Stock Market: A Warning of a Decline Ahead

The S&P 500 Composite (SPX: 1,281.06) rose 0.29% on Thursday. Volume on the NYSE rose 22%, confirming an improved trading mood.

Short-term Price Momentum Oscillators based on SPX are overbought and are losing upside momentum.

I doubt that SPX will be able to break through the upper end of its 6-month range at this time. The 6-month range high was 1292.66 set on 10/27/11.

AAII bullish sentiment rose to 48.9%, the highest level of optimism since February 10, 2011. AAII bearish sentiment fell to 17.2%, the lowest level of pessimism since December 23, 2010, and more than one standard deviation below the historical average of 30%. Applying Humphrey Bancroft Neill’s Art of Contrary Thinking, this may be taken as a warning of a stock market decline ahead.

U.S. dollar ETF (UUP) rose to the upper end of its trading range on 1/5/12. UUP remains in bullish position. 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.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell steeply on 1/5/12 after encountering significant resistance near its falling 50-day SMA. DBA was in a vulnerable, overbought position.

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Equity Mutual Funds lost 6% in 2011, according to Lipper Research Services.

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) rose to the upper end of its trading range on 1/5/12. UUP remains in bullish position. 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 22.24, 21.97, 21.92, 21.58, 21.07, and 20.84. Resistance 22.70, 23.52, 25.84, 27.19, 28.97.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell steeply on 1/5/12 after encountering significant resistance near its falling 50-day SMA. DBA was in a vulnerable, overbought position. Price fell below the lows of the previous 14 months on 12/16/11, again confirming a bearish major downtrend.

Crude Oil, United States Oil ETF (USO) fell below the lows of the previous 2 trading days on 1/5/12–just one day after breaking out above the highs of the previous 7 months on 1/4/12, thereby signaling a major uptrend. Support 37.87, 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 3 weeks on 1/5/12. But GLD fell below the lows of the previous 5 months on 12/29/11, confirming a bearish trend. On 12/12/11, I warned that a break below the low at 165.53 set on 12/6/11 would be bearish. GLD remains below its 50-day and 200-day SMAs. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 162.07, 165.53, 170.80, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (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. GDX/GLD fell below 3-year lows on 12/19/11, reconfirming a bearish major trend for the long term.

Silver, iShares Silver Trust ETF (SLV) fell below the lows of the previous 11 months on 12/29/11. SLV remains bearishly below its falling 50-day and 200-day SMAs. SLV crossed below its 50-day SMA on 12/8/11 and crossed below its 200-day SMA on 9/22/11. Longer term, the 50-day SMA has remained bearishly below the 200-day SMA every day since 10/27/11. Support 25.65 and 24.44. Resistance: 28.99, 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) fell below the lows of the previous 14 months on 12/28/11, confirming a bearish trend. SLV/GLD remains bearishly below 50-day and 200-day SMAs. 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) crossed back below its 50-day SMA on 1/4/12. 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. Major trend weakness in Copper suggests serious concerns about the economic outlook.
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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
1.86% , PSI , Semiconductors, PSI
1.33% , PWO , OTC Dynamic PS, PWO
7.33% , MRVL , MARVELL TECHNOLOGY
3.50% , XBI , Biotech SPDR, XBI
6.84% , HGSI , Human Genome Sciences Inc
8.61% , BAC , BANK OF AMERICA
7.11% , MTG , MGIC INVESTMENT
7.72% , LSI , LSI LOGIC
2.23% , PMR , Retail, PMR
5.52% , MON , MONSANTO
11.48% , SIRI , Sirius Satellite
8.30% , CIEN.O , CIENA
0.45% , JKD , LargeCap Blend Core iS M, JKD
5.88% , ROST , Ross Stores Inc
5.36% , STI , SUNTRUST BANKS
0.65% , IGM , Technology GS, IGM
7.65% , PHM , PULTE HOMES
2.49% , ISIL , INTERSIL CORP
4.15% , RF , REGIONS FINAN
1.97% , XSD , Semiconductor SPDR, XSD
2.41% , AES , AES
4.42% , PCAR , PACCAR
4.08% , AM , AMER GREETINGS STK A
2.79% , WPI , WATSON PHARM
5.47% , KBH , KB HOME
0.46% , PWV , Value LargeCap Dynamic PS, PWV
0.21% , OEF , LargeCap Blend S&P 100, OEF
3.59% , NVDA , NVIDIA
2.90% , FITB , FIFTH THIRD BANC
2.17% , LPX , LOUISIANA PAC
2.92% , TJX , TJX
2.77% , LEN , Lennar Corp. (LEN)
2.45% , HOT , STARWOOD HOTELS

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.08% , EWN , Netherlands Index, EWN
-0.78% , MYY , Short 100% MidCap 400, MYY
-0.48% , PXJ , Oil & Gas, PXJ
-2.69% , JCP , JC PENNEY
-2.81% , CPB , CAMPBELL SOUP
-1.43% , MZZ , Short 200% MidCap 400 PS, MZZ
-4.50% , EWI , Italy Index, EWI
-1.69% , EWL , Switzerland Index, EWL
-1.38% , ODP , OFFICE DEPOT
-2.12% , EWQ , France Index, EWQ
-1.77% , RSX , Russia MV, RSX
-1.59% , MCK , MCKESSON CORP
-2.15% , EWK , Belgium Index, EWK
-3.60% , EWP , Spain Index, EWP
-1.16% , EWG , Germany Index, EWG
-3.03% , S , SPRINT NEXTEL
-2.15% , EZU , EMU Europe Index, EZU
-3.23% , GPS , GAP
-2.21% , SHLD , SEARS HOLDINGS
-1.47% , ADRD , Developed 100 BLDRS, ADRD
-1.32% , CHRW.O , CH Robinson Worldwide Inc, CHRWD
-2.14% , SLB , SCHLUMBERGER
-2.37% , HES , AMERADA HESS
-2.98% , TGT , TARGET
-0.84% , IXG , Financials Global LargeCap Value, IXG
-1.11% , RTN , RAYTHEON
-1.32% , OMC , OMNICOM
-1.64% , OMX , OFFICEMAX INC., OMX
-2.72% , NTAP , NETWK APPLIANCE
-1.32% , IXP , Telecommunications Global, IXP
-1.77% , KSS , KOHLS
-2.14% , DBA , Agriculture DB PS, DBA
-0.86% , VOX , Telecom Services VIPERs, VOX
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
3.50% Biotech SPDR, XBI
2.56% Homebuilders SPDR, XHB
1.97% Semiconductor SPDR, XSD
1.71% Financial Services DJ, IYG
1.38% Preferred Stock iS, PFF
1.36% Semiconductor iS IGW, SOXX
1.35% Financial SPDR, XLF
1.31% Financials VIPERs, VFH
1.21% Financial Preferred, PGF
1.12% Financial DJ US, IYF
1.12% China LargeCap Growth G D H USX PS, PGJ
1.10% REIT Wilshire, RWR
0.94% Capital Markets KWB ST, KCE
0.94% REIT VIPERs, VNQ
0.94% Realty Cohen & Steers, ICF
0.93% Taiwan Index, EWT
0.83% Consumer Discretionary SPDR, XLY
0.82% QQQ Nasdaq 100 Trust, QQQ
0.78% Growth MidCap 400 B, IJK
0.77% MidCap S&P 400 SPDRs, MDY
0.77% MidCap S&P 400 iS, IJH
0.75% Value SmallCap S&P 600 B, IJS
0.74% Info Tech VIPERs, VGT
0.74% MidCap Russell, IWR
0.73% Real Estate US DJ, IYR
0.69% Growth SmallCap VIPERs, VBK
0.69% Value MidCap S&P 400 B, IJJ
0.68% Gold Shares S.T., GLD
0.68% Growth MidCap Russell, IWP
0.68% China 25 iS, FXI
0.65% Networking, IGN
0.65% Small Cap VIPERs, VB
0.65% Growth SmallCap R 2000, IWO
0.64% Technology DJ US, IYW
0.63% Growth BARRA Small Cap 600, IJT
0.63% Value SmallCap VIPERS, VBR
0.59% SmallCap S&P 600, IJR
0.59% Value MidCap Russell, IWS
0.58% WilderHill Clean Energy PS, PBW
0.56% SmallCap Russell 2000, IWM
0.52% Malaysia Index, EWM
0.46% Value LargeCap Dynamic PS, PWV
0.46% Bond Muni ATM-Free S&P iS, MUB
0.44% Blend Total Market VIPERs, VTI
0.44% Value S&P 500 B, IVE
0.44% LargeCap 1000 R, IWB
0.44% Value SmallCap Russell 2000, IWN
0.43% Value 1000 Russell, IWD
0.43% LargeCap Blend Russell 3000, IWV
0.42% Silver Trust iS, SLV
0.42% India PS, PIN
0.40% LargeCap Blend S&P=Weight R, RSP
0.36% Value VIPERs, VTV
0.35% Growth VIPERs, VUG
0.33% S&P 500 iS LargeCap Blend, IVV
0.33% LargeCap VIPERs, VV
0.31% Technology SPDR, XLK
0.29% Materials SPDR, XLB
0.29% Microcap Russell, IWC
0.29% Health Care SPDR, XLV
0.27% Growth 1000 Russell, IWF
0.27% S&P 500 SPDRs LargeCap Blend, SPY
0.23% Water Resources, PHO
0.21% LargeCap Blend S&P 100, OEF
0.21% Indonesia MV, IDX
0.20% Dividend DJ Select, DVY
0.20% Utilities SPDR, XLU
0.19% Growth S&P 500/BARRA, IVW
0.19% Bond, TIPS, TIP
0.14% Bond, Aggregate, AGG
0.11% Utilities VIPERs, VPU
0.05% Chile MSCI iS, ECH
0.03% Industrial SPDR, XLI
0.02% Bond, 10 Year Treasury, IEF
0.01% Bond, 1-3 Year Treasury, SHY
0.00% India Earnings WTree, EPI
0.00% Dividend SPDR, SDY
0.00% Bond Treasury Short-Term iS, SHV
-0.02% DIAMONDS (DJIA), DIA
-0.06% Consumer Staples SPDR, XLP
-0.06% Hong Kong Index, EWH
-0.08% Emerging 50 BLDRS, ADRE
-0.09% Dividend Appreciation Vipers, VIG
-0.15% Bond EmrgMkt JPM iS, EMB
-0.18% Bond, 20+ Years Treasury, TLT
-0.22% Frontier Markets Guggenheim , FRN
-0.22% Dividend High Yield Equity PS, PEY
-0.24% Transportation Av DJ, IYT
-0.27% Singapore Index, EWS
-0.30% Basic Materials DJ US, IYM
-0.30% Bear, Short S&P 500, SH
-0.36% Bond, High-Yield Junk, JNK
-0.42% Energy VIPERs, VDE
-0.43% Bond, Corp, LQD
-0.44% Bond, High-Yield Corporate, HYG
-0.44% Emerging Markets, EEM
-0.46% Thailand MSCI iS, THD
-0.48% Energy SPDR, XLE
-0.48% Emerging VIPERs, VWO
-0.56% Energy DJ, IYE
-0.59% Energy & Nat Res iS GS, IGE
-0.62% Telecom DJ US, IYZ
-0.62% Canada Index, EWC
-0.68% Dividend International, PID
-0.69% Global 100, IOO
-0.79% Energy Global, IXC
-0.96% Turkey MSCI iS, TUR
-0.96% Pacific ex-Japan, EPP
-1.04% Metals & Mining SPDR, XME
-1.15% Global ex US ACWI iS, ACWX
-1.16% Germany Index, EWG
-1.18% Mexico Index, EWW
-1.18% South Korea Index, EWY
-1.19% Japan Index, EWJ
-1.21% South Africa Index, EZA
-1.22% Bond Ex-US Treas, BWX
-1.23% Pacific VIPERs, VPL
-1.27% Latin Am 40, ILF
-1.30% Australia Index, EWA
-1.33% Growth EAFE MSCI, EFG
-1.34% Oil Fund PowerShares, DBO
-1.35% Brazil Index, EWZ
-1.36% Commodity Tracking, DBC
-1.46% Small Cap EAFE MSCI iS, SCZ
-1.48% EAFE Index, EFA
-1.51% United Kingdom Index, EWU
-1.51% Oil, Crude, U.S. Oil Fund, USO
-1.69% Switzerland Index, EWL
-1.77% Value EAFE MSCI, EFV
-1.77% Sweden Index, EWD
-1.77% Russia MV, RSX
-1.82% European VIPERs, VGK
-1.86% Europe 350 S&P Index, IEV
-2.08% Netherlands Index, EWN
-2.12% France Index, EWQ
-2.14% Agriculture DB PS, DBA
-2.15% Belgium Index, EWK
-2.15% EMU Europe Index, EZU
-2.98% Austria Index, EWO
-3.60% Spain Index, EWP
-4.50% Italy Index, EWI