A Typical Minor Bounce

The S&P 500 Composite (SPX, 1,144.03 ) rose 20.08 points or 1.79% on Wednesday, October 5, 2011. NYSE volume fell 26% below Tuesday’s active pace.

Over the past 2 trading days, the stock market has recovered a normal fraction of recent losses. Over the past 2 months, there have been 9 previous bounces lasting 1 to 5 trading days. Minor bounces are entirely normal and expected, but they also are fickle and fleeting. This 2-day recovery appears to be a typical minor bounce.

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.

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. A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated.
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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 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 falling further below falling 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) shot up above the highs of the previous 14-months on 10/3/11. OEX/SPX rose above 50-day and 200-day SMAs on 9/21/11, which was a RELATIVELY bullish sign for the short-term trend of the Ratio. Absolute price of OEX remains bearish.

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.

The S&P 500 Composite (SPX, 1,144.03 ) rose 20.08 points or 1.79% on Wednesday, October 5, 2011. NYSE volume fell 26% below Tuesday’s active pace.

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
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) 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) rose above the highs of the previous 6 trading days on 10/4/11 before pulling back into the previous day’s range. The minor trend turned up on 9/28/11. IEF rose above all-time highs on 9/22/11, reconfirming its preexisting major uptrend. Support 103.80, 103.55, 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 10/3/11, reconfirming a bearish long-term major trend. This 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 highs of the previous 8 months on 10/4/11, 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 22.13, 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 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 broke down below 9-week lows on 9/26/11,confirming a downtrend, for the short term at least. Gold rose above all-time highs on 9/6/11, reconfirming its preexisting major uptrend. 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 broke down below the lows of the previous 7 months on 9/26/11, 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) fell below the lows of the previous 14 months on 10/5/11, reconfirming a bearish major trend for the long term. Such 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
5.15% , PXJ , Oil & Gas, PXJ
10.10% , YHOO , YAHOO
3.37% , IGN , Networking, IGN
12.09% , MBI , MBIA
7.69% , BIIB , BIOGEN IDEC
12.36% , RIMM , RESEARCH IN MOTION LTD
2.51% , PKB , Building & Construction, PKB
5.44% , FPX , IPOs, First Tr IPOX-100, FPX
8.51% , APOL , APOLLO GROUP
1.69% , PID , Dividend International, PID
5.31% , HMA , HEALTH MGMT STK A
2.27% , IXG , Financials Global LargeCap Value, IXG
1.91% , IWZ , Growth LargeCap Russell 3000, IWZ
2.96% , EWH , Hong Kong Index, EWH
3.26% , IXC , Energy Global, IXC
8.93% , NBR , NABORS
3.08% , XSD , Semiconductor SPDR, XSD
1.93% , KCE , Capital Markets KWB ST, KCE
5.66% , XME , Metals & Mining SPDR, XME
2.13% , EWK , Belgium Index, EWK
1.20% , JKD , LargeCap Blend Core iS M, JKD
3.57% , PBW , WilderHill Clean Energy PS, PBW
3.72% , CSCO , CISCO SYSTEMS
5.85% , DELL , DELL
1.91% , PPA , Aerospace & Defense, PPA
1.82% , EIS , Israel MSCI iS, EIS
5.56% , PTEN , Patterson-UTI Energy Inc
2.80% , EPU , Peru MSCI iS, EPU
5.26% , THC , TENET HEALTHCARE
7.46% , DOW , DOW CHEMICAL
2.54% , EWD , Sweden Index, EWD
2.05% , VTI , Blend Total Market VIPERs, VTI
3.72% , JBL , JABIL CIRCUIT

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.43% , MYY , Short 100% MidCap 400, MYY
-2.67% , YUM , YUM BRANDS
-2.31% , CCE , COCA COLA ENTER
-0.10% , UTH , Utilities H, UTH
-2.30% , LH , LAB CRP OF AMER
-2.29% , ED , CON ED
-0.85% , VNQ , REIT VIPERs, VNQ
-0.82% , RWR , REIT Wilshire, RWR
-0.54% , MHP , MCGRAW HILL
-1.23% , BIG , BIG LOTS
-2.87% , BK , BANK OF NEW YORK
-0.38% , NE , NOBLE
-1.71% , COST , COSTCO WHOLESAL
-0.29% , LMT , LOCKHEED MARTIN
-0.54% , EXC , EXELON CORP
-0.57% , SJM , J. M. Smucker
-0.39% , PETM , PETsMART Inc
-0.69% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.45% , JWN , NORDSTROM
-1.60% , DGX , QUEST DIAG
-0.64% , EMN , EASTMAN CHEM
-0.34% , AGG , Bond, Aggregate, AGG
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
5.66% Metals & Mining SPDR, XME
4.95% Silver Miners Global X, SIL
4.44% Basic Materials DJ US, IYM
4.35% Canada Index, EWC
4.30% Indonesia MV, IDX
4.07% Energy & Nat Res iS GS, IGE
4.06% China 25 iS, FXI
3.98% Materials SPDR, XLB
3.79% Austria Index, EWO
3.68% Energy SPDR, XLE
3.57% WilderHill Clean Energy PS, PBW
3.51% Energy VIPERs, VDE
3.48% Homebuilders SPDR, XHB
3.37% Germany Index, EWG
3.37% Networking, IGN
3.35% Energy DJ, IYE
3.26% Energy Global, IXC
3.18% Semiconductor iS IGW, SOXX
3.11% Oil, Crude, U.S. Oil Fund, USO
3.08% Semiconductor SPDR, XSD
2.96% Hong Kong Index, EWH
2.87% Australia Index, EWA
2.86% China LargeCap Growth G D H USX PS, PGJ
2.84% Pacific ex-Japan, EPP
2.83% Biotech SPDR, XBI
2.77% France Index, EWQ
2.69% Oil Fund PowerShares, DBO
2.67% Transportation Av DJ, IYT
2.61% EMU Europe Index, EZU
2.57% QQQ Nasdaq 100 Trust, QQQ
2.54% Sweden Index, EWD
2.46% Technology DJ US, IYW
2.39% Brazil Index, EWZ
2.34% Info Tech VIPERs, VGT
2.32% Emerging Markets, EEM
2.32% Growth MidCap Russell, IWP
2.27% LargeCap Blend S&P=Weight R, RSP
2.23% Thailand MSCI iS, THD
2.20% Italy Index, EWI
2.19% European VIPERs, VGK
2.18% Value MidCap S&P 400 B, IJJ
2.15% Growth SmallCap VIPERs, VBK
2.14% Growth VIPERs, VUG
2.13% Belgium Index, EWK
2.12% Industrial SPDR, XLI
2.12% MidCap S&P 400 SPDRs, MDY
2.12% Water Resources, PHO
2.08% Technology SPDR, XLK
2.07% LargeCap Blend Russell 3000, IWV
2.07% LargeCap 1000 R, IWB
2.06% Emerging 50 BLDRS, ADRE
2.05% LargeCap VIPERs, VV
2.05% MidCap Russell, IWR
2.05% MidCap S&P 400 iS, IJH
2.05% Blend Total Market VIPERs, VTI
2.04% Value 1000 Russell, IWD
2.03% Growth 1000 Russell, IWF
1.99% S&P 500 iS LargeCap Blend, IVV
1.98% Growth MidCap 400 B, IJK
1.97% Growth S&P 500/BARRA, IVW
1.96% Silver Trust iS, SLV
1.93% Latin Am 40, ILF
1.93% Capital Markets KWB ST, KCE
1.91% United Kingdom Index, EWU
1.90% Value S&P 500 B, IVE
1.88% Value LargeCap Dynamic PS, PWV
1.87% Malaysia Index, EWM
1.87% Europe 350 S&P Index, IEV
1.85% Growth SmallCap R 2000, IWO
1.85% Global ex US ACWI iS, ACWX
1.85% S&P 500 SPDRs LargeCap Blend, SPY
1.84% Global 100, IOO
1.84% Value MidCap Russell, IWS
1.83% Consumer Discretionary SPDR, XLY
1.82% Small Cap VIPERs, VB
1.74% LargeCap Blend S&P 100, OEF
1.74% Value VIPERs, VTV
1.74% Emerging VIPERs, VWO
1.73% Value EAFE MSCI, EFV
1.69% Dividend International, PID
1.67% Netherlands Index, EWN
1.65% Spain Index, EWP
1.61% Health Care SPDR, XLV
1.59% Singapore Index, EWS
1.58% Value SmallCap VIPERS, VBR
1.54% EAFE Index, EFA
1.45% Financial Services DJ, IYG
1.45% Financial SPDR, XLF
1.45% DIAMONDS (DJIA), DIA
1.42% Dividend Appreciation Vipers, VIG
1.41% Commodity Tracking, DBC
1.37% SmallCap Russell 2000, IWM
1.36% Dividend SPDR, SDY
1.33% SmallCap S&P 600, IJR
1.30% South Africa Index, EZA
1.30% Financials VIPERs, VFH
1.26% Growth BARRA Small Cap 600, IJT
1.25% Chile MSCI iS, ECH
1.24% Growth EAFE MSCI, EFG
1.22% Bond, High-Yield Corporate, HYG
1.15% Gold Shares S.T., GLD
1.13% Dividend DJ Select, DVY
1.12% Financial DJ US, IYF
1.05% Value SmallCap S&P 600 B, IJS
1.02% Preferred Stock iS, PFF
0.98% Mexico Index, EWW
0.94% Agriculture DB PS, DBA
0.94% Value SmallCap Russell 2000, IWN
0.90% Financial Preferred, PGF
0.90% Telecom DJ US, IYZ
0.87% Turkey MSCI iS, TUR
0.84% Bond EmrgMkt JPM iS, EMB
0.81% Pacific VIPERs, VPL
0.75% South Korea Index, EWY
0.67% Taiwan Index, EWT
0.61% Dividend High Yield Equity PS, PEY
0.50% Microcap Russell, IWC
0.50% Small Cap EAFE MSCI iS, SCZ
0.48% Bond, High-Yield Junk, JNK
0.45% Frontier Markets Guggenheim , FRN
0.41% Bond, Corp, LQD
0.27% India PS, PIN
0.24% Bond Ex-US Treas, BWX
0.23% Utilities VIPERs, VPU
0.14% Consumer Staples SPDR, XLP
0.06% Utilities SPDR, XLU
0.06% India Earnings WTree, EPI
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.07% Bond, TIPS, TIP
-0.14% Switzerland Index, EWL
-0.20% Russia MV, RSX
-0.34% Bond, Aggregate, AGG
-0.42% Bond, 10 Year Treasury, IEF
-0.48% Japan Index, EWJ
-0.69% Bond Muni ATM-Free S&P iS, MUB
-0.71% Realty Cohen & Steers, ICF
-0.72% Bond, 20+ Years Treasury, TLT
-0.76% Real Estate US DJ, IYR
-0.82% REIT Wilshire, RWR
-0.85% REIT VIPERs, VNQ