Most Stocks Bounced–But Technology and Materials Demonstrated Substantial Relative Weakness

S&P 500 Composite (SPX, 1,289.00) rose 9.44 points or 0.74% on Thursday. NYSE volume fell 23%, thereby denying confirmation of the price upturn.

NASDAQ Composite/S&P 500 Relative Strength Ratio entered a downside correction since peaking on 1/18/11 and fell below 11-week lows on 6/9/11.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below 3-month lows on 6/9/11 and has been in a downside correction since 4/5/11.

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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
0.78% , PPA , Aerospace & Defense, PPA
1.33% , EWQ , France Index, EWQ
5.88% , MCO , MOODYS CORP
0.92% , PSTL , Steel Global PS ETF, PSTL
2.12% , FDO , FAMILY DLR STRS
0.62% , PJP , Pharmaceuticals, PJP
1.15% , PXE , Energy Exploration & Prod, PXE
1.30% , IEV , Europe 350 S&P Index, IEV
0.60% , FPX , IPOs, First Tr IPOX-100, FPX
0.84% , EWP , Spain Index, EWP
4.98% , UNH , UNITEDHEALTH GRP
4.48% , CI , CIGNA
1.44% , IYG , Financial Services DJ, IYG
1.61% , KCE , Capital Markets KWB ST, KCE
1.07% , PIV , Value Line Timeliness MidCap Gr, PIV
3.56% , AET , AETNA
0.59% , ADRA , Asia 50 BLDRS, ADRA
6.44% , IPG , INTERPUBLIC GRP
0.82% , PWV , Value LargeCap Dynamic PS, PWV
0.73% , HHH , Internet H, HHH
0.68% , ADRU , Europe 100 BLDRS, ADRU
0.06% , PSI , Semiconductors, PSI
2.28% , SJM , J. M. Smucker
2.80% , MON , MONSANTO
2.88% , SNV , SYNOVUS
2.78% , AMP , Ameriprise Financial Inc.
2.87% , NBR , NABORS
1.04% , EFG , Growth EAFE MSCI, EFG
2.84% , RDC , ROWAN COMPANIES
2.41% , COH , COACH
0.91% , NY , Value LargeCap NYSE 100 iS, NY
3.77% , SEE , SEALED AIR
2.70% , RSX , Russia MV, RSX

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.35% , BDH , Broadband H, BDH
-0.49% , KWT , Solar Energy MV, KWT
-3.06% , PLD , PROLOGIS TRUST
-0.68% , PIC , Insurance, PIC
-1.11% , ICF , Realty Cohen & Steers, ICF
-0.27% , LQD , Bond, Corp, LQD
-2.72% , BHH , Internet B2B H, BHH
-0.93% , IYR , Real Estate US DJ, IYR
-0.79% , ECH , Chile MSCI iS, ECH
-0.88% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.14% , NVDA , NVIDIA
-0.73% , MJN , Mead Johnson Nutrition
-1.11% , SPG , SIMON PROP GRP
-0.91% , SVU , SUPERVALU
-0.13% , MUB , Bond Muni ATM-Free S&P iS, MUB
-0.79% , CTB , COOPER TIRE
-0.95% , TYC , TYCO INTL
-0.72% , EQR , EQUITY RESIDENT BEN INT
-0.27% , LUV , SOUTHWEST AIRLS
-0.24% , PFG , PRINCIPAL FINL
-0.88% , FLR , FLUOR
-0.12% , XEL , XCEL ENERGY
-0.40% , PAYX , PAYCHEX
-0.10% , EXC , EXELON CORP
-0.16% , HGSI , Human Genome Sciences Inc
-0.14% , LBTYA , Liberty Global Inc. (LBTYA)
-0.16% , RF , REGIONS FINAN
-0.27% , BWX , Bond Ex-US Treas, BWX
-0.11% , PBW , WilderHill Clean Energy PS, PBW
-0.12% , AMGN , AMGEN
-0.20% , MSI , Motorola Solutions, MSI
-0.44% , CHKP , Check Point Software Technologies Ltd
-0.27% , DUK , DUKE ENERGY

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

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Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) has been trading with a bearish bias since peaking on 10/14/10. The Ratio remains below the 200-day SMA, and the 50-day SMA remains 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 entered a downside correction since peaking on 1/18/11, fell below 11-week lows on 6/9/11, and remains neutral. Absolute price entered a downside correction since peaking on 5/2/11.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell further below 28-year lows on 5/26/11, again reconfirming its preexisting bearish major trend.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) broke down below 3-month lows on 6/9/11 and has been in a downside correction since 4/5/11.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below 2-month lows on 6/9/11 but remains neutral with the 50-day SMA above the 200-day SMA. The Ratio set an all-time high on 4/5/11.

Crude Oil nearest futures contract price closed above the highs of the previous 5-trading days on 6/9/11, continuing its choppy/sideways range trading. Oil fell below the lows of the previous 2-weeks on 6/7/11. Oil has been trading choppy/sideways following the low of 94.63 on 5/6/11. The latest data from the Commodity Futures Trading Commission shows hedge-fund and other money managers increased net long positions in Oil–which could prove to be bearish when this hot money rushes for the exits. On 5/3/11, when Crude Oil was 111.56, I wrote, “Crude Oil nearest futures contract price fell below the lows of the previous 7 trading days on 5/3/11, suggesting a short-term price pullback.” Support 97.74, 94.63, 87.09, 83.85, 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 73.52, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 103.39, 104.60, 105.16, 114.83, 115.27, 120.42, 130.0, and 147.27.

Gold nearest futures contract price appears to have stalled out since 6/6/11. Gold’s 5-week countertrend bounce might be weakening. Reward/Risk does not appear attractive. It seems possible that Gold has finally topped out at 1577.4 after rising 132% from 681 in October, 2008. Support: 1520.04, 1462.5, 1445.0, 1411.5, 1380.7, 1419.5, 1351.4, 1309.1, 1307.7, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: 1577.4.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) broke down below 27-month lows on 6/8/11. The Ratio has been falling steeply since 4/8/11 and remains bearish.

Silver nearest futures contract price appears to be consolidating losses within a larger downside correction. Silver fell 35% from 49.82 on 4/25/11 to 32.3 on 5/12/11, breaking down below 10-week lows. On 5/2/11, when Silver was 46.084, I wrote, “Silver nearest futures contract price broke sharply below the lows of the previous 2 weeks. The short-term price trend has turned down. If this downtrend continues, it could have implications for inflation expectations.” Support 36.265, 32.3, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 38.845, 39.38, 39.47, 49.82, 49.845 and 50.35.

Silver/Gold Ratio entered a steep downtrend since the peak on 4/28/11. Although the Ratio has stabilized somewhat since making a low on 5/16/11, it probably remains bearish.

Copper nearest futures contract price eased below the lows of the previous 3 trading days on 6/9/11, continuing its slow drift lower. Copper broke down below previous 5-month lows on 5/12/11, confirming an intermediate-term correction, if not a bear market. Weakness in Copper suggests doubts about the economic outlook. Support 3.9505, 3.8535, 3.846, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.2125, 4.402, 4.533, 4.554, 4.6495, 4.6535, and 4.6575.

U.S. Treasury Bond nearest futures contract price rose above previous highs early on 6/9/11 but reversed to close lower. A minor price pullback could be possible but, intermediate-term, the Bond rose above the highs of the previous 6 months on 6/1/11, reconfirming a significant uptrend. In its favor, nearly everyone has been talking bearish on Bonds this year, so the Bond is rising up off an extreme oversold condition. Support 124.01, 123.18, 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 126.10, 128.00 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) broke down below 6-month lows on 6/8/11. Absolute price of JNK broke down below 11-week lows on 6/8/11, after topping out at 41.32 on 11/4/10. Both confirm a bearish trend for JNK.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 6 months on 6/8/11, again reconfirming a medium-term downtrend. TIP/IEF entered a downtrend after peaking on 4/8/11. This downtrend means that fixed-income investors prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. Inflation expectations are still waning.

The U.S. dollar nearest futures contract price closed above the highs of the previous 3-trading days on 6/9/11. Price action has been choppy. USD fell below the lows of the previous 4-weeks on 6/7/11–after rising above 7-week highs on 5/23/11. Support 73.515, 72.86, and 70.80. Resistance 74.955, 76.54, 76.87, 77.675, 78.98, 79.34, 81.635, 81.935, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.

Advisory Service Sentiment: There were 40.9% Bulls versus 22.6% Bears as of 6/8/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. This is near normal, since the Ratio’s 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.64. Note that Advisory Service Sentiment as of 4/6/11 rose to 3.65, its highest level in the 8 years since the 20-year high of 3.74 set on 6/18/03. The market has been working off that excess by correcting to the downside.

VIX Fear Index fell below its 3-year range on 4/20/11, hitting 14.30 intraday, and again confirming a preexisting trend toward bullish complacency. This follows a brief spike up to an intraday peak of 31.28 on 3/16/11. Fear was short-lived. 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 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.

As of the close on June 6, 2011, the Dow Theory confirmed a Secondary Reaction (a significant downside correction) for the general stock market, as the Dow Industrials and Transports both closed below 10-week lows. Previously, as of June 1, 2011, the Dow Theory gave a warning of a significant downside correction for the general stock market, as the Dow Industrials and Transports both closed below 5-week lows.

On 5/2/11, when the S&P 500 Composite (SPX) was 1,358.59, I warned, “The majority of major stock price indexes opened higher on gaps but reversed to close with losses on the day. This may signal exhaustion of the short-term uptrend. Sentiment indicators have been suggesting that the stock market may be over loved and overbought. And in view of the sharp reversals in the metal commodities, the so-called “inflation trade”, when speculators buy stocks and sell fixed-income instruments based on expectations of rising price levels for goods and services, may be on thin ice.”

Based on the daily SPX, momentum indicators gave bearish divergence warnings in April; that is, they never made it back to their February peaks when the price indexes rose to higher highs. These bearish divergence warnings are still in effect.

S&P 500 Composite (SPX, 1,289.00) rose 9.44 points or 0.74% on Thursday. NYSE volume fell 23%, thereby denying confirmation of the price upturn.

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
1370.50, high of 5/2/11
1359.44, high of 5/10/11
1346.82, high of 5/19/11
1294.70, low of 4/18/11

S&P 500 Cash Index Potential Support
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
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
1173.00, low of 11/16/10
1171.70, low of 10/27/10
1166.74, low of 10/20/10
1159.71, low of 10/19/10
1,151.41, low of 10/7/10
1,131.87, low of 10/4/10
1122.79, low of 9/23/2010
1114.63, low of 9/15/2010
1110.88, low of 9/10/2010
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

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

3.11% Silver Miners Global X, SIL
2.70% Russia MV, RSX
1.78% Silver Trust iS, SLV
1.66% Materials SPDR, XLB
1.61% Capital Markets KWB ST, KCE
1.51% Germany Index, EWG
1.51% Basic Materials DJ US, IYM
1.50% Mexico Index, EWW
1.44% Financial Services DJ, IYG
1.38% EMU Europe Index, EZU
1.36% Pacific ex-Japan, EPP
1.36% Energy SPDR, XLE
1.33% Australia Index, EWA
1.33% France Index, EWQ
1.31% European VIPERs, VGK
1.31% Energy & Nat Res iS GS, IGE
1.30% Europe 350 S&P Index, IEV
1.29% Energy VIPERs, VDE
1.28% Energy Global, IXC
1.23% Energy DJ, IYE
1.23% India PS, PIN
1.19% Metals & Mining SPDR, XME
1.16% United Kingdom Index, EWU
1.16% Homebuilders SPDR, XHB
1.15% Financial SPDR, XLF
1.10% Pacific VIPERs, VPL
1.09% Thailand MSCI iS, THD
1.05% Health Care SPDR, XLV
1.04% Growth EAFE MSCI, EFG
1.03% EAFE Index, EFA
1.00% Canada Index, EWC
0.94% Agriculture DB PS, DBA
0.92% Value EAFE MSCI, EFV
0.92% Global ex US ACWI iS, ACWX
0.91% Global 100, IOO
0.91% Financials VIPERs, VFH
0.90% Growth SmallCap VIPERs, VBK
0.90% Small Cap EAFE MSCI iS, SCZ
0.84% Transportation Av DJ, IYT
0.84% Value S&P 500 B, IVE
0.84% Austria Index, EWO
0.84% Spain Index, EWP
0.84% Consumer Discretionary SPDR, XLY
0.83% Turkey MSCI iS, TUR
0.83% Financial DJ US, IYF
0.82% Value LargeCap Dynamic PS, PWV
0.82% Water Resources, PHO
0.82% Sweden Index, EWD
0.81% India Earnings WTree, EPI
0.80% Value 1000 Russell, IWD
0.80% Hong Kong Index, EWH
0.79% Growth SmallCap R 2000, IWO
0.79% Emerging Markets, EEM
0.78% Italy Index, EWI
0.77% LargeCap Blend S&P 100, OEF
0.76% Taiwan Index, EWT
0.76% S&P 500 SPDRs LargeCap Blend, SPY
0.76% Industrial SPDR, XLI
0.75% Dividend Appreciation Vipers, VIG
0.75% S&P 500 iS LargeCap Blend, IVV
0.75% Value VIPERs, VTV
0.74% LargeCap Blend S&P=Weight R, RSP
0.73% LargeCap VIPERs, VV
0.73% Oil, Crude, U.S. Oil Fund, USO
0.72% Growth VIPERs, VUG
0.72% LargeCap Blend Russell 3000, IWV
0.71% Blend Total Market VIPERs, VTI
0.71% Growth BARRA Small Cap 600, IJT
0.70% Japan Index, EWJ
0.70% Latin Am 40, ILF
0.68% DIAMONDS (DJIA), DIA
0.67% Malaysia Index, EWM
0.67% Belgium Index, EWK
0.67% LargeCap 1000 R, IWB
0.66% Growth MidCap Russell, IWP
0.66% Emerging 50 BLDRS, ADRE
0.65% Singapore Index, EWS
0.63% Growth 1000 Russell, IWF
0.63% MidCap Russell, IWR
0.62% Growth S&P 500/BARRA, IVW
0.61% South Korea Index, EWY
0.58% Indonesia MV, IDX
0.56% Emerging VIPERs, VWO
0.56% Small Cap VIPERs, VB
0.56% Commodity Tracking, DBC
0.56% Dividend International, PID
0.55% Microcap Russell, IWC
0.55% Consumer Staples SPDR, XLP
0.53% Brazil Index, EWZ
0.53% SmallCap Russell 2000, IWM
0.52% Value MidCap Russell, IWS
0.50% Gold Shares S.T., GLD
0.48% Dividend DJ Select, DVY
0.46% SmallCap S&P 600, IJR
0.43% Dividend SPDR, SDY
0.43% Value SmallCap VIPERS, VBR
0.42% MidCap S&P 400 iS, IJH
0.42% Growth MidCap 400 B, IJK
0.41% Telecom DJ US, IYZ
0.41% Netherlands Index, EWN
0.41% MidCap S&P 400 SPDRs, MDY
0.34% Value MidCap S&P 400 B, IJJ
0.30% Oil Fund PowerShares, DBO
0.29% Switzerland Index, EWL
0.27% Value SmallCap S&P 600 B, IJS
0.25% Semiconductor SPDR, XSD
0.21% South Africa Index, EZA
0.20% Value SmallCap Russell 2000, IWN
0.20% China LargeCap Growth G D H USX PS, PGJ
0.17% QQQ Nasdaq 100 Trust, QQQ
0.16% Info Tech VIPERs, VGT
0.16% China 25 iS, FXI
0.13% Frontier Markets Guggenheim , FRN
0.13% Technology DJ US, IYW
0.11% Bond EmrgMkt JPM iS, EMB
0.10% Bond, High-Yield Junk, JNK
0.09% Utilities SPDR, XLU
0.08% Technology SPDR, XLK
0.07% Semiconductor iS IGW, SOXX
0.07% Bond, High-Yield Corporate, HYG
0.04% Utilities VIPERs, VPU
0.00% Networking, IGN
0.00% Dividend High Yield Equity PS, PEY
0.00% Bond Treasury Short-Term iS, SHV
-0.08% Preferred Stock iS, PFF
-0.10% Biotech SPDR, XBI
-0.11% Bond, 1-3 Year Treasury, SHY
-0.11% Financial Preferred, PGF
-0.11% WilderHill Clean Energy PS, PBW
-0.12% Bond, TIPS, TIP
-0.13% Bond Muni ATM-Free S&P iS, MUB
-0.15% Bond, Aggregate, AGG
-0.27% Bond, Corp, LQD
-0.27% Bond Ex-US Treas, BWX
-0.40% Bond, 10 Year Treasury, IEF
-0.40% Bond, 20+ Years Treasury, TLT
-0.79% Chile MSCI iS, ECH
-0.93% Real Estate US DJ, IYR
-1.08% REIT VIPERs, VNQ
-1.11% Realty Cohen & Steers, ICF
-1.15% REIT Wilshire, RWR