The S&P 500 Composite (SPX, 1,162.95) rose 26.52 points or 2.33% on Monday, September 26, 2011.
Volume on the NYSE fell 18%, again failing to confirm the 2-day bounce in price.
Sentiment has been bearish, implying the presence of shorts available for covering. This was evident Monday afternoon.
Stock prices scored most of their gains in the final 2 hours, apparently in reaction to a story on television entertainment station CNBC: “European officials are working on a detailed plan aimed at shoring up European bank stability, according to an official who spoke with CNBC’s Steve Liesman.” Unnamed sources whisper this plan would create a new highly-levered vehicle that would borrow massive sums in order to buy vast quantities of toxic debt that has been threatening the financial system. In other words, the solution to the European debt crisis is to create much more debt–out of thin air, of course. If there really is a plan anything like this, the probability of upside follow-through in stock markets might be questionable.
Minor upside reversals against the dominant bear trend lure short-term traders into trying to trade a bounce. Minor price corrections against the trend are normal and expected, of course, but playing 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 over the past 7 weeks. And in a Dow Theory Primary Tide Bear Market, the big surprises come to the downside.
A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
There is a strategy that gained over the past 5 months, while most other strategies lost —
NOW WITH A NO-RISK FREE TRIAL.
The Colby Global Markets Report
(click here for a no-risk free trial)
Includes Top Ten ETFs, Major Trend Relative Strength Rankings, charts, support and resistance levels, and much more.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio rose above previous 10-year highs on 9/23/11 reconfirming a long-term uptrend. This means a long NASDAQ Composite and short S&P 500 hedge has been a winning trade. NASDAQ absolute price turned bearish, falling below 50-day and 200-day SMAs, on 9/20/11.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF /SPY) fell below 29-month lows on 9/22/11, 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 14-month lows on 9/22/11and 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 14-month lows on 9/22/11 and remains bearishly below falling 50- and 200-day SMAs.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above 50-day and 200-day SMAs on 9/21/11, which is a RELATIVELY bullish sign for the short term trend of the Ratio. Longer term, OEX/SPX fell below 28-year lows on 5/26/11, reconfirming its preexisting bearish major trend.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below 13-month lows on 9/21/11, reconfirming a major downtrend. Absolute price has been weak since 5/2/11, broke down below 12-month lows on 9/22/11, and remains below falling 50- and 200-day SMAs.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below the lows of the previous 6-weeks on 9/22/11, confirming a bearish minor trend. MDY/SPY fell below the lows of the previous 10-months on 8/8/11, confirming a bearish major trend.
Advisory Service Sentiment: There were 37.6% Bulls versus 39.8% Bears as of 9/21/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 0.94, up from 0.87 the previous week, which was the lowest level 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 remains stuck in its 7-week, relatively high level trading range, from a low of 30.16 to a high of 48.00. 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, 1,162.95) rose 26.52 points or 2.33% on Monday, September 26, 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
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price fell below 2-day lows on9/26/11, signaling nothing more than a minor pullback. TLT rose above all-time highs on 9/22/11, reconfirming a major uptrend. Support 118.58, 111.25, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 123.87.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) price fell below 2-day lows on9/26/11, signaling nothing more than a minor pullback. IEF rose above all-time highs on 9/22/11, reconfirming its preexisting major uptrend. Support 105.00, 103.55, 102.50, and 102.38. Resistance none.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) remains bearish according to my objective 50/200 SMA system. JNK/LQD fell below 6-week lows on 9/22/11, confirming a bearish trend for the short term. JNK/LQD fell below 2-year lows on 8/10/11, confirming a bearish trend for the long term.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) remains bearish according to my objective 50/200 SMA system. TIP/IEF has been weak since peaking on 4/8/11 and fell below 13-month lows on 9/22/11. This bearish trend 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.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible Assets, Commodities
U.S. dollar ETF (UUP) price rose above the highs of the previous 7 months on 9/22/11, reconfirming a major price uptrend. After the collapse of gold and the Swiss Franc, the U.S. dollar is the last refuge for risk-averse investors. Support 22.05, 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 9/23/11, reconfirming a major long-term downtrend.
Crude Oil, United States Oil ETF (USO) price broke down from a Bearish Rising Wedge pattern on 9/19/11, thereby signaling renewed bearish momentum. USO fell below the lows of the previous 2-years intraday on 9/26/11 before reversing to close higher on the day. Still, a new low confirms a long-term major downtrend. Support 33.55, 33.25, 32.60, 31.45, 30.31, 26.28, 22.74. Resistance 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: 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 170.32, 177.40, and 185.85.
Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) whipsawed back below its falling 50-day SMA on 9/22/11 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 neutral; it has not been as bullish as GLD. 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 26.03 and 24.44. Resistance: 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 10 months on 9/23/11, 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-Idx ETN (JJC ) fell below the lows of the previous 14 months on 9/26/11, reconfirming a major price downtrend. Weakness in Copper suggests doubts about the economic outlook, while strength in Copper suggests confidence.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
3.61% , EIS , Israel MSCI iS, EIS
1.64% , ADRA , Asia 50 BLDRS, ADRA
2.17% , RZV , Value SmallCap S&P 600, RZV
3.00% , PMR , Retail, PMR
2.02% , JKI , Value MidCap iS M, JKI
0.70% , ITF , Japan LargeCap Blend TOPIX 150, ITF
4.74% , IIH , Internet Infrastructure H, IIH
2.86% , KCE , Capital Markets KWB ST, KCE
2.11% , TTH , Telecom H, TTH
6.06% , IGT , INTL GAME TECH
1.18% , PUI , Utilities, PUI
7.07% , FHN , First Horizon National
0.55% , XSD , Semiconductor SPDR, XSD
6.86% , SHW , SHERWIN WILLIAMS
1.46% , FDL , Dividend Leaders, FDL
2.37% , PEJ , Leisure & Entertainment, PEJ
4.12% , TNB , THOMAS & BETTS
2.96% , EWO , Austria Index, EWO
3.52% , IXC , Energy Global, IXC
2.15% , XLG , LargeCap Rydex Rus Top 50, XLG
5.19% , KLAC , KLA TENCOR
3.14% , CINF , CINCINNATI FIN
6.15% , CBE , COOPER INDS STK A
2.33% , EWK , Belgium Index, EWK
3.72% , EWI , Italy Index, EWI
3.46% , PBI , PITNEY BOWES
2.11% , PKB , Building & Construction, PKB
0.83% , BWX , Bond Ex-US Treas, BWX
1.82% , RFV , Value MidCap S&P 400, RFV
2.33% , PXQ , Networking, PXQ
5.80% , ERIC.O , LM Ericsson Telephone Company
2.10% , SLM , SLM CORP
1.94% , IAH , Internet Architecture H, IAH
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-26.89% , EK , EASTMAN KODAK
-4.27% , CLX , CLOROX
-2.06% , SIRI , Sirius Satellite
-1.36% , WYNN , Wynn Resorts L
-1.94% , ALTR , ALTERA
-5.12% , DXD , Short 200% Dow 30 PS, DXD
-3.86% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.98% , AMAT , APPLIED MATERIAL
-0.05% , GVI , Bond Interm U.S. Gov, GVI
-4.11% , THD , Thailand MSCI iS, THD
-1.25% , MCHP , Microchip Technology Incorporated
-2.30% , QID , Short 200% QQQ PS, QID
-4.89% , SDS , Short 200% S&P 500 PS, SDS
-1.04% , CSX , CSX
-0.91% , TIF , TIFFANY
-0.28% , AAPL , APPLE COMPUTER
-0.85% , TLH , Bond 10-20 Year US Treas, TLH
-0.54% , EL , Estee Lauder
-0.13% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.72% , BRCM , BROADCOM STK A
-1.35% , NIHD , NII Holdings, Inc.
-0.12% , PNW , PINNACLE WEST
-0.67% , ADI , ANALOG DEVICES
-0.08% , GLW , CORNING
-0.43% , FXI , China 25 iS, FXI
-0.22% , PIN , India PS, PIN
-0.81% , JNY , JONES APPAREL
-0.28% , XLNX , XILINX
-0.19% , LQD , Bond, Corp, LQD
-0.66% , PXN , Nanotech Lux, PXN
-0.17% , NVLS , NOVELLUS SYS
-0.23% , AGG , Bond, Aggregate, AGG
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.45% Financial SPDR, XLF
4.27% Financial Services DJ, IYG
3.72% Financials VIPERs, VFH
3.72% South Africa Index, EZA
3.72% Italy Index, EWI
3.65% Energy VIPERs, VDE
3.65% Energy SPDR, XLE
3.62% Financial DJ US, IYF
3.61% Energy DJ, IYE
3.61% Germany Index, EWG
3.52% Energy Global, IXC
3.51% Netherlands Index, EWN
3.49% Spain Index, EWP
3.49% Sweden Index, EWD
3.33% Basic Materials DJ US, IYM
3.27% Homebuilders SPDR, XHB
3.21% Materials SPDR, XLB
3.11% EMU Europe Index, EZU
3.08% Mexico Index, EWW
3.06% Energy & Nat Res iS GS, IGE
2.99% Metals & Mining SPDR, XME
2.96% Austria Index, EWO
2.87% Global 100, IOO
2.86% Capital Markets KWB ST, KCE
2.86% Europe 350 S&P Index, IEV
2.80% Value EAFE MSCI, EFV
2.79% Chile MSCI iS, ECH
2.64% Australia Index, EWA
2.61% France Index, EWQ
2.61% Switzerland Index, EWL
2.60% DIAMONDS (DJIA), DIA
2.59% Value 1000 Russell, IWD
2.55% Value VIPERs, VTV
2.52% Industrial SPDR, XLI
2.52% Dividend Appreciation Vipers, VIG
2.51% Water Resources, PHO
2.49% LargeCap Blend S&P=Weight R, RSP
2.38% United Kingdom Index, EWU
2.38% S&P 500 SPDRs LargeCap Blend, SPY
2.37% Value MidCap Russell, IWS
2.36% Blend Total Market VIPERs, VTI
2.36% Canada Index, EWC
2.36% Value LargeCap Dynamic PS, PWV
2.35% Consumer Discretionary SPDR, XLY
2.33% Belgium Index, EWK
2.33% Latin Am 40, ILF
2.32% MidCap Russell, IWR
2.31% LargeCap Blend Russell 3000, IWV
2.31% Transportation Av DJ, IYT
2.27% LargeCap VIPERs, VV
2.27% Value S&P 500 B, IVE
2.26% LargeCap 1000 R, IWB
2.12% Growth 1000 Russell, IWF
2.12% Growth MidCap Russell, IWP
2.12% Dividend SPDR, SDY
2.11% Value SmallCap Russell 2000, IWN
2.07% Russia MV, RSX
2.06% EAFE Index, EFA
2.05% Growth VIPERs, VUG
2.05% Value SmallCap VIPERS, VBR
2.00% Growth SmallCap R 2000, IWO
1.97% Value SmallCap S&P 600 B, IJS
1.97% Dividend DJ Select, DVY
1.93% Consumer Staples SPDR, XLP
1.92% Pacific ex-Japan, EPP
1.91% S&P 500 iS LargeCap Blend, IVV
1.89% MidCap S&P 400 SPDRs, MDY
1.89% SmallCap Russell 2000, IWM
1.88% Small Cap VIPERs, VB
1.88% Silver Miners Global X, SIL
1.86% LargeCap Blend S&P 100, OEF
1.83% Growth SmallCap VIPERs, VBK
1.83% SmallCap S&P 600, IJR
1.78% European VIPERs, VGK
1.74% Growth MidCap 400 B, IJK
1.68% Growth BARRA Small Cap 600, IJT
1.66% Emerging 50 BLDRS, ADRE
1.66% Brazil Index, EWZ
1.65% Health Care SPDR, XLV
1.63% Dividend High Yield Equity PS, PEY
1.62% MidCap S&P 400 iS, IJH
1.59% Growth S&P 500/BARRA, IVW
1.58% Global ex US ACWI iS, ACWX
1.54% Dividend International, PID
1.53% Microcap Russell, IWC
1.51% Value MidCap S&P 400 B, IJJ
1.51% Emerging Markets, EEM
1.49% Indonesia MV, IDX
1.40% REIT VIPERs, VNQ
1.39% Technology DJ US, IYW
1.38% REIT Wilshire, RWR
1.37% Telecom DJ US, IYZ
1.36% Agriculture DB PS, DBA
1.31% Frontier Markets Guggenheim , FRN
1.28% Info Tech VIPERs, VGT
1.27% Real Estate US DJ, IYR
1.26% Turkey MSCI iS, TUR
1.25% Technology SPDR, XLK
1.23% Networking, IGN
1.22% Oil, Crude, U.S. Oil Fund, USO
1.22% South Korea Index, EWY
1.18% Growth EAFE MSCI, EFG
1.16% QQQ Nasdaq 100 Trust, QQQ
0.98% Emerging VIPERs, VWO
0.95% Pacific VIPERs, VPL
0.90% Small Cap EAFE MSCI iS, SCZ
0.89% Utilities VIPERs, VPU
0.83% Bond Ex-US Treas, BWX
0.81% Utilities SPDR, XLU
0.63% Biotech SPDR, XBI
0.59% Realty Cohen & Steers, ICF
0.56% Bond, High-Yield Junk, JNK
0.55% Semiconductor SPDR, XSD
0.55% Oil Fund PowerShares, DBO
0.54% Japan Index, EWJ
0.38% Bond, High-Yield Corporate, HYG
0.34% Commodity Tracking, DBC
0.34% WilderHill Clean Energy PS, PBW
0.09% Singapore Index, EWS
0.05% India Earnings WTree, EPI
0.02% Bond Treasury Short-Term iS, SHV
-0.04% Bond, 1-3 Year Treasury, SHY
-0.10% China LargeCap Growth G D H USX PS, PGJ
-0.13% Bond Muni ATM-Free S&P iS, MUB
-0.16% Preferred Stock iS, PFF
-0.19% Bond, Corp, LQD
-0.19% Financial Preferred, PGF
-0.22% India PS, PIN
-0.23% Bond, Aggregate, AGG
-0.33% Semiconductor iS IGW, SOXX
-0.42% Bond, 10 Year Treasury, IEF
-0.43% China 25 iS, FXI
-0.48% Bond, TIPS, TIP
-0.52% Hong Kong Index, EWH
-0.71% Silver Trust iS, SLV
-0.98% Malaysia Index, EWM
-1.39% Gold Shares S.T., GLD
-1.40% Taiwan Index, EWT
-1.49% Bond EmrgMkt JPM iS, EMB
-1.61% Bond, 20+ Years Treasury, TLT
-4.11% Thailand MSCI iS, THD
