The S&P 500 Composite (SPX: 1,315.38) rose 0.07% on Friday to its highest closing price in 5 months, again confirming a medium-term rally. SPX appears overbought and overdue for a correction, however. Stocks may be vulnerable to a downside shakeout in days ahead.

Bearish technical divergences support a skeptical attitude toward a further stock price advance: SPX still demonstrates relatively low short-term upside momentum; volume trends are bearish, rising on declines and falling on rallies; and the net number of new highs (New Highs minus New Lows) is lower now than in October and December despite the rise in the price indexes.

VIX Fear Index broke down below the lows of the previous 5 months on 1/20/12, hitting 18.16 intraday. That is down from recent peaks of 30.91 on 12/8/11, 37.83 on 11/1/11, 46.88 on 10/4/11, and 48.00 on 8/8/11. This large drop indicates a shift away from fear and toward confidence.

The latest sentiment data from AAII shows 47% Bulls versus 24% Bears. That is a moderate downward adjustment in mood from the previous week’s reading, which was 1.3 standard deviations more optimistic than the 20-year average.

With the majority of investors bullish, and therefore already invested in the market, stocks are vulnerable to a downside shakeout. The market mood always reverts to the mean…in time.
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Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.
Hedge funds lost 5%, according to COO Connect.
Hedge funds suffered their second-worst year on record in 2011, according to an index maintained by Eurekahedge, an independent research firm that specializes in hedge fund data. Some of the world’s largest and best-known hedge funds suffered huge losses, down 20% to 50%.

But not all money managers were down in 2011; see:
Robert W. Colby Asset Management, Inc. (click here).
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Tangible Assets, Commodities

U.S. dollar ETF (UUP) fell below the lows of the previous 10 trading days on 1/19/12, thereby confirming a minor pullback. UUP rose above the high of the previous 12 months on 1/13/12, thereby reconfirming its bullish major trend. UUP rose above its 50-day SMA on 11/14/11 and rose above its 200-day SMA on 11/9/11. The 50-day SMA has remained bullishly above the 200-day SMA every day since 10/26/11. Support 22.35, 22.24, 21.97, 21.92, 21.58, 21.07, and 20.84. Resistance 22.85, 23.52, 25.84, 27.19, 28.97.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) whipsawed back below its 50-day SMA on 1/12/12, resuming its bearish major trend. DBA remains bearishly below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/8/11.

Crude Oil, United States Oil ETF (USO) has been correcting and consolidating over the past 11 trading days. USO broke out above the highs of the previous 7 months on 1/4/12, thereby confirming a major uptrend. Support 37.64, 35.73, 34.54, 32.52, 29.10, 26.28, and 22.74. Resistance 39.96, 40.74, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) rose above the highs of the previous 5 weeks on 1/20/12 and rose above its 200-day SMA on 1/10/12, indicating a minor uptrend. GLD remains below its 50-day SMA. Support: 159.68, 158.01, 156.19, 154.55, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 165.53, 170.80, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell below the lows of the previous 3 years on 1/20/12, thereby reconfirming a bearish major trend for the long term. GDX/GLD remains bearishly below its 50-day and 200-day SMAs. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.

Silver, iShares Silver Trust ETF (SLV) rose above its 50-day SMA on 1/20/12 but remains bearishly below its falling 200-day SMA. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 10/27/11. Support 28.63, 27.83, 25.65, and 24.44. Resistance: 32.53, 34.44, 34.51, 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) rose above its 50-day SMA on 1/20/12 but remains bearishly below its falling 200-day SMA. SLV/GLD fell below the lows of the previous 14 months on 12/28/11, confirming a long-term bearish trend. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/30/11. This SLV/GLD downtrend means investors prefer Gold over Silver.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) rose above the highs of the previous 4 months on 1/19/12 and rose above its 50-day SMA on 1/10/12. JJC remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 8/8/11.
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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
1.06% , ITF , Japan LargeCap Blend TOPIX 150, ITF
0.94% , PSI , Semiconductors, PSI
5.65% , MSFT , MICROSOFT
13.03% , SHLD , SEARS HOLDINGS
4.98% , SLV , Silver Trust iS, SLV
4.44% , EK , EASTMAN KODAK
5.64% , CTB , COOPER TIRE
3.61% , HPQ , HEWLETT PACKARD
2.59% , VMC , VULCAN MATERIALS
1.67% , BC , BRUNSWICK
2.45% , ACE , ACE
4.43% , IBM , IBM
2.11% , ADM , ARCHER DANIELS
2.06% , CNP , CENTERPNT ENERGY
2.93% , INTC , INTEL
1.14% , EWH , Hong Kong Index, EWH
1.75% , ABC , AMERISOURCEBERGN
1.16% , BIIB , BIOGEN IDEC
3.23% , RFMD , RF Micro Devices Inc
3.22% , AMD , ADV MICRO DEV
1.13% , IXG , Financials Global LargeCap Value, IXG
0.21% , VDC , Consumer Staples VIPERs, VDC
0.48% , SOXX , Semiconductor iS IGW, SOXX
1.46% , BIG , BIG LOTS
1.29% , EWJ , Japan Index, EWJ
1.19% , SRE , SEMPRA ENERGY
2.81% , SCHW.K , CHARLES SCHWAB, SCHW.O
0.95% , CB , CHUBB
0.99% , VPL , Pacific VIPERs, VPL
0.26% , ADRD , Developed 100 BLDRS, ADRD
1.29% , SLB , SCHLUMBERGER
3.08% , FHN , First Horizon National
0.69% , CVG , CONVERGYS

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.63% , JKG , MidCap Blend Core iS M, JKG
-5.62% , COF , CAPITAL ONE FNCL
-8.38% , GOOG , Google
-2.82% , HNZ , HJ HEINZ
-5.51% , DYN , DYNEGY
-4.06% , PH , PARKER HANNIFIN
-2.88% , FITB , FIFTH THIRD BANC
-2.04% , PCG , PG&E
-5.66% , FMCN , Focus Media, FMCN
-2.99% , S , SPRINT NEXTEL
-3.79% , LVLT.K , LEVEL 3 COMMUNICATIONS
-2.05% , OMC , OMNICOM
-2.50% , DOV , DOVER
-3.52% , WPI , WATSON PHARM
-1.79% , AXP , AMERICAN EXPRESS
-2.74% , CBS , CBS CORP.
-2.94% , HUM , HUMANA
-0.72% , EWL , Switzerland Index, EWL
-1.93% , R , RYDER SYSTEM
-2.04% , DISCA , Discovery Communications
-2.56% , XHB , Homebuilders SPDR, XHB
-3.30% , ETN , EATON
-1.91% , HON , HONEYWELL INTL
-1.74% , AAPL , APPLE COMPUTER
-2.52% , BLK , BlackRock Inc.
-1.58% , CPB , CAMPBELL SOUP
-0.76% , JKE , Growth LargeCap iS M, JKE
-1.47% , DXD , Short 200% Dow 30 PS, DXD
-1.03% , ETR , ENTERGY
-1.64% , BMS , BEMIS
-2.65% , NYT , NY TIMES STK A
-0.66% , PEJ , Leisure & Entertainment, PEJ
-1.30% , APD , AIR PRODS & CHEM
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
4.98% Silver Trust iS, SLV
1.29% Japan Index, EWJ
1.14% Hong Kong Index, EWH
1.07% China LargeCap Growth G D H USX PS, PGJ
1.05% South Korea Index, EWY
1.04% Semiconductor SPDR, XSD
1.00% Austria Index, EWO
0.99% Pacific VIPERs, VPL
0.78% Capital Markets KWB ST, KCE
0.76% Singapore Index, EWS
0.72% Frontier Markets Guggenheim , FRN
0.70% Value EAFE MSCI, EFV
0.68% Financials VIPERs, VFH
0.66% Global 100, IOO
0.65% Small Cap EAFE MSCI iS, SCZ
0.65% Pacific ex-Japan, EPP
0.64% Financial SPDR, XLF
0.63% REIT Wilshire, RWR
0.63% DIAMONDS (DJIA), DIA
0.62% REIT VIPERs, VNQ
0.60% Realty Cohen & Steers, ICF
0.57% Microcap Russell, IWC
0.57% Financial Services DJ, IYG
0.55% Financial DJ US, IYF
0.53% Gold Shares S.T., GLD
0.52% EAFE Index, EFA
0.49% Bond Ex-US Treas, BWX
0.48% United Kingdom Index, EWU
0.48% Semiconductor iS IGW, SOXX
0.48% Real Estate US DJ, IYR
0.46% Financial Preferred, PGF
0.44% Australia Index, EWA
0.42% Value SmallCap Russell 2000, IWN
0.40% Value SmallCap S&P 600 B, IJS
0.40% Preferred Stock iS, PFF
0.39% Netherlands Index, EWN
0.39% Brazil Index, EWZ
0.36% Value SmallCap VIPERS, VBR
0.35% Value VIPERs, VTV
0.35% WilderHill Clean Energy PS, PBW
0.34% Technology DJ US, IYW
0.32% Dividend High Yield Equity PS, PEY
0.32% Value LargeCap Dynamic PS, PWV
0.32% Italy Index, EWI
0.29% Growth EAFE MSCI, EFG
0.29% Spain Index, EWP
0.28% Utilities VIPERs, VPU
0.27% Bond EmrgMkt JPM iS, EMB
0.26% Info Tech VIPERs, VGT
0.26% Global ex US ACWI iS, ACWX
0.26% Europe 350 S&P Index, IEV
0.25% Value S&P 500 B, IVE
0.20% LargeCap Blend S&P 100, OEF
0.18% China 25 iS, FXI
0.16% India Earnings WTree, EPI
0.16% India PS, PIN
0.15% Bond, High-Yield Junk, JNK
0.15% SmallCap S&P 600, IJR
0.14% Utilities SPDR, XLU
0.14% Dividend Appreciation Vipers, VIG
0.14% Value MidCap S&P 400 B, IJJ
0.12% Value 1000 Russell, IWD
0.12% Emerging VIPERs, VWO
0.12% European VIPERs, VGK
0.11% Technology SPDR, XLK
0.08% Belgium Index, EWK
0.08% Dividend International, PID
0.07% Turkey MSCI iS, TUR
0.06% SmallCap Russell 2000, IWM
0.06% Chile MSCI iS, ECH
0.06% S&P 500 SPDRs LargeCap Blend, SPY
0.05% LargeCap Blend Russell 3000, IWV
0.04% Latin Am 40, ILF
0.04% Small Cap VIPERs, VB
0.03% Consumer Staples SPDR, XLP
0.03% Blend Total Market VIPERs, VTI
0.01% Energy SPDR, XLE
0.00% Water Resources, PHO
0.00% Health Care SPDR, XLV
0.00% Bond, High-Yield Corporate, HYG
-0.02% LargeCap VIPERs, VV
-0.02% South Africa Index, EZA
-0.02% Bond Treasury Short-Term iS, SHV
-0.02% Dividend DJ Select, DVY
-0.02% S&P 500 iS LargeCap Blend, IVV
-0.02% Bond, 1-3 Year Treasury, SHY
-0.02% Emerging 50 BLDRS, ADRE
-0.03% Bear, Short S&P 500, SH
-0.03% LargeCap 1000 R, IWB
-0.04% Dividend SPDR, SDY
-0.04% Value MidCap Russell, IWS
-0.05% Germany Index, EWG
-0.05% France Index, EWQ
-0.07% EMU Europe Index, EZU
-0.07% MidCap S&P 400 SPDRs, MDY
-0.07% Emerging Markets, EEM
-0.09% Energy VIPERs, VDE
-0.09% Growth BARRA Small Cap 600, IJT
-0.10% Growth SmallCap R 2000, IWO
-0.12% LargeCap Blend S&P=Weight R, RSP
-0.13% Energy Global, IXC
-0.14% Growth S&P 500/BARRA, IVW
-0.14% Canada Index, EWC
-0.14% Malaysia Index, EWM
-0.15% Energy DJ, IYE
-0.15% QQQ Nasdaq 100 Trust, QQQ
-0.16% MidCap S&P 400 iS, IJH
-0.19% Metals & Mining SPDR, XME
-0.20% Bond, TIPS, TIP
-0.22% Networking, IGN
-0.23% Energy & Nat Res iS GS, IGE
-0.23% Growth 1000 Russell, IWF
-0.23% Telecom DJ US, IYZ
-0.24% Agriculture DB PS, DBA
-0.25% Growth VIPERs, VUG
-0.25% Bond, Corp, LQD
-0.25% Bond, Aggregate, AGG
-0.26% Basic Materials DJ US, IYM
-0.26% Sweden Index, EWD
-0.27% Growth SmallCap VIPERs, VBK
-0.34% MidCap Russell, IWR
-0.34% Bond, 10 Year Treasury, IEF
-0.35% Growth MidCap 400 B, IJK
-0.40% Bond Muni ATM-Free S&P iS, MUB
-0.40% Taiwan Index, EWT
-0.44% Materials SPDR, XLB
-0.46% Thailand MSCI iS, THD
-0.47% Transportation Av DJ, IYT
-0.58% Industrial SPDR, XLI
-0.62% Mexico Index, EWW
-0.70% Growth MidCap Russell, IWP
-0.72% Switzerland Index, EWL
-0.72% Commodity Tracking, DBC
-0.82% Consumer Discretionary SPDR, XLY
-0.82% Russia MV, RSX
-0.85% Indonesia MV, IDX
-0.94% Biotech SPDR, XBI
-1.13% Bond, 20+ Years Treasury, TLT
-2.12% Oil Fund PowerShares, DBO
-2.35% Oil, Crude, U.S. Oil Fund, USO
-2.56% Homebuilders SPDR, XHB