The S&P 500 Composite (SPX, 1,119.46) fell 79.92 points or 6.66% on Monday, August 8, 2011.
Trading volume surged 45% above its 200-day SMA to indicate heavy selling pressure.
Based on the SPX, the standard 14-day RSI, now at 16.46, fell below its lowest levels in nearly 10 years. Many other oscillators are deeply oversold as well.
VIX Fear Index rose to 48.00, its highest level in 14 months, since 5/21/10. Options players are growing more fearful as the stock price decline accelerates.
CBOE Options Total Put/Call Volume Ratio is at the top end of its range, indicating relatively heavy trading volume in puts.
The stock market is very oversold, but that is not to say it can’t decline further. Some of the biggest declines in history happened after the market was already oversold. Sharp declines generate their own momentum due to forced selling.
Governments may attempt to stem market weakness in days ahead, adding a wild card to any analysis.
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Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio fell below the lows of the previous 5 weeks and its 200-day SMA on 8/8/11. The Ratio’s 50-day SMA remains below the 200-day SMA, but the spread is closing and the SMAs may cross in days ahead. Absolute price broke down below 10-month lows on 8/8/11 and remains bearish.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) remains bearish. The EEM/SPY Ratio broke down below 5-month lows on 8/8/11, remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 13-month lows on 8/8/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) has been in a major long-term downtrend since peaking on 11/27/07. The EFA/SPY Ratio remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 11-month lows on 8/8/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above the highs of the previous 12 months on 8/8/11, confirming a relatively modest recovery in comparison to the previous major decline. OEX/SPX fell below 28-year lows on 5/26/11, confirming a bearish major trend. Absolute price of OEX fell below the lows of the previous 11 months on 8/8/11 and remains bearish.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) remains bearish. IWM/SPY fell below 10-month lows on 8/8/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) remains bearish. MDY/SPY fell below 11-month lows on 8/8/11.
Advisory Service Sentiment: There were 46.3% Bulls versus 24.7% Bears as of 8/3/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio fell to 1.87, down from 2.30. This ratio indicates moderate bullish complacency when compared to the 20-year median of 1.56 and mean of 1.64.
VIX Fear Index rose to 48.00, its highest level in 14 months, since 5/21/10. Options players appear to be growing more fearful as the stock price decline accelerates. 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, 1,119.46) fell 79.92 points or 6.66% on Monday, August 8, 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
1370.50, 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
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1,234.56, low of 8/3/11
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
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
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
S&P 500 Cash Index Potential Support
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
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) rose above the highs of the previous 10 months on 8/8/11, again confirming a significant uptrend. Support 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 106.32 and 109.34.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below 2-year lows and fell further below its 20-, 50-, and 200-day simple moving averages on 8/8/11, confirming a major bearish trend.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 7 weeks on 8/8/11, confirming a short-term downtrend. TIP/IEF remains below 3 key SMAs, of 20, 50, and 200 days. This means fixed-income investors currently prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) remains in a major downtrend but appears to be consolidating sideways since hitting a low of 20.84 on 5/4/11. Support 21.20, 20.91, and 20.84. Resistance 21.74, 21.86, and 22.21.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below the lows of the previous 8 months on 8/8/11, suggesting a bearish major trend.
Crude Oil, United States Oil ETF (USO) fell below the lows of the previous 14 months on 8/8/11, again confirming a significant downtrend. Support 30.93 and 22.74. Resistance 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above all-time highs early on 8/8/11. Although minor price consolidations and corrections are to be expected in bullish price trends, the dominant trend remains persistently bullish. In a world of too much debt, weak currencies, and self-serving politicians, investors around the globe seek the safety of gold as the only forever-true money. Support: 159.68, 156.11, 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: none.
Gold Mining Stocks ETF (GDX) Relative (to the Gold bullion ETF) Strength Ratio (GDX/GLD) fell below 29-month lows on 8/8/11, again confirming a bearish major trend for the long term.
Silver, iShares Silver Trust ETF (SLV) fell below 3-week lows on 8/5/11, confirming a short-term price pullback. Longer term, the price action in Silver appears choppy and erratic since the spike top at 48.35 on 4/28/11. Support 35.29, 34.02, and 31.97. Resistance: 44.71 and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) fell below 5-week lows and below the 50 and 200 SMAs on 8/8/11, suggesting a downside correction.
Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) fell below the lows of the previous 8 months on 8/8/11, again confirming a short-term downtrend. Strength in Copper suggests confidence in the economic outlook, while Weakness suggests doubts about the future. Support 49.00. Resistance: 56.64, 57.48, 59.06, 60.04, and 61.69.
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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
16.35% , MZZ , Short 200% MidCap 400 PS, MZZ
3.32% , GLD , Gold Shares S.T., GLD
10.82% , DXD , Short 200% Dow 30 PS, DXD
6.48% , SH , Short 100% S&P 500, SH
1.59% , IEF , Bond, 10 Year Treasury, IEF
3.21% , IAU , Gold COMEX iS, IAU
5.83% , PSQ , Short 100% QQQ, PSQ
1.21% , TIP , Bond, TIPS, TIP
12.90% , SDS , Short 200% S&P 500 PS, SDS
2.33% , TLH , Bond 10-20 Year US Treas, TLH
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.63% , PEJ , Leisure & Entertainment, PEJ
-7.20% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-40.57% , MTG , MGIC INVESTMENT
-6.74% , PWO , OTC Dynamic PS, PWO
-5.85% , XLG , LargeCap Rydex Rus Top 50, XLG
-8.76% , PSJ , Software, PSJ
-6.33% , XSD , Semiconductor SPDR, XSD
-6.82% , SWH , Software H, SWH
-6.40% , PEY , Dividend High Yield Equity PS, PEY
-5.99% , PSI , Semiconductors, PSI
-8.70% , EIS , Israel MSCI iS, EIS
-6.31% , FPX , IPOs, First Tr IPOX-100, FPX
-14.73% , SLM , SLM CORP
-7.34% , PWB , Lg Cap Growth PSD, PWB
-16.96% , GNW , GENWORTH FINANCIAL
-12.57% , SHLD , SEARS HOLDINGS
-6.14% , DGT , Global Titans, DGT
-7.47% , BDH , Broadband H, BDH
-17.22% , SNV , SYNOVUS
-12.43% , MBI , MBIA
-7.43% , SIL , Silver Miners Global X, SIL
-6.95% , TMW , Wilshire 5000 ST TM, TMW
-6.85% , IWV , LargeCap Blend Russell 3000, IWV
-7.22% , PPA , Aerospace & Defense, PPA
-15.49% , HAR , Harman International
-7.98% , COST , COSTCO WHOLESAL
-21.53% , OMX , OFFICEMAX INC., OMX
-18.42% , EK , EASTMAN KODAK
-13.65% , IGT , INTL GAME TECH
-11.69% , RSX , Russia MV, RSX
-6.66% , PWV , Value LargeCap Dynamic PS, PWV
-9.37% , TMK , TORCHMARK
-6.70% , EPU , Peru MSCI iS, EPU
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.32% Gold Shares S.T., GLD
3.16% Bond, 20+ Years Treasury, TLT
1.74% Silver Trust iS, SLV
1.59% Bond, 10 Year Treasury, IEF
1.21% Bond, TIPS, TIP
0.05% Bond, Aggregate, AGG
0.04% Bond, 1-3 Year Treasury, SHY
-0.02% Bond Ex-US Treas, BWX
-0.02% Bond Treasury Short-Term iS, SHV
-0.95% Bond, Corp, LQD
-1.40% Bond Muni ATM-Free S&P iS, MUB
-1.67% Bond EmrgMkt JPM iS, EMB
-2.64% Agriculture DB PS, DBA
-3.71% Commodity Tracking, DBC
-3.78% Consumer Staples SPDR, XLP
-4.25% Bond, High-Yield Junk, JNK
-4.26% Bond, High-Yield Corporate, HYG
-4.80% Japan Index, EWJ
-4.97% Hong Kong Index, EWH
-5.12% Health Care SPDR, XLV
-5.30% Utilities SPDR, XLU
-5.33% Thailand MSCI iS, THD
-5.34% Semiconductor iS IGW, SOXX
-5.41% DIAMONDS (DJIA), DIA
-5.45% Canada Index, EWC
-5.53% Dividend Appreciation Vipers, VIG
-5.59% Pacific VIPERs, VPL
-5.59% Technology DJ US, IYW
-5.60% Utilities VIPERs, VPU
-5.63% Technology SPDR, XLK
-5.85% Growth S&P 500/BARRA, IVW
-5.86% Dividend SPDR, SDY
-6.02% Dividend DJ Select, DVY
-6.02% QQQ Nasdaq 100 Trust, QQQ
-6.05% LargeCap Blend S&P 100, OEF
-6.08% Info Tech VIPERs, VGT
-6.13% Switzerland Index, EWL
-6.25% Malaysia Index, EWM
-6.27% Consumer Discretionary SPDR, XLY
-6.30% Growth 1000 Russell, IWF
-6.30% India Earnings WTree, EPI
-6.33% Semiconductor SPDR, XSD
-6.36% Taiwan Index, EWT
-6.40% Dividend High Yield Equity PS, PEY
-6.48% S&P 500 iS LargeCap Blend, IVV
-6.51% S&P 500 SPDRs LargeCap Blend, SPY
-6.52% Growth VIPERs, VUG
-6.65% LargeCap VIPERs, VV
-6.66% Value LargeCap Dynamic PS, PWV
-6.68% Global 100, IOO
-6.69% India PS, PIN
-6.71% LargeCap 1000 R, IWB
-6.77% Oil Fund PowerShares, DBO
-6.84% Dividend International, PID
-6.85% LargeCap Blend Russell 3000, IWV
-6.87% Transportation Av DJ, IYT
-6.89% Value VIPERs, VTV
-6.93% Blend Total Market VIPERs, VTI
-7.05% Industrial SPDR, XLI
-7.07% Value 1000 Russell, IWD
-7.15% China 25 iS, FXI
-7.19% Oil, Crude, U.S. Oil Fund, USO
-7.26% Value S&P 500 B, IVE
-7.30% Biotech SPDR, XBI
-7.31% Materials SPDR, XLB
-7.34% LargeCap Blend S&P=Weight R, RSP
-7.36% Belgium Index, EWK
-7.42% Telecom DJ US, IYZ
-7.43% Silver Miners Global X, SIL
-7.45% Pacific ex-Japan, EPP
-7.47% EAFE Index, EFA
-7.54% Indonesia MV, IDX
-7.55% Value EAFE MSCI, EFV
-7.69% Water Resources, PHO
-7.70% Energy & Nat Res iS GS, IGE
-7.72% Growth MidCap Russell, IWP
-7.72% Growth EAFE MSCI, EFG
-7.73% Global ex US ACWI iS, ACWX
-7.77% MidCap Russell, IWR
-7.78% Emerging 50 BLDRS, ADRE
-7.78% United Kingdom Index, EWU
-7.80% Singapore Index, EWS
-7.95% China LargeCap Growth G D H USX PS, PGJ
-7.97% Networking, IGN
-8.03% Australia Index, EWA
-8.06% Emerging VIPERs, VWO
-8.07% MidCap S&P 400 SPDRs, MDY
-8.07% MidCap S&P 400 iS, IJH
-8.09% Spain Index, EWP
-8.11% Basic Materials DJ US, IYM
-8.15% Value MidCap Russell, IWS
-8.16% Growth MidCap 400 B, IJK
-8.20% Value MidCap S&P 400 B, IJJ
-8.21% Europe 350 S&P Index, IEV
-8.29% Growth BARRA Small Cap 600, IJT
-8.29% SmallCap S&P 600, IJR
-8.34% Emerging Markets, EEM
-8.36% Energy DJ, IYE
-8.39% South Africa Index, EZA
-8.42% Small Cap VIPERs, VB
-8.42% Netherlands Index, EWN
-8.42% Mexico Index, EWW
-8.44% Frontier Markets Guggenheim , FRN
-8.51% Real Estate US DJ, IYR
-8.51% Energy SPDR, XLE
-8.51% Value SmallCap S&P 600 B, IJS
-8.51% Value SmallCap VIPERS, VBR
-8.51% Energy Global, IXC
-8.54% Energy VIPERs, VDE
-8.56% Homebuilders SPDR, XHB
-8.59% REIT Wilshire, RWR
-8.60% Growth SmallCap VIPERs, VBK
-8.69% REIT VIPERs, VNQ
-8.70% Growth SmallCap R 2000, IWO
-8.71% SmallCap Russell 2000, IWM
-8.72% Microcap Russell, IWC
-8.73% Sweden Index, EWD
-8.76% Value SmallCap Russell 2000, IWN
-8.76% Realty Cohen & Steers, ICF
-8.89% Italy Index, EWI
-8.90% Small Cap EAFE MSCI iS, SCZ
-8.94% Latin Am 40, ILF
-8.99% Chile MSCI iS, ECH
-9.08% Metals & Mining SPDR, XME
-9.09% Capital Markets KWB ST, KCE
-9.10% European VIPERs, VGK
-9.20% South Korea Index, EWY
-9.21% EMU Europe Index, EZU
-9.28% Brazil Index, EWZ
-9.38% France Index, EWQ
-9.48% Financials VIPERs, VFH
-9.48% Financial SPDR, XLF
-9.50% Financial DJ US, IYF
-9.51% Preferred Stock iS, PFF
-9.76% WilderHill Clean Energy PS, PBW
-10.20% Germany Index, EWG
-10.26% Financial Services DJ, IYG
-10.60% Turkey MSCI iS, TUR
-10.63% Austria Index, EWO
-11.02% Financial Preferred, PGF
-11.69% Russia MV, RSX
