by Robert W. Colby, Senior Analyst,

Stock Market: short-term price momentum turned back down again.

Short-term minor Ripples may come and go, but signify nothing.

Short-term, dead-cat bounces are best viewed as selling opportunities when the Primary Tide Trend is Bearish, as it is now.

Investors focus on capital preservation.

On Wednesday, major stock price indexes opened lower and fell most of the day. It was a decisive trend day. Intraday recovery attempts were few and feeble. Stocks closed near their lowest levels of the day. The Standard & Poor’s 500 cash index (952.77) broke down below previous 2-day lows and closed down 52.98 points, or 5.27%,. Total NYSE volume fell 2%.

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
% Price Change, Symbol, Name

9.58% , MZZ , Short 200% MidCap 400 PS, MZZ
6.81% , HSP , HOSPIRA
4.27% , YHOO , YAHOO
7.30% , HUM , HUMANA

Bearish Stocks: Falling Price and Rising Volume
% Price Change, Symbol, Name

-3.39% , PUI , Utilities, PUI
-5.05% , UTH , Utilities H, UTH
-4.55% , PWB , Lg Cap Growth PSD, PWB
-8.20% , KCE , Capital Markets KWB ST, KCE
-2.90% , PJP , Pharmaceuticals, PJP
-12.26% , MMC , MARSH & MCLENNAN
-5.10% , JKI , Value MidCap iS M, JKI
-40.88% , ABK , AMBAC FINL GRP
-5.58% , IGM , Technology GS, IGM
-5.83% , PHJ , Dividend Growth PS, PHJ
-4.22% , FDV , Value 40 Large Low P/E FT DB, FDV
-5.72% , JKJ , SmallCap Core iS M, JKJ
-8.40% , MOT , MOTOROLA
-5.40% , IGV , Software, IGV
-11.74% , FAST , Fastenal Company
-4.05% , PBJ , Food & Beverage, PBJ
-4.82% , PIV , Value Line Timeliness MidCap Gr, PIV
-9.89% , PDCO , Patterson Dental Company
-5.78% , IJS , Value SmallCap S&P 600 B, IJS
-9.99% , HSIC , Henry Schein Inc
-10.17% , MTB , M&T BANK
-2.10% , BHH , Internet B2B H, BHH
-3.96% , DGT , Global Titans, DGT
-7.43% , EZU , EMU Europe Index, EZU
-4.42% , IWZ , Growth LargeCap Russell 3000, IWZ
-5.39% , RFV , Value MidCap S&P 400, RFV
-4.51% , PWC , LargeCap Blend Dynamic PS, PWC
-6.06% , ELV , Value Large Cap DJ, ELV
-6.35% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-7.31% , BDH , Broadband H, BDH
-4.95% , VTI , Blend Total Market VIPERs, VTI
-8.70% , MCHP , Microchip Technology Incorporated
-8.93% , IYG , Financial Services DJ, IYG
-5.29% , PEJ , Leisure & Entertainment, PEJ
-9.17% , TXT , TEXTRON
-5.19% , NYC , LargeCap Blend NYSE Composite iS, NYC
-5.72% , IXN , Technology Global, IXN
-6.85% , TIF , TIFFANY
-5.95% , XHB , Homebuilders SPDR, XHB
-6.31% , EWQ , France Index, EWQ

9 Major U.S. Stock Sectors
Ranked on Latest One-Day Price Change
% Price Change, Sector ETF, Symbol

-1.47% Health Care SPDR, XLV
-1.77% Consumer Staples SPDR, XLP
-1.85% Utilities SPDR, XLU
-4.18% Industrial SPDR, XLI
-4.18% Materials SPDR, XLB
-4.47% Energy SPDR, XLE
-5.52% Consumer Discretionary SPDR, XLY
-6.05% Technology SPDR, XLK
-9.15% Financial SPDR, XLF

Primary Tide Trends for the 9 major sectors last for years. Here are my up-to-date Relative Strength Rankings, as measured with emphasis on these long-term Primary Tide Trends (listed in order of long-term relative strength):

Consumer Staples (XLP) Neutral, Market Weight. On 10/10/08, XLP/SPY Relative Strength Ratio rose to another new 5-year high, but XLP absolute price fell to a new 2-year low. All 9 sectors have lost in 2008, but XLP has lost least.

Health Care (XLV) Neutral, Market Weight. On 10/24/08, XLV/SPY Relative Strength Ratio rose to another new 4-year high. But on 10/10/08, XLV absolute price fell to a new 5-year low.

Utilities (XLU) Bearish, Underweight. On 10/10/08, the XLU absolute price fell to another new 2-year low.

Technology (XLK) Bearish, Underweight. On 10/24/08, the XLK absolute price fell to a new 5-year low.

Consumer Discretionary (XLY) Bearish, Underweight. On 10/24/08, XLY absolute price fell to its lowest level in 5 years.

Industrial (XLI) Bearish, Underweight. On 10/24/08, the XLI absolute price fell to a new 5-year low.

Energy (XLE) Bearish, Underweight. On 10/10/08, the XLE absolute price hit another new 18-month intraday low.

Materials (XLB) Bearish, Underweight. On 10/27/08, the XLB absolute price fell to a new 5-year low.

Financial (XLF) Bearish, Underweight. On 10/10/08, the XLF absolute price hit another new 10-year low. The XLF long-term trend of relative strength has been trending down since 2/20/07.

Foreign stock index EFA Relative Strength Ratio has sharply underperformed the S&P 500 since 11/27/07. EFA absolute price fell to a new 5-year low on 10/27/08 and has been in a falling trend since 10/31/07. EFA is the ETF representing the EAFE, the international developed country stock markets, ex the U.S. and Canada.

NASDAQ Composite remains Bearish. Relative Strength underperforming S&P 500 since 8/14/08. On 10/24/08, the absolute price made another new 5-year low, reconfirming absolute long-term trend weakness.

Growth Stock/Value Stock Relative Strength Ratio has been trending down since it peaked on 7/15/08.

The Small Cap/Large Cap Relative Strength Ratio has been trending down since it peaked on 9/19/08.

Crude Oil futures December contract price consolidated with an Inside Day (lower high and higher low). A new 2-week high on 11/4/08 signaled a short-term oversold bounce. The intermediate-term trend remains clearly Bearish, however. U.S. OIL FUND ETF (AMEX: USO) is not a pure play on Crude Oil, although it generally moves in the same direction.

The Energy stock sector has outperformed Crude Oil since 10/9/08.

Gold futures contract price reversed to the downside. The short-term trend appears choppy and uncertain. Gold remains in an intermediate-term downtrend since the peak of 1033.90 on 3/17/08.

Gold Mining stocks continue to underperform Gold futures on a major trend basis.

U.S. Treasury Bond futures contract price moved up above the highs of the previous 5 trading days. Bonds appear to be attempting an oversold bounce for the short term, but they still appear uncertain for the intermediate term. Long term, Bonds have been in a neutral sideways trend since June 2003.

iShares iBoxx $ Invest Grade Corp Bond (LQD) ETF absolute price and LQD/TLT Relative Strength Ratio both fell to multi-year new lows on 10/10/08. Bond investors appear to be seriously concerned about the economic outlook.

iShares Lehman TIPS Bond (TIP) ETF Relative Strength suggests deflation. The TIP/TLT Relative Strength ratio has been in a persistent downtrend since 7/3/08.

The U.S. dollar fell again, breaking below the lows of the previous 3 trading days. The short-term trend appears to be turning Bearish. The dollar just made a new 24-month high on 10/27/08, so the longer-term trend is still Bullish.

The Art of Contrary Thinking: Traders need to be extremely nimble to keep up with rapid changes in the mass mood. The business and financial news has flipped from fear to hope and back again this year, creating record high levels of volatility. Investors might be wise to focus on risk control.

Sentiment/Contrary Opinion: There were 30.3% Bulls versus 48.3% Bears as of 11/5/2008, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear ratio was 0.63, up from 0.44 the previous week. This is still an extreme level of pessimism. The ratio’s 38-year range is 0.28 to 17.51, and the median is 1.47. Contrary Opinion must be tempered with other timing tools, of course.

VIX Fear Index, now at 54.56, turned to the upside. Its 18-year high was 80.06 on 10/27/08. Its 18-year low was 9.89 on 1/24/07. 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.

VXN Fear Index, now at 55.43, turned up. Its 7-year high was 79.16 on 10/27/08. Its record high was 114.23 on 10/8/98. Its record low was 12.61 on 7/29/05. VXN measures NASDAQ Volatility using a method comparable to that used for VIX.

CBOE Put/Call Ratio is 0.82, which indicates Bearish sentiment. Its 4-year mean and median are 0.62, and its 4-year range is 0.35 to 1.28.

ISEE Call/Put Ratio is 1.12, which indicates Bearish sentiment. The ratio’s 4-year mean is 1.50, 4-year median is 1.47, and 4-year range is 0.51 to 3.16.

Fundamentals: The 2003-2007 Bull Market was fed by abundant global liquidly, M&A, leveraged buyouts, corporate stock buybacks, and the net balance of positive earnings surprises. The unfolding fallout from the subprime credit market crisis has derailed that engine. Economic statistics and corporate earnings have weakened and seem likely to weaken further over the next several months.

The Dow Theory last reconfirmed a Primary Tide Bear Market on 10/27/08, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed below their previous lowest closing prices of 2006-2008. These two Averages originally signaled a Primary Tide Bear Market on 11/21/07, when both closed below their closing price lows of August, 2007.

Shock and Fear. There is nothing new under the sun. The Dow Theory described this type of market many decades ago. From my book, The Encyclopedia of Technical Market Indicators , Second Edition : “The second Bear phase is marked by a sudden mood change, from optimism and hope to shock and fear. One day, the public wakes up and sees, much to its surprise, that “the emperor has no clothes”. Actual fundamental business conditions are not panning out to be as positive as previously hoped. In fact, there may be a little problem. The smart money is long gone, and there is no one left to buy when the public wants out. Stock prices drop steeply in a vacuum. Fear quickly replaces greed. Repeated waves of panic may sweep the market. Transactional volume swells as the unsophisticated investor screams, “Get me out at any price!” Sharp professional traders are willing to bid way down in price for stocks when prices drop too far too fast. The best that can be expected, however, is a dead-cat bounce that recovers only a fraction of the steep loss.”

The breadth of the market has been in a Bearish trend long term since June 2007. The number of New Lows has exceeded the number of New Highs most days for more than a year, since July 2007, and that is one sign of a Bear Market. On 10/27/08, the Cumulative Daily Advance-Decline Lines for the NYSE and for the NASDAQ both fell to new 2-year lows, reconfirming that the major breadth trends remain Bearish.

To discover the next Resistance, traders probably will be watching how the market acts at the following levels for the Standard & Poor’s 500 cash index (952.77):

Potential Resistance
1,576.09, high of 10/11/2007
1,552.76, high of 10/31/2007
1,523.57, high of 12/11/2007
1,498.85, high of 12/26/2007
1,440.24, high of 5/19/2008
1,406.32, high of 5/29/2008
1,366.59, high of 6/17/2008
1,335.63, high of 6/25/2008
1,313.15, high of 8/11/2008
1,274.42, high of 9/8/2008
1,255.09, high of 9/12/2008
1238.807, Fibonacci 78.6% of 1,576.09 high
1,220.03, high of 9/25/2008
1,077.08, Fibonacci 61.8% of 2002-2007 upmove
1,044.31, high of 10/14/2008
1,001.84, high of 11/4/2008

To discover the next Support, traders probably will be watching how the market acts at the following levels for the S&P 500 cash index (952.77):

Potential Support
941.43, Fibonacci 78.6% of 2002-2007 upmove
839.80, low of 10/10/2008
788.05, Fibonacci 50.0% of 1,576.09 high
768.63, low of 10/10/2002
602.07, Fibonacci 38.2% of 1,576.09 high

Daily Rankings of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

10.47% Short 200% QQQ PS, QID
9.61% Short 200% Dow 30 PS, DXD
9.58% Short 200% MidCap 400 PS, MZZ
8.74% Short 200% S&P 500 PS, SDS
5.93% Short 100% QQQ, PSQ
5.40% Short 100% S&P 500, SH
5.11% Short 100% Dow 30, DOG
5.08% Short 100% MidCap 400, MYY
1.94% Bond, Corp, LQD
1.52% Bond, Aggregate, AGG
1.19% Bond, 20+ Years Treasury, TLT
0.89% Silver Trust iS, SLV
0.71% Bond, TIPS, TIP
0.53% Bond, 10 Year Treasury, IEF
0.18% Bond, 1-3 Year Treasury, SHY
-1.47% Health Care SPDR, XLV
-1.52% Biotech H, BBH
-1.77% Consumer Staples SPDR, XLP
-1.82% Semiconductor SPDR, XSD
-1.85% Utilities SPDR, XLU
-2.09% Japan Index, EWJ
-2.10% Internet B2B H, BHH
-2.15% Software, PSJ
-2.20% Japan LargeCap Blend TOPIX 150, ITF
-2.57% Hardware & Electronics, PHW
-2.59% Commodity Tracking, DBC
-2.73% Internet Infrastructure H, IIH
-2.85% Malaysia Index, EWM
-2.90% Biotech & Genome, PBE
-2.90% Pharmaceuticals, PJP
-2.95% Pacific VIPERs, VPL
-2.97% Consumer Staples VIPERs, VDC
-3.05% Health Care VIPERs, VHT
-3.06% Semiconductors, PSI
-3.13% Healthcare DJ, IYH
-3.19% IPOs, First Tr IPOX-100, FPX
-3.31% Consumer Non-Cyclical, IYK
-3.32% Biotech SPDR, XBI
-3.37% Utilities VIPERs, VPU
-3.39% Utilities, PUI
-3.43% Value MidCap Dynamic PS, PWP
-3.48% Growth S&P 500, RPG
-3.53% Value SmallCap S&P 600, RZV
-3.54% Retail, PMR
-3.55% Gold Shares S.T., GLD
-3.59% Value LargeCap NYSE 100 iS, NY
-3.69% Asia 50 BLDRS, ADRA
-3.84% Growth SmallCap iS M, JKK
-3.88% Utilities DJ, IDU
-3.96% Global Titans, DGT
-4.00% Growth Small Cap DJ, DSG
-4.02% Dividend International, PID
-4.05% Food & Beverage, PBJ
-4.06% Pharmaceutical H, PPH
-4.07% Insurance, PIC
-4.09% Internet Architecture H, IAH
-4.15% LargeCap Blend Socially Responsible iS, KLD
-4.18% Industrial SPDR, XLI
-4.18% Materials SPDR, XLB
-4.19% Nanotech Lux, PXN
-4.20% Singapore Index, EWS
-4.20% S&P 500 SPDRs LargeCap Blend, SPY
-4.22% Value 40 Large Low P/E FT DB, FDV
-4.27% Canada Index, EWC
-4.30% Spain Index, EWP
-4.34% LargeCap Blend Core iS M, JKD
-4.35% Energy Exploration & Prod, PXE
-4.38% Dividend Appreciation Vipers, VIG
-4.39% MidCap Growth iS M, JKH
-4.42% Growth LargeCap Russell 3000, IWZ
-4.45% MidCap S&P 400 SPDRs, MDY
-4.47% Energy SPDR, XLE
-4.48% Italy Index, EWI
-4.51% LargeCap Blend Dynamic PS, PWC
-4.52% Technology MS sT, MTK
-4.55% Lg Cap Growth PSD, PWB
-4.57% Growth SmallCap R 2000, IWO
-4.57% Growth MidCap S&P 400, RFG
-4.59% Energy DJ, IYE
-4.61% Growth S&P 500/BARRA, IVW
-4.62% OTC Dynamic PS, PWO
-4.62% MidCap S&P 400 iS, IJH
-4.68% Value LargeCap Dynamic PS, PWV
-4.69% Growth 1000 Russell, IWF
-4.70% Aerospace & Defense, PPA
-4.75% Value EAFE MSCI, EFV
-4.75% Pacific ex-Japan, EPP
-4.76% S&P 500 iS LargeCap Blend, IVV
-4.82% Value Line Timeliness MidCap Gr, PIV
-4.84% Growth MidCap 400 B, IJK
-4.86% Energy VIPERs, VDE
-4.86% Telecommunications & Wireless, PTE
-4.86% Retail H, RTH
-4.86% Software H, SWH
-4.89% Natural Resource iS GS, IGE
-4.89% LargeCap Blend Russell 3000, IWV
-4.90% Wilshire 5000 ST TM, TMW
-4.92% Small Cap VIPERs, VB
-4.93% Healthcare Global, IXJ
-4.95% Blend Total Market VIPERs, VTI
-4.97% Growth VIPERs, VUG
-4.97% Consumer Cyclical DJ, IYC
-5.00% Networking, PXQ
-5.03% Global 100, IOO
-5.03% Growth SmallCap VIPERs, VBK
-5.05% Utilities H, UTH
-5.08% Microcap Russell, IWC
-5.08% Growth SmallCap Dynamic PS, PWT
-5.09% Australia Index, EWA
-5.10% Growth EAFE MSCI, EFG
-5.10% Value MidCap iS M, JKI
-5.12% MidCap VIPERs, VO
-5.14% LargeCap VIPERs, VV
-5.14% Dividend Achievers PS, PFM
-5.15% MidCap Russell, IWR
-5.15% Value S&P 500, RPV
-5.15% Internet H, HHH
-5.17% Growth BARRA Small Cap 600, IJT
-5.18% Industrials VIPERs, VIS
-5.18% Semiconductor iS GS, IGW
-5.19% LargeCap Blend NYSE Composite iS, NYC
-5.21% SmallCap S&P 600, IJR
-5.21% Growth LargeCap NASDAQ 100, QQQQ
-5.24% SmallCap Russell 2000, IWM
-5.24% Growth LargeCap NASDAQ Fidelity, ONEQ
-5.24% LargeCap Blend S&P 1500 iS, ISI
-5.26% Industrial LargeCap Blend DJ US, IYJ
-5.26% Value MidCap Russell, IWS
-5.27% Water Resources, PHO
-5.28% LargeCap 1000 R, IWB
-5.29% Leisure & Entertainment, PEJ
-5.29% Growth MidCap Russell, IWP
-5.30% Info Tech VIPERs, VGT
-5.31% Oil Services H, OIH
-5.32% Value MidCap S&P 400 B, IJJ
-5.33% Europe 100 BLDRS, ADRU
-5.33% Extended Mkt VIPERs, VXF
-5.36% LargeCap Blend Total Market DJ, IYY
-5.37% LargeCap Blend S&P=Weight R, RSP
-5.39% Value MidCap S&P 400, RFV
-5.40% Dividend SPDR, SDY
-5.40% Software, IGV
-5.44% EAFE Index, EFA
-5.45% Value Small Cap DJ, DSV
-5.46% Growth Large Cap, ELG
-5.49% Value SmallCap Dynamic PS, PWY
-5.49% Telecommunications Global, IXP
-5.50% Consumer D. VIPERs, VCR
-5.52% LargeCap Blend S&P 100, OEF
-5.52% Consumer Discretionary SPDR, XLY
-5.54% Technology DJ US, IYW
-5.55% Value 1000 Russell, IWD
-5.58% Technology GS, IGM
-5.59% Growth LargeCap iS M, JKE
-5.60% Growth Mid Cap Dynamic PS, PWJ
-5.62% Value S&P 500 B, IVE
-5.62% LargeCap Rydex Rus Top 50, XLG
-5.63% Energy Global, IXC
-5.69% SmallCap PS Zacks, PZJ
-5.70% Value LargeCap Fundamental RAFI 1000, PRF
-5.72% Technology Global, IXN
-5.72% SmallCap Core iS M, JKJ
-5.73% Value VIPERs, VTV
-5.78% Value SmallCap S&P 600 B, IJS
-5.80% Dividend DJ Select, DVY
-5.83% Dividend Growth PS, PHJ
-5.85% MidCap Blend Core iS M, JKG
-5.87% Dividend Leaders, FDL
-5.88% Networking, IGN
-5.88% Value SmallCap VIPERS, VBR
-5.91% Hong Kong Index, EWH
-5.92% Value SmallCap iS M, JKL
-5.95% Europe 350 S&P Index, IEV
-5.95% Homebuilders SPDR, XHB
-5.96% Netherlands Index, EWN
-5.98% Value LargeCap Russell 3000, IWW
-6.04% Belgium Index, EWK
-6.05% Technology SPDR, XLK
-6.06% Value Large Cap DJ, ELV
-6.08% Semiconductor H, SMH
-6.10% Materials VIPERs, VAW
-6.12% Oil & Gas, PXJ
-6.16% Telecom DJ US, IYZ
-6.17% Euro STOXX 50, FEZ
-6.17% Oil, Crude, U.S. Oil Fund, USO
-6.24% Micro Cap Zachs, PZI
-6.31% Financials Global LargeCap Value, IXG
-6.31% France Index, EWQ
-6.32% Value SmallCap Russell 2000, IWN
-6.35% Value LargeCap Euro STOXX 50 DJ, FEU
-6.39% Transportation Av DJ, IYT
-6.41% European VIPERs, VGK
-6.50% Building & Construction, PKB
-6.53% Value LargeCap iS M, JKF
-6.72% Basic Materials DJ US, IYM
-6.72% United Kingdom Index, EWU
-6.76% Germany Index, EWG
-6.80% Telecom H, TTH
-6.81% Switzerland Index, EWL
-6.83% Telecom Services VIPERs, VOX
-7.16% Mexico Index, EWW
-7.31% Broadband H, BDH
-7.32% Dividend High Yield Equity PS, PEY
-7.42% South Korea Index, EWY
-7.43% EMU Europe Index, EZU
-7.66% Austria Index, EWO
-7.84% Sweden Index, EWD
-7.85% WilderHill Clean Energy PS, PBW
-8.08% Financial DJ US, IYF
-8.20% Capital Markets KWB ST, KCE
-8.32% Financials VIPERs, VFH
-8.67% Bank Regional H, RKH
-8.91% Ultra Dow30 Double, DDM
-8.93% Financial Services DJ, IYG
-8.98% Ultra MidCap400 Double, MVV
-9.05% Metals & Mining SPDR, XME
-9.15% Financial SPDR, XLF
-9.20% Taiwan Index, EWT
-9.21% China LargeCap Growth G D H USX PS, PGJ
-9.31% India Earnings WTree, EPI
-9.31% Ultra S&P500 Double, SSO
-9.41% China 25 iS, FXI
-9.66% Real Estate US DJ, IYR
-9.81% Emerging 50 BLDRS, ADRE
-10.32% Realty Cohen & Steers, ICF
-10.43% REIT Wilshire, RWR
-10.75% Developed 100 BLDRS, ADRD
-10.80% Brazil Index, EWZ
-10.88% South Africa Index, EZA
-10.91% Ultra QQQ Double, QLD
-11.14% Latin Am 40, ILF
-11.66% Emerging VIPERs, VWO
-12.73% Emerging Markets, EEM