Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped to 50.0% in early August, up from previous peaks at 47.0% in July and 42.0% in May. “Watch out for a correction — or worse. The odds of a stock market correction are now quite elevated,” according to Mark Hulbert, writing for MarketWatch on 8/8/12.

The S&P 500 (SPX: 1,401.35) rose 7.12 points or 0.51% on Tuesday. SPX rose above its highs of the previous 14 weeks–but various technical indicators again failed to confirm.

NYSE volume rose 18%. On-Balance Volume for the SPX remains in a downtrend with bearish divergence, however. NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price. Volume has not been confirming the price up move.

Short-term momentum oscillators failed to rise above June-July highs to confirm the higher high for the S&P 500.

Currently, as of 8/7/12, the Dow-Jones Industrials are above June-July highs but the Transports continue to lag well below June-July highs.

Technical market conditions suggest that downside risk still may exceed upside potential for the stock market. Choosing safety over risk appears to be the most reasonable approach for conservative traders and investors.

For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
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Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.

Meanwhile, one money manager made gains for 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).

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Stock Market Indicators

The Dow Theory signaled a Primary Tide Bear Market on 5/17/12 when both Industrials and Transports closed below their closing price lows of the previous 4 months, including the critical lows of March and April, 2012. The Averages gave an early warning by diverging after 2/3/12, as the Transports turned corrective and failed to confirm higher highs by the Industrials. Again on 5/1/12, the Industrials rose to a higher closing price high while the Transports failed to rise to a higher closing price high, thereby indicating a non-confirmation and bearish divergence. Currently, as of 8/7/12, the Industrials are above June-July highs but the Transports continue to lag well below June-July highs.

VIX Fear Index fell to 15.48 intraday on 8/7/12, its lowest level since 7/19/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a rapid shift from worried concern to bullish complacency. 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 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
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012

The S&P 500 Composite Potential Support
1391.74, high of 7/30/2012
1389.07, Fibonacci 78.6% of April-June 2012 range
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1344.56, Fibonacci 50% of April-June 2012 range
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1344.63, 50-day SMA
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1323.94, 200-day SMA
1306.62, low of 6/12/2012
1303.47, Fibonacci 23.6% of April-June 2012 range
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
1266.74, low of 6/4/2012
1265.26, low of 1/5/2012
1262.30, low of 12/27/2011
1257.58, Fibonacci 61.8% of 2011 range
1248.58, Fibonacci 50.0% of 2011-12 range
1244.80, low of 12/7/2011
1239.73, low of 12/1/2011
1238.81, Fibonacci 78.6% of 1,576.09 high
1234.81, low of 11/3/2011
1231.04, high of 12/16/2011
1228.74, Fibonacci 61.8% of 2007-2009 range
1226.64, low of 11/9/2011
1224.57, high of 12/19/2011
1215.20, low of 12/16/2011
1207.56, Fibonacci 61.8% of 2011-12 range
1202.37, low of 12/19/2011
1158.66, low of 11/25/2011
1121.44, Fibonacci 50% of 2007-2009 range
1074.77, low of 10/4/2011
1149.16, Fibonacci 78.6% R of 2011-12 range
1014.14, Fibonacci 38.2% of 2007-2009 range
1010.91, low of 7/1/2010
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
881.38, Fibonacci 23.6% of 2007-2009 range
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
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Tangible Assets, Commodities

U.S. dollar ETF (UUP) fell below its 50-day SMA on 8/3/12, turning systematically neutral. UUP remains above its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.14, 23.52, 25.84, 27.19, 28.97.

CRB Commodity Price Index remains systematically neutral: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 8/18/11.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) remains systematically neutral: above its 50-day SMA, above its 200-day SMA, but its 50-day SMA has remained below its 200-day SMA every day since 8/8/11. The 50-200 spread has been narrowing since late June but still may be days away from the 2 SMAs meeting. A trend of rising food prices could bring trouble for the general economy because more consumer spending for food means less consumer spending available for other goods and services.

Crude Oil, United States Oil ETF (USO) turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 35.25, 36.97, 40.29, 41.38, 42.30, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. GLD remains below its 200-day SMA, and its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.

Silver, iShares Silver Trust ETF (SLV) price whipsawed back above its 50-day SMA on 8/3/12, thereby turning systematically neutral again. SLV remains below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) fell below its lows of the previous 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD is now systematically neutral: above its 50-day SMA, below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price rose above its 50-day SMA on 8/7/12, thereby turning systematically neutral. JJC fell to its lowest level in 8 months on 8/2/12, thereby confirming its major bearish trend. JJC price remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since 12/31/10. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this relative weakness may be suggesting rising doubts about prospects going forward.
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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 later revealed to be deal stocks 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
1.43% , PKB , Building & Construction, PKB
2.29% , XSD , Semiconductor SPDR, XSD
1.19% , ITF , Japan LargeCap Blend TOPIX 150, ITF
6.31% , FLEX , Flextronics International Ltd
2.07% , PXE , Energy Exploration & Prod, PXE
4.55% , SIRI , Sirius Satellite
1.02% , PSJ , Software, PSJ
4.95% , WYNN , Wynn Resorts L
2.31% , SOXX , Semiconductor iS IGW, SOXX
2.76% , TXT , TEXTRON
1.22% , ADRA , Asia 50 BLDRS, ADRA
2.49% , SHW , SHERWIN WILLIAMS
1.14% , PPA , Aerospace & Defense, PPA
3.29% , MDP , MEREDITH
0.81% , DGT , Global Titans, DGT
1.10% , RPG , Growth S&P 500, RPG
5.23% , AMAT , APPLIED MATERIAL
3.87% , LSI , LSI LOGIC
0.64% , TMW , Wilshire 5000 ST TM, TMW
4.29% , JCI , JOHNSON CONTROLS
4.34% , NTAP , NETWK APPLIANCE
1.74% , HAR , Harman International
1.59% , EPI , India Earnings WTree, EPI
3.58% , ALTR , ALTERA
1.98% , MHP , MCGRAW HILL
2.78% , CMI , CUMMINS
1.69% , AET , AETNA
2.20% , BHI , BAKER HUGHES
2.72% , BEN , FRANKLIN RSC
0.63% , IXG , Financials Global LargeCap Value, IXG
2.89% , ALL , ALLSTATE
0.79% , IOO , Global 100, IOO
2.08% , LTD , LIMITED BRANDS

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-6.45% , FE , FIRSTENERGY
-5.67% , CHD , Church & Dwight
-24.38% , NIHD , NII Holdings, Inc.
-1.91% , MZZ , Short 200% MidCap 400 PS, MZZ
-2.20% , LLY , ELI LILLY
-5.17% , ODP , OFFICE DEPOT
-2.60% , LO , Lorillard, Inc. LO
-2.35% , MO , ALTRIA, MO
-1.74% , CVS , CVS
-2.14% , PFE , PFIZER
-1.03% , EXPD , Expeditors International WA
-0.90% , MYY , Short 100% MidCap 400, MYY
-1.84% , LUV , SOUTHWEST AIRLS
-1.57% , PCG , PG&E
-1.93% , RAI , Reynolds American
-0.68% , AEP , AM ELEC POWER
-1.38% , CL , COLGATE
-1.52% , EIX , EDISON INTL
-1.41% , TUR , Turkey MSCI iS, TUR
-1.17% , SRCL , Stericycle, SRCL
-1.23% , ICF , Realty Cohen & Steers, ICF
-1.29% , TLT , Bond, 20+ Years Treasury, TLT
-0.70% , IDX , Indonesia MV, IDX
-0.52% , LQD , Bond, Corp, LQD
-0.27% , EWM , Malaysia Index, EWM
-0.25% , PIC , Insurance, PIC
-1.66% , QID , Short 200% QQQ PS, QID
-0.21% , TIP , Bond, TIPS, TIP
-1.17% , PNW , PINNACLE WEST
-1.51% , EQR , EQUITY RESIDENT BEN INT
-0.59% , IYZ , Telecom DJ US, IYZ
-1.20% , ECH , Chile MSCI iS, ECH
-1.12% , CMCSA , COMCAST HOLDINGS 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
2.81% Networking, IGN
2.45% Spain Index, EWP
2.31% Semiconductor iS IGW, SOXX
2.29% Semiconductor SPDR, XSD
2.16% Italy Index, EWI
1.97% Capital Markets KWB ST, KCE
1.92% China LargeCap Growth G D H USX PS, PGJ
1.85% Homebuilders SPDR, XHB
1.81% Canada Index, EWC
1.75% Energy & Nat Res iS GS, IGE
1.71% WilderHill Clean Energy PS, PBW
1.66% Energy Global, IXC
1.60% France Index, EWQ
1.59% India Earnings WTree, EPI
1.50% Energy SPDR, XLE
1.49% Metals & Mining SPDR, XME
1.48% Energy VIPERs, VDE
1.43% Energy DJ, IYE
1.42% Oil, Crude, U.S. Oil Fund, USO
1.35% EMU Europe Index, EZU
1.29% India PS, PIN
1.27% Value EAFE MSCI, EFV
1.21% Basic Materials DJ US, IYM
1.21% Japan Index, EWJ
1.17% Growth MidCap Russell, IWP
1.16% Russia MV, RSX
1.16% Materials SPDR, XLB
1.14% Growth SmallCap VIPERs, VBK
1.13% Growth SmallCap R 2000, IWO
1.11% Growth MidCap 400 B, IJK
1.07% Oil Fund PowerShares, DBO
1.03% MidCap S&P 400 SPDRs, MDY
1.02% Industrial SPDR, XLI
1.01% Info Tech VIPERs, VGT
0.99% LargeCap Blend S&P=Weight R, RSP
0.98% MidCap Russell, IWR
0.97% Pacific VIPERs, VPL
0.96% MidCap S&P 400 iS, IJH
0.95% Small Cap VIPERs, VB
0.94% Consumer Discretionary SPDR, XLY
0.92% Technology DJ US, IYW
0.91% SmallCap Russell 2000, IWM
0.88% Value SmallCap S&P 600 B, IJS
0.87% Value MidCap Russell, IWS
0.86% Europe 350 S&P Index, IEV
0.85% Value MidCap S&P 400 B, IJJ
0.85% Water Resources, PHO
0.84% SmallCap S&P 600, IJR
0.84% Financial Services DJ, IYG
0.84% Netherlands Index, EWN
0.84% Global ex US ACWI iS, ACWX
0.84% EAFE Index, EFA
0.83% QQQ Nasdaq 100 Trust, QQQ
0.79% Global 100, IOO
0.79% European VIPERs, VGK
0.76% Hong Kong Index, EWH
0.76% Commodity Tracking, DBC
0.74% Dividend International, PID
0.72% Growth BARRA Small Cap 600, IJT
0.69% Value SmallCap VIPERS, VBR
0.67% Technology SPDR, XLK
0.66% Growth VIPERs, VUG
0.63% Biotech SPDR, XBI
0.62% Pacific ex-Japan, EPP
0.60% Blend Total Market VIPERs, VTI
0.60% Value SmallCap Russell 2000, IWN
0.59% Silver Trust iS, SLV
0.58% Germany Index, EWG
0.57% China 25 iS, FXI
0.57% Value LargeCap Dynamic PS, PWV
0.57% South Korea Index, EWY
0.57% Dividend Appreciation Vipers, VIG
0.55% Austria Index, EWO
0.55% LargeCap 1000 R, IWB
0.55% Value 1000 Russell, IWD
0.54% Dividend SPDR, SDY
0.53% Value S&P 500 B, IVE
0.52% LargeCap VIPERs, VV
0.51% S&P 500 iS LargeCap Blend, IVV
0.50% S&P 500 SPDRs LargeCap Blend, SPY
0.49% LargeCap Blend Russell 3000, IWV
0.47% United Kingdom Index, EWU
0.47% Small Cap EAFE MSCI iS, SCZ
0.46% Growth S&P 500/BARRA, IVW
0.45% Growth 1000 Russell, IWF
0.45% Financials VIPERs, VFH
0.43% Australia Index, EWA
0.40% Financial SPDR, XLF
0.39% Value VIPERs, VTV
0.38% Financial DJ US, IYF
0.37% DIAMONDS (DJIA), DIA
0.36% LargeCap Blend S&P 100, OEF
0.31% Growth EAFE MSCI, EFG
0.29% Thailand MSCI iS, THD
0.27% Emerging Markets, EEM
0.26% Microcap Russell, IWC
0.23% Emerging 50 BLDRS, ADRE
0.22% Financial Preferred, PGF
0.21% Dividend High Yield Equity PS, PEY
0.21% Switzerland Index, EWL
0.20% Emerging VIPERs, VWO
0.17% Belgium Index, EWK
0.14% Preferred Stock iS, PFF
0.12% Transportation Av DJ, IYT
0.08% Taiwan Index, EWT
0.07% Brazil Index, EWZ
0.01% South Africa Index, EZA
0.01% Bond Treasury Short-Term iS, SHV
-0.01% Gold Shares S.T., GLD
-0.04% Bond EmrgMkt JPM iS, EMB
-0.05% Bond, 1-3 Year Treasury, SHY
-0.05% Frontier Markets Guggenheim , FRN
-0.07% Latin Am 40, ILF
-0.07% Sweden Index, EWD
-0.11% Mexico Index, EWW
-0.18% Bond, High-Yield Junk, JNK
-0.19% Dividend DJ Select, DVY
-0.20% Bond, High-Yield Corporate, HYG
-0.21% Bond, TIPS, TIP
-0.23% Health Care SPDR, XLV
-0.26% Bond Muni ATM-Free S&P iS, MUB
-0.27% Bond Ex-US Treas, BWX
-0.27% Bond, Aggregate, AGG
-0.27% Malaysia Index, EWM
-0.30% Singapore Index, EWS
-0.47% Agriculture DB PS, DBA
-0.48% Bear, Short S&P 500, SH
-0.52% Bond, Corp, LQD
-0.53% Bond, 10 Year Treasury, IEF
-0.53% Consumer Staples SPDR, XLP
-0.59% Telecom DJ US, IYZ
-0.70% Indonesia MV, IDX
-0.86% Utilities VIPERs, VPU
-1.03% Utilities SPDR, XLU
-1.04% Real Estate US DJ, IYR
-1.18% REIT VIPERs, VNQ
-1.18% REIT Wilshire, RWR
-1.20% Chile MSCI iS, ECH
-1.23% Realty Cohen & Steers, ICF
-1.29% Bond, 20+ Years Treasury, TLT
-1.41% Turkey MSCI iS, TUR