJK
1.85% Growth MidCap Russell, IWP
1.85% MidCap S&P 400 SPDRs, MDY
1.84% MidCap S&P 400 iS, IJH
1.79% SmallCap Russell 2000, IWM
1.79% Belgium Index, EWK
1.79% Value SmallCap S&P 600 B, IJS
1.78% Growth SmallCap R 2000, IWO
1.77% Growth SmallCap VIPERs, VBK
1.75% Industrial SPDR, XLI
1.75% Info Tech VIPERs, VGT
1.75% SmallCap S&P 600, IJR
1.72% Technology DJ US, IYW
1.68% United Kingdom Index, EWU
1.68% Microcap Russell, IWC
1.67% Value MidCap S&P 400 B, IJJ
1.67% Small Cap VIPERs, VB
1.65% Consumer Discretionary SPDR, XLY
1.65% Capital Markets KWB ST, KCE
1.63% WilderHill Clean Energy PS, PBW
1.62% Value SmallCap Russell 2000, IWN
1.62% Growth BARRA Small Cap 600, IJT
1.60% Networking, IGN
1.59% Dividend Appreciation Vipers, VIG
1.59% MidCap Russell, IWR
1.58% Value SmallCap VIPERS, VBR
1.58% Growth 1000 Russell, IWF
1.56% Growth VIPERs, VUG
1.55% Materials SPDR, XLB
1.55% Water Resources, PHO
1.55% LargeCap Blend S&P=Weight R, RSP
1.54% Switzerland Index, EWL
1.54% Dividend SPDR, SDY
1.51% Value MidCap Russell, IWS
1.51% EAFE Index, EFA
1.50% Technology SPDR, XLK
1.48% LargeCap VIPERs, VV
1.44% Energy DJ, IYE
1.43% QQQ Nasdaq 100 Trust, QQQ
1.43% Growth S&P 500/BARRA, IVW
1.42% Blend Total Market VIPERs, VTI
1.42% LargeCap Blend Russell 3000, IWV
1.41% LargeCap 1000 R, IWB
1.41% S&P 500 iS LargeCap Blend, IVV
1.40% Austria Index, EWO
1.40% Financials VIPERs, VFH
1.38% S&P 500 SPDRs LargeCap Blend, SPY
1.38% LargeCap Blend S&P 100, OEF
1.37% Financial DJ US, IYF
1.36% China LargeCap Growth G D H USX PS, PGJ
1.33% DIAMONDS (DJIA), DIA
1.32% Value EAFE MSCI, EFV
1.31% Value S&P 500 B, IVE
1.31% Telecom DJ US, IYZ
1.27% Sweden Index, EWD
1.25% Value LargeCap Dynamic PS, PWV
1.25% Dividend High Yield Equity PS, PEY
1.25% Energy VIPERs, VDE
1.25% Value VIPERs, VTV
1.24% Energy SPDR, XLE
1.24% Value 1000 Russell, IWD
1.22% Dividend DJ Select, DVY
1.20% Financial SPDR, XLF
1.19% Consumer Staples SPDR, XLP
1.17% Biotech SPDR, XBI
1.16% Growth EAFE MSCI, EFG
1.14% Basic Materials DJ US, IYM
1.12% Dividend International, PID
1.07% Energy Global, IXC
0.96% Energy & Nat Res iS GS, IGE
0.96% Health Care SPDR, XLV
0.86% Utilities VIPERs, VPU
0.86% Small Cap EAFE MSCI iS, SCZ
0.86% Mexico Index, EWW
0.85% Brazil Index, EWZ
0.85% Bond, 20+ Years Treasury, TLT
0.81% Metals & Mining SPDR, XME
0.79% Global ex US ACWI iS, ACWX
0.77% India PS, PIN
0.76% REIT Wilshire, RWR
0.69% Frontier Markets Guggenheim , FRN
0.69% Utilities SPDR, XLU
0.66% Bond, High-Yield Corporate, HYG
0.65% REIT VIPERs, VNQ
0.63% Realty Cohen & Steers, ICF
0.62% Latin Am 40, ILF
0.60% Emerging 50 BLDRS, ADRE
0.57% Real Estate US DJ, IYR
0.48% Russia MV, RSX
0.42% Japan Index, EWJ
0.36% Financial Preferred, PGF
0.33% Preferred Stock iS, PFF
0.32% Bond, High-Yield Junk, JNK
0.25% China 25 iS, FXI
0.21% Canada Index, EWC
0.15% India Earnings WTree, EPI
0.06% Bond, 10 Year Treasury, IEF
0.03% Bond Muni ATM-Free S&P iS, MUB
0.02% Bond, Aggregate, AGG
0.00% Bond, 1-3 Year Treasury, SHY
-0.02% Bond Treasury Short-Term iS, SHV
-0.04% Bond, Corp, LQD
-0.08% Bond Ex-US Treas, BWX
-0.09% Agriculture DB PS, DBA
-0.12% Bond, TIPS, TIP
-0.16% Singapore Index, EWS
-0.20% Pacific VIPERs, VPL
-0.28% Emerging Markets, EEM
-0.30% South Africa Index, EZA
-0.41% Emerging VIPERs, VWO
-0.48% Commodity Tracking, DBC
-0.63% South Korea Index, EWY
-0.63% Bond EmrgMkt JPM iS, EMB
-0.67% Chile MSCI iS, ECH
-0.68% Silver Trust iS, SLV
-0.74% Gold Shares S.T., GLD
-0.83% Turkey MSCI iS, TUR
-0.85% Taiwan Index, EWT
-0.87% Pacific ex-Japan, EPP
-0.90% Australia Index, EWA
-0.99% Oil Fund PowerShares, DBO
-1.11% Silver Miners Global X, SIL
-1.17% Malaysia Index, EWM
-1.32% Hong Kong Index, EWH
-1.46% Oil, Crude, U.S. Oil Fund, USO
-1.51% Thailand MSCI iS, THD
-5.17% Indonesia MV, IDX
