Further Consolidation Seems Likely in Days Ahead

Industrial stock sector Relative Strength Ratio (XLI/SPY) rose further above rising 50-day and 200-day SMAs on 9/7/10 and remains bullish.

Materials stock sector Relative Strength Ratio (XLB/SPY) rose further above 7-month high on 9/7/10.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) crossed below its 50 SMA and 200 SMA on 9/7/10, thereby turning neutral.

Gold nearest futures contract rose further above 8-week highs on 9/7/10, again confirming a significant uptrend.

S&P 500 Composite (SPX, 1,091.84) fell 12.67 points or 1.15% on Monday 9/7/10. Absolute price remains neutral, below the 200-day SMA, and with the 50-day SMA below the 200-day SMA. The market may need to demonstrate upside follow-through in order to turn around investor confidence, which has fallen to a low level. For more than 2 months, the stock market has been consolidating losses in a trading range between the SPX 1131.23 high of 6/21/2010 and the SPX 1010.91 low of 7/1/10–and further consolidation seems likely in days ahead.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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
5.87% , ORCL , ORACLE
4.57% , X , US STEEL CORP
2.59% , TEVA , Teva Pharmaceutical Industries Limited
3.36% , NE , NOBLE
1.56% , PLL , PALL
0.91% , EWH , Hong Kong Index, EWH
1.39% , IIH , Internet Infrastructure H, IIH
1.05% , CIEN.O , CIENA
1.81% , NUE , NUCOR
0.12% , ITF , Japan LargeCap Blend TOPIX 150, ITF
0.74% , GENZ , GENZYME
0.92% , NVDA , NVIDIA
0.30% , GVI , Bond Interm U.S. Gov, GVI
0.65% , CCE , COCA COLA ENTER
1.46% , MYY , Short 100% MidCap 400, MYY
0.76% , MRVL , MARVELL TECHNOLOGY
1.97% , NEM , NEWMONT MINING
1.06% , TLH , Bond 10-20 Year US Treas, TLH
1.66% , NTAP , NETWK APPLIANCE
0.34% , BAX , BAXTER INTL
0.54% , SIAL , SIGMA ALDRICH
0.47% , QCOM , QUALCOMM
0.87% , MO , ALTRIA, MO
0.19% , SVU , SUPERVALU
0.26% , KMB , KIMBERLY CLARK
0.11% , BMY , BRISTOL MYERS
0.14% , RAI , Reynolds American
0.82% , IAU , Gold COMEX iS, IAU
0.59% , HANS , Hansen Natural, HANS
0.91% , INTU , INTUIT
0.07% , CNP , CENTERPNT ENERGY
0.87% , QLGC , QLOGIC
0.11% , SHY , Bond, 1-3 Year Treasury, SHY
0.08% , MUB , Bond Muni ATM-Free S&P iS, MUB
0.52% , DBC , Commodity Tracking, DBC
0.13% , TYC , TYCO INTL
0.14% , AEP , AM ELEC POWER
0.05% , AZO , AUTOZONE
0.02% , RTN , RAYTHEON
0.05% , KR , KROGER

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.52% , ACWX , Global ex US ACWI iS, ACWX
-1.47% , HHH , Internet H, HHH
-3.30% , EWP , Spain Index, EWP
-1.41% , SCZ , Small Cap EAFE MSCI iS, SCZ
-2.94% , EWQ , France Index, EWQ
-0.20% , SWH , Software H, SWH
-2.90% , EWI , Italy Index, EWI
-1.77% , JKI , Value MidCap iS M, JKI
-4.81% , MAS , MASCO
-1.38% , ADRU , Europe 100 BLDRS, ADRU
-1.36% , RPV , Value S&P 500, RPV
-0.98% , PIV , Value Line Timeliness MidCap Gr, PIV
-0.80% , PJP , Pharmaceuticals, PJP
-1.38% , PPA , Aerospace & Defense, PPA
-5.57% , KLAC , KLA TENCOR
-1.38% , IWW , Value LargeCap Russell 3000, IWW
-1.84% , FO , FORTUNE BRANDS
-2.10% , KWT , Solar Energy MV, KWT
-1.39% , FDV , Value 40 Large Low P/E FT DB, FDV
-1.65% , EWU , United Kingdom Index, EWU
-1.11% , PKB , Building & Construction, PKB
-1.98% , JKJ , SmallCap Core iS M, JKJ
-1.98% , PWT , Growth SmallCap Dynamic PS, PWT
-2.65% , EWN , Netherlands Index, EWN
-4.31% , CHKP , Check Point Software Technologies Ltd
-4.13% , CECO , CAREER EDUCATION CORP
-0.69% , IYK , Consumer Non-Cyclical, IYK
-4.76% , MTB , M&T BANK
-1.15% , PZJ , SmallCap PS Zacks, PZJ
-4.69% , TDC , Teradata Corporation, TDC
-3.45% , HES , AMERADA HESS
-3.77% , NSM , NATL SEMICONDUCT
-0.86% , PTE , Telecommunications & Wireless, PTE
-1.85% , JKL , Value SmallCap iS M, JKL
-3.86% , KEY , KEYCORP
-3.70% , DOW , DOW CHEMICAL
-3.11% , ADI , ANALOG DEVICES
-0.99% , JKH , MidCap Growth iS M, JKH
-2.46% , EP , EL PASO
-1.15% , PMR , Retail, PMR

9 major U.S. stock sectors ranked in order of long-term relative strength:

Consumer Discretionary (XLY) Bullish, Over Weight. The Relative Strength Ratio (XLY/SPY) rose to another new 2-month high on 9/3/10 and remains bullish. The Ratio remains above both SMAs and the 50-day SMA remains above the 200-day SMA. Absolute price remains neutral, with the 50-day SMA below the 200-day SMA. Support 29.80, 28.64, 28.21, and 26.62. Resistance 32.41, 33.12, 34.39, 36.13, 38.25 and 39.09.

Utilities (XLU) Bullish, Over Weight. The Relative Strength Ratio (XLU/SPY) rose to a new 12-month high on 8/31/10 and remains bullish, with the ratio above 50-day and 200-day SMAs, and with the 50 above the 200. Absolute price of XLU rose to another new 8-month high on 9/3/10 and remains bullish. Support 30.15, 29.66, 27.91, 27.44, and 25.76. Resistance 31.74 and 32.08.

Industrial (XLI) Neutral, Market Weight. The Relative Strength Ratio (XLI/SPY) rose further above rising 50-day and 200-day SMAs on 9/7/10 and remains bullish. Absolute price remains neutral, with the 50-day below the 200-day SMA. Support 27.67, 26.79 and 26.66. Resistance 31.15, 32.41, 33.46, 34.24, 34.50, and 35.00.

Materials (XLB) Neutral, Market Weight. The Relative Strength Ratio (XLB/SPY) rose further above 7-month high on 9/7/10. Technically, the Ratio remains neutral, with the 50-day SMA below the 200-day SMA–although the SMAs appear to be converging toward a possible bullish crossover in days ahead. Absolute price remains neutral, with the 50-day SMA below the 200-day SMA. Support 29.88, 29.43, and 27.67. Resistance 32.93, 33.06, 35.47, and 37.56.

Consumer Staples (XLP) Neutral, Market Weight. The Relative Strength Ratio (XLP/SPY) rose above 7-month highs on 8/24/10, again confirming a bullish trend. Absolute price of XLP remains neutral, with the 50-day below the 200-day SMA. Support 26.34, 25.30, and 24.95. Resistance 27.46, 27.83, 27.95, 28.20, 28.75, 29.29 and 30.29.

Technology (XLK) Neutral, Market Weight. The Relative Strength Ratio (XLK/SPY) fell to another new 3-month low on 9/2/10 and remains neutral. Absolute price of XLK rose above its 50-day SMA on 9/3/10 but is only neutral with the 50-day SMA below the 200-day SMA. Support 20.01 and 19.51. Resistance 22.62, 23.27, 24.16, 24.68, and 25.69.

Health Care (XLV) Bearish, Under Weight. The Relative Strength Ratio (XLV/SPY) has been bearish since peaking on 2/23/09. Absolute price of XLV has been bearish since peaking on 1/20/10. Support 27.49. Resistance 29.38, 29.93, 30.83, 32.05, 32.18, 32.42, 32.69, 33.16, 33.37 and 33.74.

Energy (XLE) Bearish, Under Weight. The Relative Strength Ratio (XLE/SPY) has been mostly bearish since peaking on 7/1/08. Absolute price of XLE turned mostly bearish after peaking on 4/26/10. Support 50.33, 48.56, 46.16, and 43.66. Resistance 56.70, 58.11, 59.84, 62.30, 62.73, 69.95, and 78.10.

Financial (XLF) Bearish, Under Weight. The Relative Strength Ratio (XLF/SPY) fell to a new 9-month low on 8/30/10 and remains bearish—despite a technical bounce from 8/25/10 to 9/3/10. Absolute price fell below its 50-day SMA on 9/7/10, turning bearish. The price 50-day SMA remains below the 200-day SMA. Support 13.29 and 13.08. Resistance 15.09, 15.67, 16.13, 16.90, 17.12, 17.16, and 17.87.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) rose to another new 10-month high on 9/1/10, again confirming a significant bullish trend. Absolute price of EEM remains neutral, with the 50-day SMA below the 200-day SMA.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) remains neutral, with the 50-day SMA below the 200-day SMA.

NASDAQ Composite/S&P 500 Relative Strength Ratio fell below 6-month lows on 8/13/10, thereby confirming a significant correction to the downside.

The S&P 500 Equally Weighted ETF Relative Strength Ratio (RSP/SPY) rose further above 5-week highs on 9/3/10 and remains bullish. Longer term, RSP/SPY has been bullish (trending upward) since 11/19/08. Absolute price remains neutral, with the 50-day SMA below the 200-day SMA.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) appears to be trending lower again in recent weeks, since 8/3/10. Big caps have been relatively out of favor for more than 10 years, since 3/29/2000.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) crossed below its 50 SMA and 200 SMA on 9/7/10, thereby turning neutral. The 50-day SMA remains above the 200-day SMA. Long term, IWM/SPY has been bullish (trending upward) since 4/8/99.

The S&P MidCap 400/Large Cap Relative Strength Ratio (MDY/SPY) rose further above 5-week highs on 9/3/10 and remains bullish. Longer term, MDY /SPY has been bullish, trending upward since 4/7/99. Absolute price remains neutral, with the 50-day SMA below the 200-day SMA.

Crude Oil nearest futures contract fell again after consolidating losses since its low of 8/25/10. Oil may be bearish: it has been heading down most days since making a high at 83.40 on 8/4/10. A longer time frame downside correction started after the 87.15 peak on 5/3/10. Watch critical support around 70.76 and 70.35. Support 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 77.03, 84.55, 87.15, 90.51, 98.65, and 102.84.

Gold nearest futures contract rose further above 8-week highs on 9/7/10, again confirming a significant uptrend. Support 1232.4, 1210.9, 1191.5, 1155.6, 1124.3, 1120.9, 1084.8, 1045.2, 1026.9, and 989.3. Resistance: 1264.8 and 1267.1.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) has been whipsawing sideways through moving averages in recent months. Best stand aside until a clear trend emerges.

Silver/Gold Ratio has been mostly neutral, consolidating losses since making a low on 2/8/10. Longer term, Silver has underperformed Gold since 4/19/06.

Copper nearest futures contract price rose further above 4-month highs on 9/3/10, again confirming an intermediate-term Secondary Uptrend. Strength in Copper suggests confidence about prospects for the world economy, while weakness in Copper suggests doubts. Support 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance 3.68, 3.795, 4.0825, and 4.27.

U.S. Treasury Bond nearest futures contract price reversed strongly to the upside on 9/7/10, recovering all of Friday steep loss. The Bond broke down below previous 2-week lows on 9/3/10, however, which could have been taken as a sign of a minor downside correction. Call the short-term trend uncertain. The bond set its highest daily close in 19-months on 8/31/10, again confirming that the major trend remained bullish. Support 129.22, 126.01, 125.07, 124.19, 123.03, 121.28, 119.26, 118.24, 118.12, 115.15, 114.06. 113.04, and 112.15. Resistance 136.31, 137.31, and 142.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) fell below 3-month lows on 8/26/10, again confirming the preexisting bearish trend. The Ratio has been heading lower since the peak on 1/8/10. From 3/9/09 to 1/8/10, JNK/LQD was bullish, with the ratio moving upward and Junk outperforming.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell further below 15-month lows on 8/24/10 and remains RELATIVELY bearish. This implies that investors are choosing less inflation protection.

The U.S. dollar nearest futures contract price reversed to the upside on 9/7/10, rising above the range of the previous 2 trading days, but it is not at all clear whether it could be sustainable. USD fell below 3-week lows on 9/3/10, thereby confirming the short-term trend as bearish. The Secondary, intermediate-term trend appears uncertain–possibly bearish as well. Long term, USD may be consolidating losses since bottoming at 70.805 in March 2008. Support 80.14, 79.73, 79.61, 78.83, 78.20, 76.74 and 75.90, 74.27, and 70.805. Resistance 83.64, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.

Advisory Service Sentiment: There were 29.4% Bulls versus 37.7% Bears as of 9/1/10, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear ratio fell to 0.78, down from 1.07 the previous week. This ratio is now at its lowest level of bullish sentiment in 17 months, since 3/25/09. The ratio has fallen substantially from its peak at 3.36 set on 1/13/10, which was the highest bullish sentiment in 6 years. The 20-year range is 0.41 to 3.74, the median is 1.51, and the mean is 1.57.

The Dow Theory suggests a Primary Tide Bull Market, in my interpretation. The Dow Theory last confirmed a Bullish Major Trend on 4/26/10, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 18 months. The Dow Theory signaled the current Primary Tide Bull Market on 7/23/09, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 6 months. That 7/23/09 bullish signal reversed the previous bearish signal: the two Averages signaled a Primary Tide Bear Market on 11/21/07, when both Averages closed below their closing price lows of August 2007.

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
1366.59, high of 6/17/2008
1335.63, high of 6/25/2008
1313.15, high of 8/11/2008
1274.42, high of 9/8/2008
1255.09, high of 9/12/2008
1238.81, Fibonacci 78.6% of 1,576.09 high
1228.74, Fibonacci 61.8% of 2007-2009 range
1220.03, high of 9/25/2008
1219.80, high of 4/26/2010
1173.57, high of 5/13/2010
1040.00, Fibonacci 61.8% of 2010 range
1131.23, high of 6/21/2010
1105.10, high of 9/3/2010

S&P 500 Cash Index Potential Support
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

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

2.05% Bond, 20+ Years Treasury, TLT
0.91% Hong Kong Index, EWH
0.79% Bond, 10 Year Treasury, IEF
0.74% Bond, Corp, LQD
0.69% Gold Shares S.T., GLD
0.56% Bond, TIPS, TIP
0.52% Commodity Tracking, DBC
0.43% Indonesia MV, IDX
0.35% India PS, PIN
0.29% Bond, Aggregate, AGG
0.11% Bond, 1-3 Year Treasury, SHY
0.08% Bond Muni ATM-Free S&P iS, MUB
0.04% India Earnings WTree, EPI
-0.05% Preferred Stock iS, PFF
-0.05% Japan Index, EWJ
-0.06% Financial Preferred, PGF
-0.15% Bond, High-Yield Corporate, HYG
-0.16% Singapore Index, EWS
-0.21% Metals & Mining SPDR, XME
-0.22% Bond Ex-US Treas, BWX
-0.30% Agriculture DB PS, DBA
-0.31% Silver Trust iS, SLV
-0.40% Consumer Staples SPDR, XLP
-0.42% Pacific VIPERs, VPL
-0.44% Bond EmrgMkt JPM iS, EMB
-0.49% Switzerland Index, EWL
-0.51% Utilities SPDR, XLU
-0.57% Pacific ex-Japan, EPP
-0.58% Telecom DJ US, IYZ
-0.58% Health Care SPDR, XLV
-0.61% Utilities VIPERs, VPU
-0.67% Growth LargeCap NASDAQ 100, QQQQ
-0.77% Chile MSCI iS, ECH
-0.79% Dividend Appreciation Vipers, VIG
-0.79% Technology DJ US, IYW
-0.81% Canada Index, EWC
-0.83% Growth S&P 500/BARRA, IVW
-0.83% Technology SPDR, XLK
-0.84% Basic Materials DJ US, IYM
-0.85% Growth 1000 Russell, IWF
-0.89% Australia Index, EWA
-0.89% Growth VIPERs, VUG
-0.92% Transportation Av DJ, IYT
-0.93% Industrial SPDR, XLI
-0.96% Dividend DJ Select, DVY
-0.97% Info Tech VIPERs, VGT
-0.97% Oil, Crude, U.S. Oil Fund, USO
-0.97% DIAMONDS (DJIA), DIA
-0.98% Materials SPDR, XLB
-1.00% China 25 iS, FXI
-1.01% Dividend SPDR, SDY
-1.04% LargeCap Blend S&P 100, OEF
-1.05% Biotech SPDR, XBI
-1.08% South Korea Index, EWY
-1.08% S&P 500 iS LargeCap Blend, IVV
-1.08% Blend Total Market VIPERs, VTI
-1.11% Taiwan Index, EWT
-1.13% S&P 500 SPDRs LargeCap Blend, SPY
-1.13% LargeCap 1000 R, IWB
-1.13% LargeCap VIPERs, VV
-1.13% Networking, IGN
-1.15% Water Resources, PHO
-1.15% LargeCap Blend Russell 3000, IWV
-1.16% Growth MidCap Russell, IWP
-1.23% Dividend High Yield Equity PS, PEY
-1.24% Value LargeCap Dynamic PS, PWV
-1.26% Growth MidCap 400 B, IJK
-1.26% Growth EAFE MSCI, EFG
-1.27% LargeCap Blend S&P=Weight R, RSP
-1.29% Latin Am 40, ILF
-1.29% Natural Resource iS GS, IGE
-1.31% Global 100, IOO
-1.31% Value S&P 500 B, IVE
-1.31% Malaysia Index, EWM
-1.31% Value VIPERs, VTV
-1.35% China LargeCap Growth G D H USX PS, PGJ
-1.36% Emerging 50 BLDRS, ADRE
-1.36% Emerging VIPERs, VWO
-1.36% MidCap S&P 400 SPDRs, MDY
-1.38% MidCap S&P 400 iS, IJH
-1.39% Real Estate US DJ, IYR
-1.39% MidCap Russell, IWR
-1.39% EAFE Index, EFA
-1.41% Value EAFE MSCI, EFV
-1.41% Small Cap EAFE MSCI iS, SCZ
-1.42% WilderHill Clean Energy PS, PBW
-1.45% Value 1000 Russell, IWD
-1.45% Emerging Markets, EEM
-1.47% Energy VIPERs, VDE
-1.48% Energy Global, IXC
-1.49% Energy SPDR, XLE
-1.52% Global ex US ACWI iS, ACWX
-1.54% Energy DJ, IYE
-1.54% REIT VIPERs, VNQ
-1.54% Brazil Index, EWZ
-1.55% Thailand MSCI iS, THD
-1.55% Dividend International, PID
-1.57% Value MidCap S&P 400 B, IJJ
-1.61% Consumer Discretionary SPDR, XLY
-1.62% REIT Wilshire, RWR
-1.63% Realty Cohen & Steers, ICF
-1.65% Mexico Index, EWW
-1.65% United Kingdom Index, EWU
-1.65% Growth SmallCap VIPERs, VBK
-1.67% Value MidCap Russell, IWS
-1.74% Growth BARRA Small Cap 600, IJT
-1.75% Small Cap VIPERs, VB
-1.78% Europe 350 S&P Index, IEV
-1.82% Growth SmallCap R 2000, IWO
-1.85% SmallCap S&P 600, IJR
-1.86% Value SmallCap VIPERS, VBR
-1.90% SmallCap Russell 2000, IWM
-1.93% Sweden Index, EWD
-1.93% Turkey MSCI iS, TUR
-1.94% Microcap Russell, IWC
-1.94% Belgium Index, EWK
-2.01% Value SmallCap S&P 600 B, IJS
-2.05% Germany Index, EWG
-2.08% Russia MV, RSX
-2.09% Value SmallCap Russell 2000, IWN
-2.10% Capital Markets KWB ST, KCE
-2.10% Financial DJ US, IYF
-2.13% European VIPERs, VGK
-2.15% Semiconductor SPDR, XSD
-2.18% Financials VIPERs, VFH
-2.27% Austria Index, EWO
-2.30% Financial SPDR, XLF
-2.34% Semiconductor iS GS, IGW
-2.38% Financial Services DJ, IYG
-2.50% South Africa Index, EZA
-2.52% EMU Europe Index, EZU
-2.65% Netherlands Index, EWN
-2.73% Homebuilders SPDR, XHB
-2.73% Value SmallCap S&P 600, RZV
-2.90% Italy Index, EWI
-2.94% France Index, EWQ
-3.30% Spain Index, EWP

Further Consolidation Seems Likely in Days Ahead

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