S&P 500 Composite (SPX, 1,270.98) fell 18.02 points or 1.40% on Friday. SPX fell below 12-week lows, reconfirming its preexisting, intermediate-term downtrend. NYSE volume rose 26% to confirm the price downtrend. The Dow-Jones Averages and most other indexes and indicators also reconfirmed the downtrend.
Stock prices fell every week over the past 6 weeks as the S&P 500 Composite lost 6.78%. It is the largest down wave since August 2010 and the longest lasting down wave since April-July 2010. In my interpretation of the Dow Theory, this is a confirmed Secondary Reaction (a significant downside correction) for the general stock market.
When the stock market suffers a significant downside correction, the great majority of sectors, groups, industries, and individual stocks join in the decline, including the strongest. So, relative strength going into a Secondary Reaction does not protect against loss.
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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
0.48% , TLH , Bond 10-20 Year US Treas, TLH
1.55% , PSQ , Short 100% QQQ, PSQ
3.06% , AIG , AMER INTL GROUP
1.54% , MYY , Short 100% MidCap 400, MYY
3.79% , EK , EASTMAN KODAK
2.76% , SDS , Short 200% S&P 500 PS, SDS
1.37% , DOG , Short 100% Dow 30, DOG
2.87% , DXD , Short 200% Dow 30 PS, DXD
1.79% , GS , GOLDMAN SACHS
3.04% , QID , Short 200% QQQ PS, QID
1.43% , X , US STEEL CORP
1.41% , BAC , BANK OF AMERICA
0.78% , NUE , NUCOR
1.38% , SH , Short 100% S&P 500, SH
0.80% , MS , MORGAN STANLEY
0.13% , GVI , Bond Interm U.S. Gov, GVI
1.00% , DPS , Dr Pepper Snapple Group
0.22% , CEG , CONSTELL ENERGY
0.17% , JPM , J P MORGAN CHASE
1.33% , SHLD , SEARS HOLDINGS
0.16% , CVG , CONVERGYS
0.11% , PGF , Financial Preferred, PGF
0.21% , CNP , CENTERPNT ENERGY
0.40% , C , CITIGROUP
0.01% , SHV , Bond Treasury Short-Term iS, SHV
0.21% , WFC , WELLS FARGO
0.03% , T , AT&T Corp., T
0.32% , IEF , Bond, 10 Year Treasury, IEF
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.42% , PWP , Value MidCap Dynamic PS, PWP
-7.11% , CTB , COOPER TIRE
-1.81% , SWH , Software H, SWH
-1.96% , PWJ , Growth Mid Cap Dynamic PS, PWJ
-1.47% , ISI , LargeCap Blend S&P 1500 iS, ISI
-1.60% , MTK , Technology MS sT, MTK
-1.66% , RPG , Growth S&P 500, RPG
-3.52% , PXN , Nanotech Lux, PXN
-1.62% , NYC , LargeCap Blend NYSE Composite iS, NYC
-3.19% , EWI , Italy Index, EWI
-2.52% , PKB , Building & Construction, PKB
-3.26% , FEZ , Euro STOXX 50, FEZ
-1.03% , JKK , Growth SmallCap iS M, JKK
-4.63% , KSU , Kansas City Southern, KSU
-2.39% , PIN , India PS, PIN
-1.91% , DGT , Global Titans, DGT
-2.75% , EWK , Belgium Index, EWK
-0.76% , ITF , Japan LargeCap Blend TOPIX 150, ITF
-1.38% , PWY , Value SmallCap Dynamic PS, PWY
-1.48% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
-1.96% , JKJ , SmallCap Core iS M, JKJ
-2.09% , IXJ , Healthcare Global, IXJ
-3.43% , THC , TENET HEALTHCARE
-1.64% , PPH , Pharmaceutical H, PPH
-2.81% , EWN , Netherlands Index, EWN
-4.09% , EWD , Sweden Index, EWD
-3.92% , NYT , NY TIMES STK A
-1.55% , PWT , Growth SmallCap Dynamic PS, PWT
-1.49% , IIH , Internet Infrastructure H, IIH
-1.71% , EWO , Austria Index, EWO
-2.84% , DDM , Ultra Dow30 Double, DDM
-1.55% , IVW , Growth S&P 500/BARRA, IVW
-3.38% , BLK , BlackRock Inc.
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 6/10/11, 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 4-month lows on 6/10/11 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 12-week lows on 6/10/11. The Ratio set an all-time high on 4/5/11. Price also fell below 12-week lows.
Crude Oil nearest futures contract price surrendered 2-day gains to close near the low closes of the past 3 weeks on 6/10/11. 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 closed below 4-day lows on 6/10/11, signaling a short-term downtrend. On 6/9/11, when Gold was 1542.7, I noted that the Gold “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 5 trading days on 6/10/11, 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 has been consolidating gains near its highs over the past 8 trading days. 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, 127.19, 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 further below 6-month lows on 6/10/11. Absolute price of JNK broke down below 8-month lows on 6/10/11. 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 6/10/11, again reconfirming a significant 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 5-trading days on 6/10/11. The trend appears to be turning up again. Support 73.88, 73.515, 72.86, and 70.80. Resistance 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, 1,270.98) fell 18.02 points or 1.40% on Friday. SPX fell below 12-week lows, reconfirming its preexisting, intermediate-term downtrend.
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
0.77% Bond, 20+ Years Treasury, TLT
0.32% Bond, 10 Year Treasury, IEF
0.11% Financial Preferred, PGF
0.09% Frontier Markets Guggenheim , FRN
0.08% Bond, 1-3 Year Treasury, SHY
0.01% Bond Treasury Short-Term iS, SHV
-0.01% Bond, Aggregate, AGG
-0.04% Bond, TIPS, TIP
-0.08% Bond EmrgMkt JPM iS, EMB
-0.12% Bond, Corp, LQD
-0.15% Preferred Stock iS, PFF
-0.27% Financial Services DJ, IYG
-0.34% Bond Muni ATM-Free S&P iS, MUB
-0.47% Malaysia Index, EWM
-0.52% Utilities VIPERs, VPU
-0.57% Thailand MSCI iS, THD
-0.65% Bond, High-Yield Corporate, HYG
-0.66% Utilities SPDR, XLU
-0.67% Financial SPDR, XLF
-0.70% Dividend High Yield Equity PS, PEY
-0.71% Bond Ex-US Treas, BWX
-0.88% Gold Shares S.T., GLD
-0.89% Capital Markets KWB ST, KCE
-0.89% Financial DJ US, IYF
-0.95% Metals & Mining SPDR, XME
-0.96% Financials VIPERs, VFH
-0.97% Agriculture DB PS, DBA
-0.99% Japan Index, EWJ
-0.99% Indonesia MV, IDX
-1.00% Bond, High-Yield Junk, JNK
-1.02% Chile MSCI iS, ECH
-1.05% Commodity Tracking, DBC
-1.06% Dividend DJ Select, DVY
-1.14% WilderHill Clean Energy PS, PBW
-1.15% Consumer Staples SPDR, XLP
-1.20% Value VIPERs, VTV
-1.26% Materials SPDR, XLB
-1.27% Telecom DJ US, IYZ
-1.28% Dividend SPDR, SDY
-1.28% Value S&P 500 B, IVE
-1.29% Turkey MSCI iS, TUR
-1.32% Value 1000 Russell, IWD
-1.32% Transportation Av DJ, IYT
-1.34% Basic Materials DJ US, IYM
-1.35% LargeCap Blend S&P 100, OEF
-1.37% S&P 500 iS LargeCap Blend, IVV
-1.37% Value SmallCap S&P 600 B, IJS
-1.39% S&P 500 SPDRs LargeCap Blend, SPY
-1.39% Technology SPDR, XLK
-1.40% LargeCap 1000 R, IWB
-1.40% Dividend Appreciation Vipers, VIG
-1.42% Value MidCap S&P 400 B, IJJ
-1.42% Blend Total Market VIPERs, VTI
-1.43% Value LargeCap Dynamic PS, PWV
-1.44% LargeCap Blend Russell 3000, IWV
-1.44% Info Tech VIPERs, VGT
-1.44% DIAMONDS (DJIA), DIA
-1.45% LargeCap VIPERs, VV
-1.46% Pacific VIPERs, VPL
-1.46% Technology DJ US, IYW
-1.48% LargeCap Blend S&P=Weight R, RSP
-1.49% Value SmallCap Russell 2000, IWN
-1.49% Microcap Russell, IWC
-1.50% MidCap S&P 400 iS, IJH
-1.52% QQQ Nasdaq 100 Trust, QQQ
-1.52% Value MidCap Russell, IWS
-1.53% MidCap Russell, IWR
-1.54% Growth MidCap Russell, IWP
-1.54% Dividend International, PID
-1.55% Growth S&P 500/BARRA, IVW
-1.55% Small Cap VIPERs, VB
-1.55% Value SmallCap VIPERS, VBR
-1.55% MidCap S&P 400 SPDRs, MDY
-1.55% SmallCap S&P 600, IJR
-1.57% Growth 1000 Russell, IWF
-1.58% Latin Am 40, ILF
-1.59% Industrial SPDR, XLI
-1.60% SmallCap Russell 2000, IWM
-1.60% Semiconductor iS IGW, SOXX
-1.61% Growth MidCap 400 B, IJK
-1.62% Growth VIPERs, VUG
-1.62% Semiconductor SPDR, XSD
-1.64% Growth SmallCap VIPERs, VBK
-1.67% Growth SmallCap R 2000, IWO
-1.68% Brazil Index, EWZ
-1.70% Growth BARRA Small Cap 600, IJT
-1.71% Switzerland Index, EWL
-1.71% Mexico Index, EWW
-1.71% Austria Index, EWO
-1.72% Water Resources, PHO
-1.75% Canada Index, EWC
-1.82% Russia MV, RSX
-1.83% Emerging 50 BLDRS, ADRE
-1.83% Energy DJ, IYE
-1.84% Consumer Discretionary SPDR, XLY
-1.85% Health Care SPDR, XLV
-1.87% Energy VIPERs, VDE
-1.90% Homebuilders SPDR, XHB
-1.92% Oil Fund PowerShares, DBO
-1.94% Energy SPDR, XLE
-1.99% Energy & Nat Res iS GS, IGE
-2.01% Australia Index, EWA
-2.01% Singapore Index, EWS
-2.03% Networking, IGN
-2.03% Global 100, IOO
-2.03% South Africa Index, EZA
-2.06% Biotech SPDR, XBI
-2.06% Emerging VIPERs, VWO
-2.08% Global ex US ACWI iS, ACWX
-2.11% India Earnings WTree, EPI
-2.16% Small Cap EAFE MSCI iS, SCZ
-2.17% Emerging Markets, EEM
-2.20% Energy Global, IXC
-2.23% Pacific ex-Japan, EPP
-2.29% Growth EAFE MSCI, EFG
-2.29% Value EAFE MSCI, EFV
-2.31% EAFE Index, EFA
-2.33% Hong Kong Index, EWH
-2.33% China LargeCap Growth G D H USX PS, PGJ
-2.37% Real Estate US DJ, IYR
-2.39% India PS, PIN
-2.46% Realty Cohen & Steers, ICF
-2.47% China 25 iS, FXI
-2.51% REIT Wilshire, RWR
-2.52% REIT VIPERs, VNQ
-2.64% Europe 350 S&P Index, IEV
-2.67% Oil, Crude, U.S. Oil Fund, USO
-2.75% Belgium Index, EWK
-2.79% Germany Index, EWG
-2.80% United Kingdom Index, EWU
-2.81% Netherlands Index, EWN
-2.93% Spain Index, EWP
-2.95% European VIPERs, VGK
-2.96% South Korea Index, EWY
-3.07% Taiwan Index, EWT
-3.09% France Index, EWQ
-3.10% EMU Europe Index, EZU
-3.10% Silver Miners Global X, SIL
-3.19% Italy Index, EWI
-3.87% Silver Trust iS, SLV
-4.09% Sweden Index, EWD
