U.S. Treasury Bond rose above the highs of the previous 5 months, again reconfirming a significant uptrend.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 4 months, 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 dying.

The CRB Commodity Price Index has recovered less than half of its May loss, which is typical for a counter-trend bounce. Look for the downtrend to resume.

S&P 500 Composite (SPX, 1,345.20) rose 14.10 points or 1.06% on Tuesday. SPX rose above the highs of the previous 6-trading days and above a 20-trading days down trendline. Trading volume on the NYSE rose 47% above Friday’s slow pre-holiday pace. Short-term indicators of trend and momentum have responded positively to the 4-day rally. Longer-term indicators of trend and momentum leave room for doubt, however. SPX lost 1.33% for the month of May, which was its largest monthly loss since August, 2010.

  . . . . . . . . . .

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
11.63% , ASH , ASHLAND
1.56% , BDH , Broadband H, BDH
2.78% , EWO , Austria Index, EWO
1.20% , IYH , Healthcare DJ, IYH
2.53% , EWH , Hong Kong Index, EWH
0.43% , TTH , Telecom H, TTH
3.36% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
1.30% , PXN , Nanotech Lux, PXN
1.08% , PWO , OTC Dynamic PS, PWO
1.07% , IYJ , Industrial LargeCap Blend DJ US, IYJ
1.65% , ITF , Japan LargeCap Blend TOPIX 150, ITF
1.67% , HHH , Internet H, HHH
2.59% , RZV , Value SmallCap S&P 600, RZV
2.36% , DYN , DYNEGY
1.44% , PWT , Growth SmallCap Dynamic PS, PWT
1.66% , BBH , Biotech H, BBH
0.71% , FPX , IPOs, First Tr IPOX-100, FPX
1.06% , ADRD , Developed 100 BLDRS, ADRD
2.44% , RFMD , RF Micro Devices Inc
2.21% , ALTR , ALTERA
1.94% , ACWX , Global ex US ACWI iS, ACWX
2.21% , APOL , APOLLO GROUP
0.57% , VOX , Telecom Services VIPERs, VOX
2.68% , SCHW.K , CHARLES SCHWAB, SCHW.O
3.20% , PWER , POWER ONE
1.47% , ONEQ , Growth LargeCap NASDAQ Fidelity, ONEQ
2.44% , SHW , SHERWIN WILLIAMS
2.19% , IEV , Europe 350 S&P Index, IEV
2.89% , MCO , MOODYS CORP
0.59% , VCR , Consumer D. VIPERs, VCR
1.49% , XSD , Semiconductor SPDR, XSD
2.25% , LRCX , LAM RESEARCH CORP
1.12% , IWZ , Growth LargeCap Russell 3000, IWZ

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.84% , SIRI , Sirius Satellite
-1.58% , JCP , JC PENNEY
-0.85% , CVG , CONVERGYS
-1.60% , CECO , CAREER EDUCATION CORP
-1.13% , MYY , Short 100% MidCap 400, MYY
-1.47% , PDCO , Patterson Dental Company
-0.82% , WPO , Washington Post
-0.82% , TJX , TJX
-0.28% , IIH , Internet Infrastructure H, IIH
-3.05% , QID , Short 200% QQQ PS, QID
-0.85% , MJN , Mead Johnson Nutrition
-1.72% , RIMM , RESEARCH IN MOTION LTD
-0.99% , VRSN , VeriSign Inc
-1.05% , SH , Short 100% S&P 500, SH
-1.79% , MBI , MBIA
-2.24% , MZZ , Short 200% MidCap 400 PS, MZZ
-0.43% , DV , DeVry, Inc.
-0.91% , AZO , AUTOZONE
-0.62% , ZMH , ZIMMER HLDGS
-0.26% , TIP , Bond, TIPS, TIP
-2.09% , SDS , Short 200% S&P 500 PS, SDS
-1.10% , TIF , TIFFANY
-2.03% , DXD , Short 200% Dow 30 PS, DXD
-0.31% , THC , TENET HEALTHCARE
-0.15% , ZEUS , Olympic Steel, ZEUS
-0.14% , ROK , ROCKWELL AUTOMAT
-0.59% , PH , PARKER HANNIFIN
-0.99% , DOG , Short 100% Dow 30, DOG
-0.63% , TBH , Telebras HOLDRS, TBH
-0.71% , KSS , KOHLS
-0.30% , DBA , Agriculture DB PS, DBA
-0.34% , DISCA , Discovery Communications
-0.29% , MMC , MARSH & MCLENNAN

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) fell below 11-week lows on 5/23/11 and remains bearish. The Ratio gave a bearish signal on 5/3/11 by crossing below its 50-day SMA. 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) fell below 8-week lows on 5/23/11. The Ratio gave a bearish signal on 5/11/11 by crossing below its 50-day SMA. The Ratio remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA.

NASDAQ Composite/S&P 500 Relative Strength Ratio appears to have entered a downside correction since peaking on 1/18/11 and remains neutral. Absolute price appears to have 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 2-month lows on 5/24/11 and has been in a downside correction since 4/5/11.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) has been correcting and consolidating major gains since 4/5/11 and remains neutral. The Ratio rose above all-time highs on 4/5/11.

Crude Oil nearest futures contract price rose above the highs of the previous 2-weeks on 5/31/11, suggesting a short-term upside price correction. But Oil fell below the lows of the previous 10 weeks on 5/6/11, signaling a price downtrend in a larger time frame. 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 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 104.60, 105.16, 114.83, 115.27, 120.42, 130.0, and 147.27.

Gold nearest futures contract price rose above the highs of the previous 3-weeks early on 5/31/11 but reversed to close lower, possibly suggesting exhaustion of the short-term uptrend. Gold has recovered a normal fraction of its loss since its peak at 1577.4 on 5/2/11–but still it may be only a temporary countertrend bounce in a larger downside correction. On 5/2/11, when Gold was 1557.1, I wrote, “Gold rose above all-time highs on 5/2/11, again reconfirming its major uptrend. Gold looks overextended, however, and could be due for a downside correction.” Support: 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) has been falling steeply since 4/8/11 and remains bearish.

Silver nearest futures contract price challenged last week’s high of 38.845 on 5/31/11 but failed to penetrate it, possibly suggesting exhaustion of the short-term uptrend. Since falling to a low of 32.3 on 5/12/11, Silver may have experienced nothing more than a temporary countertrend bounce and normal partial retracement of losses in a larger downside correction. The problem is that Silver broke support levels and uptrend lines in May, so the larger trend may be bearish. Silver fell below 11-week lows on 5/12/11. 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 32.3, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 38.845, 39.38, 39.47, 49.845 and 50.35.

Silver/Gold Ratio entered a steep downtrend since the peak on 4/28/11. Although the Ratio has recovered modestly since 5/16/11, it may remain bearish.

Copper nearest futures contract price rose above the highs of the previous 3-weeks on 5/31/11, suggesting a short-term upside price correction. But Copper already has recovered a normal fraction of its loss since its peak at 4.6495 set on 02/15/11, so it may be only a temporary countertrend bounce in a larger downside correction. Copper broke down below previous 4-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, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.402, 4.533, 4.554, 4.6495, 4.6535, and 4.6575.

U.S. Treasury Bond nearest futures contract price rose above the highs of the previous 5 months on 5/31/11, again reconfirming a significant uptrend. The Bond built a 5-month, intermediate-term bullish base since the low of 12/15/10. 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 124.30, 123.18, 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 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 2-month lows on 5/26/11. Absolute price of JNK peaked at 41.32 on 11/4/10.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 4 months on 5/31/11, 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 dying.

The U.S. dollar nearest futures contract price fell below the lows of the previous 3-weeks on 5/31/11, confirming a short-term downside price correction. Support 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 57.3% Bulls versus 15.7% Bears as of 4/6/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio soared to 3.65, up from 2.23 the previous week. The Ratio rose its highest level in the 8 years since the 20-year high of 3.74 set on 6/18/03. Following that 2003 peak, the stock market turned sideways/choppy for 2 months and sentiment reverted toward the mean. The Ratio’s 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.63. According to Humphrey B. Neill, The Art of Contrary Thinking, when everybody thinks alike, everyone is likely to be wrong.

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. Looking ahead, joint closes below the 5/17/11 closing price lows could have serious bearish implications for the multi-month Secondary Trend. Here are the critical closing price levels to watch out for: 12,479.60 for the Dow-Jones Industrials and 5,335.37 for the Dow-Jones Transports.

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, 1,345.20) rose 14.10 points or 1.06% on Tuesday. SPX lost 1.33% for the month of May, which was its largest monthly loss since August, 2010.

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
1359.44.50, high of 5/10/11

S&P 500 Cash Index Potential Support
1294.70, low of 4/18/11
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
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

3.64% Spain Index, EWP
3.23% Germany Index, EWG
3.08% France Index, EWQ
3.04% Italy Index, EWI
3.03% EMU Europe Index, EZU
2.94% Taiwan Index, EWT
2.87% South Africa Index, EZA
2.86% Turkey MSCI iS, TUR
2.78% Austria Index, EWO
2.75% Belgium Index, EWK
2.69% China 25 iS, FXI
2.53% Hong Kong Index, EWH
2.43% Netherlands Index, EWN
2.36% WilderHill Clean Energy PS, PBW
2.19% Europe 350 S&P Index, IEV
2.17% European VIPERs, VGK
2.07% Small Cap EAFE MSCI iS, SCZ
2.07% EAFE Index, EFA
2.06% Growth EAFE MSCI, EFG
1.99% Oil, Crude, U.S. Oil Fund, USO
1.98% Value EAFE MSCI, EFV
1.96% Oil Fund PowerShares, DBO
1.96% Sweden Index, EWD
1.94% China LargeCap Growth G D H USX PS, PGJ
1.94% Global ex US ACWI iS, ACWX
1.92% India PS, PIN
1.78% Japan Index, EWJ
1.75% Real Estate US DJ, IYR
1.73% South Korea Index, EWY
1.69% Microcap Russell, IWC
1.68% Realty Cohen & Steers, ICF
1.68% Emerging VIPERs, VWO
1.65% REIT Wilshire, RWR
1.63% Emerging Markets, EEM
1.62% QQQ Nasdaq 100 Trust, QQQ
1.59% REIT VIPERs, VNQ
1.58% Value SmallCap S&P 600 B, IJS
1.56% Global 100, IOO
1.56% Technology DJ US, IYW
1.56% Pacific VIPERs, VPL
1.54% Silver Trust iS, SLV
1.53% Growth BARRA Small Cap 600, IJT
1.52% Semiconductor iS IGW, SOXX
1.50% MidCap S&P 400 SPDRs, MDY
1.49% Semiconductor SPDR, XSD
1.49% SmallCap S&P 600, IJR
1.48% Metals & Mining SPDR, XME
1.48% Info Tech VIPERs, VGT
1.48% Value SmallCap Russell 2000, IWN
1.48% Energy Global, IXC
1.47% Russia MV, RSX
1.42% SmallCap Russell 2000, IWM
1.42% India Earnings WTree, EPI
1.39% Growth SmallCap R 2000, IWO
1.39% Capital Markets KWB ST, KCE
1.38% Technology SPDR, XLK
1.38% Silver Miners Global X, SIL
1.36% Switzerland Index, EWL
1.33% Emerging 50 BLDRS, ADRE
1.28% Singapore Index, EWS
1.24% Small Cap VIPERs, VB
1.22% Growth SmallCap VIPERs, VBK
1.22% Value MidCap S&P 400 B, IJJ
1.18% Brazil Index, EWZ
1.18% Value LargeCap Dynamic PS, PWV
1.18% Health Care SPDR, XLV
1.18% Pacific ex-Japan, EPP
1.17% Water Resources, PHO
1.16% Value SmallCap VIPERS, VBR
1.14% United Kingdom Index, EWU
1.13% MidCap S&P 400 iS, IJH
1.13% LargeCap Blend S&P 100, OEF
1.10% Energy DJ, IYE
1.09% LargeCap Blend Russell 3000, IWV
1.09% Growth S&P 500/BARRA, IVW
1.08% Blend Total Market VIPERs, VTI
1.08% Frontier Markets Guggenheim , FRN
1.08% Transportation Av DJ, IYT
1.07% Homebuilders SPDR, XHB
1.07% Energy VIPERs, VDE
1.06% Value 1000 Russell, IWD
1.04% S&P 500 SPDRs LargeCap Blend, SPY
1.03% Value S&P 500 B, IVE
1.02% DIAMONDS (DJIA), DIA
1.02% Financial SPDR, XLF
1.02% Materials SPDR, XLB
1.01% Growth VIPERs, VUG
1.01% LargeCap VIPERs, VV
1.01% Energy SPDR, XLE
1.00% Financials VIPERs, VFH
1.00% Value VIPERs, VTV
1.00% Dividend Appreciation Vipers, VIG
0.99% Financial DJ US, IYF
0.99% Basic Materials DJ US, IYM
0.98% Canada Index, EWC
0.98% S&P 500 iS LargeCap Blend, IVV
0.97% Value MidCap Russell, IWS
0.97% LargeCap 1000 R, IWB
0.95% Growth 1000 Russell, IWF
0.94% Malaysia Index, EWM
0.93% Dividend SPDR, SDY
0.93% Indonesia MV, IDX
0.91% Financial Services DJ, IYG
0.91% Dividend International, PID
0.91% Industrial SPDR, XLI
0.90% Dividend High Yield Equity PS, PEY
0.88% MidCap Russell, IWR
0.88% Growth MidCap Russell, IWP
0.88% Dividend DJ Select, DVY
0.86% LargeCap Blend S&P=Weight R, RSP
0.84% Consumer Staples SPDR, XLP
0.84% Growth MidCap 400 B, IJK
0.83% Energy & Nat Res iS GS, IGE
0.81% Networking, IGN
0.77% Utilities VIPERs, VPU
0.74% Utilities SPDR, XLU
0.74% Biotech SPDR, XBI
0.70% Consumer Discretionary SPDR, XLY
0.69% Bond EmrgMkt JPM iS, EMB
0.68% Australia Index, EWA
0.57% Commodity Tracking, DBC
0.56% Latin Am 40, ILF
0.46% Chile MSCI iS, ECH
0.42% Bond Ex-US Treas, BWX
0.39% Bond Muni ATM-Free S&P iS, MUB
0.37% Mexico Index, EWW
0.27% Bond, High-Yield Corporate, HYG
0.27% Bond, High-Yield Junk, JNK
0.23% Bond, 20+ Years Treasury, TLT
0.22% Thailand MSCI iS, THD
0.20% Telecom DJ US, IYZ
0.16% Bond, 10 Year Treasury, IEF
0.05% Preferred Stock iS, PFF
0.03% Bond, Aggregate, AGG
0.00% Bond, 1-3 Year Treasury, SHY
-0.01% Bond, Corp, LQD
-0.01% Bond Treasury Short-Term iS, SHV
-0.03% Financial Preferred, PGF
-0.04% Gold Shares S.T., GLD
-0.26% Bond, TIPS, TIP
-0.30% Agriculture DB PS, DBA