S&P 500 Composite (SPX, 1,319.49) fell 24.31 points or 1.81% on Monday 7/11/11.

SPX broke down below the lows of the previous 4 trading days, thereby confirming a short-term downtrend.

Last week, the S&P 500 tried but failed to penetrate substantial chart Resistance in a 3% band from 1331 to 1371. Support 1249 to 1279.

Price momentum indicators (such as the popular RSI 14) still show bearish divergence after registering an overbought condition last Thursday, 7/7/11. I take that as a warning of downside risk.

Trading volume on the NYSE rose 8% above the previous day’s pace but was 14% below its trailing 200-day SMA. Low and falling volume indicate relatively poor demand for stocks and raises doubts about the significance of any rally attempt.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) broke down below 7-week lows.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell further below 4-month lows.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) fell below the low of the previous 5 trading days on 7/11/11, probably ending a minor rally attempt. JNK/LQD broke down below 9-month lows on 6/16/11, confirming a major downtrend.

Financial SPDR stock sector ETF Relative Strength Ratio (XLF/SPY) fell below 2-year lows, reconfirming a major, long-term downtrend.

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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
2.83% , CLX , CLOROX
2.15% , MYY , Short 100% MidCap 400, MYY
1.39% , BSX , BOSTON SCIENT
0.94% , TLH , Bond 10-20 Year US Treas, TLH
1.56% , LRCX , LAM RESEARCH CORP
3.60% , QID , Short 200% QQQ PS, QID
0.89% , GLD , Gold Shares S.T., GLD
0.25% , VFC , VF
0.33% , LQD , Bond, Corp, LQD
0.51% , TJX , TJX
0.07% , SHY , Bond, 1-3 Year Treasury, SHY
0.09% , KLAC , KLA TENCOR
0.15% , MO , ALTRIA, MO

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.90% , UTH , Utilities H, UTH
-2.56% , RPV , Value S&P 500, RPV
-1.78% , FDV , Value 40 Large Low P/E FT DB, FDV
-1.59% , JKG , MidCap Blend Core iS M, JKG
-3.01% , ACWX , Global ex US ACWI iS, ACWX
-1.87% , PXN , Nanotech Lux, PXN
-2.76% , RKH , Bank Regional H, RKH
-4.97% , EZU , EMU Europe Index, EZU
-5.15% , EWQ , France Index, EWQ
-2.43% , IXC , Energy Global, IXC
-2.51% , PSI , Semiconductors, PSI
-5.62% , TLAB , TELLABS
-2.20% , XSD , Semiconductor SPDR, XSD
-2.61% , ADRD , Developed 100 BLDRS, ADRD
-5.29% , ETFC , E*TRADE FINANCIAL
-6.39% , GNW , GENWORTH FINANCIAL
-4.57% , CTXS , CITRIX SYSTEMS
-5.33% , C , CITIGROUP
-5.17% , EWP , Spain Index, EWP
-2.03% , IJJ , Value MidCap S&P 400 B, IJJ
-3.94% , IGT , INTL GAME TECH
-3.94% , EWK , Belgium Index, EWK
-2.86% , FDO , FAMILY DLR STRS
-1.79% , BBH , Biotech H, BBH
-2.02% , TMW , Wilshire 5000 ST TM, TMW
-4.24% , OXY , OCCIDENTAL
-3.90% , KWT , Solar Energy MV, KWT
-3.56% , FEU , Value LargeCap Euro STOXX 50 DJ, FEU
-1.91% , JKF , Value LargeCap iS M, JKF
-6.21% , EWI , Italy Index, EWI
-1.84% , IWC , Microcap Russell, IWC
-2.89% , TUR , Turkey MSCI iS, TUR
-4.63% , SVU , SUPERVALU
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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) broke down below 7-week lows on 7/11/11 after trading with a bearish bias since peaking on 10/14/10. The Ratio remains below the 200-day SMA, below the 50-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price broke down below 14-week lows on 6/23/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell further below 4-month lows on 7/11/11. The Ratio has been trading with a bearish bias since peaking on 11/27/07, so this is a major long-term bearish trend. The Ratio remains below the 200-day SMA, below the 50-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price broke down below 14-week lows on 6/23/11.

NASDAQ Composite/S&P 500 Relative Strength Ratio has been fluctuating neutral/sideways since peaking on 1/18/11. Long term, the trend remains bullish. Absolute price rose to test its yearly highs on 7/7/11 but failed and turned down.

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) has been fluctuating neutral/sideways since peaking on 4/5/11. Long term, the trend remains bullish.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) has been fluctuating neutral/sideways since peaking on 4/5/11. Long term, the trend remains bullish.

Crude Oil nearest futures contract price fell below the lows of the previous 4 trading days on 7/11/11, confirming a downside price reversal. Too many reversals make Oil a risky market to trade at this time. Support 93.45, 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 rose above the highs of the previous 11 trading days on 7/11/11, reconfirming a minor rally attempt. But Gold broke down below the lows of the past 6 weeks on 7/1/11, reconfirming a preexisting short-term downtrend. On 6/9/11, when Gold was 1542.7, I noted that Gold “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: 1478.3, 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: 1559.3 and 1577.4.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) fell below 27-month lows on 6/17/11. The Ratio has fallen significantly since 4/8/11, and the main trend remains bearish. GDX has established a clear bearish divergence relative to GLD, and that should be taken as a warning about prospects for GLD, Gold futures, Gold bullion, and Gold coins.

Silver nearest futures contract price fell below the lows of the previous 2 trading days on 7/11/11, possibly ending a minor rally attempt. Recall that Silver broke down below the lows of the past 5 weeks on 6/27/11, confirming a short-term downtrend. 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 33.38, 32.3, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 36.895, 37.86, 38.845, 39.38, 39.47, 49.82, 49.845 and 50.35.

Silver/Gold Ratio fell below the lows of the previous 4 months in 6/27/11, reconfirming a preexisting downtrend for the medium term. The Ratio entered a steep downtrend since the peak on 4/28/11 and remains bearish.

Copper nearest futures contract price fell below the low of the previous day on 7/11/11, possibly ending a minor rally attempt. Strength in Copper suggests confidence in the economic outlook, while Weakness suggests doubts about the future. Support 4.0505, 4.0240, 3.9505, 3.8725, 3.8535, 3.846, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 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 8 trading days on 7/11/11, again confirming a minor rally attempt. On 7/5/11, the Bond moved above a 5-day downtrend line, suggesting an oversold bounce. Support 122.05, 120.20, 119.15, 117.28, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 127.01, 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) fell below the low of the previous 5 trading days on 7/11/11, probably ending a minor rally attempt. JNK/LQD broke down below 9-month lows on 6/16/11, confirming a major downtrend.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) remains in a weak and vulnerable position. The Ratio fell below the lows of the previous 7 trading days on 7/11/11, and the Ratio fell below the lows of the previous 6 months on 6/20/11. This downtrend means that fixed-income investors prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs.

The U.S. dollar nearest futures contract price rose above the highs of the previous 2 weeks on 7/11/11, again confirming a minor rally attempt. Longer term, USD has stabilized since making a low at 73.325 on 5/2/11. That stabilization may be base building for a more significant upside reversal. Support 74.505, 73.88, 73.515, 73.325, 72.86, and 70.80. Resistance 76.87, 76.98, 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 24.7% Bears as of 7/6/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio rose to 1.66, which is normal, with a 20-year range of 0.41 to 3.74, a median of 1.56, and a mean of 1.64.

VIX Fear Index collapsed below the lows of the previous 8-weeks, plunging to 15.12 intraday on 7/1/11, in a surprisingly rapid swing to bullish complacency. 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.

As of the close on July 1, 2011, the Dow Theory suggested a divergence and non-confirmation as the Dow-Jones Transportation Average closed above all previous closing price highs but the Dow-Jones Industrial Average failed to confirm. The Dow Industrials currently suggest nothing more than an insignificant Minor Ripple.

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.

S&P 500 Composite (SPX, 1,319.49) fell 24.31 points or 1.81% on Monday 7/11/11.

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

S&P 500 Cash Index Potential Support
1258.07, low of 6/16/11
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
1.50% Bond, 20+ Years Treasury, TLT
0.89% Gold Shares S.T., GLD
0.76% Bond, 10 Year Treasury, IEF
0.72% Bond Muni ATM-Free S&P iS, MUB
0.56% Bond, TIPS, TIP
0.33% Bond, Corp, LQD
0.27% Bond, Aggregate, AGG
0.07% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.22% Bond EmrgMkt JPM iS, EMB
-0.39% Financial Preferred, PGF
-0.40% Agriculture DB PS, DBA
-0.48% Preferred Stock iS, PFF
-0.72% Consumer Staples SPDR, XLP
-0.77% Commodity Tracking, DBC
-0.80% Chile MSCI iS, ECH
-0.97% Bond, High-Yield Junk, JNK
-0.98% Bond, High-Yield Corporate, HYG
-1.07% Utilities SPDR, XLU
-1.14% DIAMONDS (DJIA), DIA
-1.15% Utilities VIPERs, VPU
-1.17% Oil Fund PowerShares, DBO
-1.19% Dividend DJ Select, DVY
-1.23% Japan Index, EWJ
-1.23% Dividend High Yield Equity PS, PEY
-1.28% Indonesia MV, IDX
-1.33% Dividend SPDR, SDY
-1.35% Oil, Crude, U.S. Oil Fund, USO
-1.37% Dividend Appreciation Vipers, VIG
-1.37% Health Care SPDR, XLV
-1.42% Bond Ex-US Treas, BWX
-1.47% Mexico Index, EWW
-1.62% LargeCap Blend S&P 100, OEF
-1.65% Telecom DJ US, IYZ
-1.66% Technology SPDR, XLK
-1.70% Growth S&P 500/BARRA, IVW
-1.71% India PS, PIN
-1.73% Singapore Index, EWS
-1.73% Value LargeCap Dynamic PS, PWV
-1.73% Value VIPERs, VTV
-1.73% Semiconductor iS IGW, SOXX
-1.74% REIT VIPERs, VNQ
-1.75% Growth 1000 Russell, IWF
-1.75% S&P 500 iS LargeCap Blend, IVV
-1.79% Pacific VIPERs, VPL
-1.80% Technology DJ US, IYW
-1.81% S&P 500 SPDRs LargeCap Blend, SPY
-1.81% QQQ Nasdaq 100 Trust, QQQ
-1.84% Microcap Russell, IWC
-1.84% Taiwan Index, EWT
-1.85% Blend Total Market VIPERs, VTI
-1.85% Switzerland Index, EWL
-1.85% Industrial SPDR, XLI
-1.85% LargeCap VIPERs, VV
-1.86% Realty Cohen & Steers, ICF
-1.87% Value S&P 500 B, IVE
-1.87% REIT Wilshire, RWR
-1.87% Value SmallCap S&P 600 B, IJS
-1.88% Real Estate US DJ, IYR
-1.88% Transportation Av DJ, IYT
-1.89% LargeCap 1000 R, IWB
-1.92% Info Tech VIPERs, VGT
-1.93% Growth VIPERs, VUG
-1.93% Consumer Discretionary SPDR, XLY
-1.94% LargeCap Blend Russell 3000, IWV
-1.99% SmallCap S&P 600, IJR
-1.99% Value SmallCap Russell 2000, IWN
-1.99% Value SmallCap VIPERS, VBR
-2.01% Materials SPDR, XLB
-2.02% Value 1000 Russell, IWD
-2.03% Growth BARRA Small Cap 600, IJT
-2.03% Value MidCap S&P 400 B, IJJ
-2.04% India Earnings WTree, EPI
-2.05% MidCap S&P 400 SPDRs, MDY
-2.09% Dividend International, PID
-2.10% Energy DJ, IYE
-2.10% Hong Kong Index, EWH
-2.10% Canada Index, EWC
-2.12% LargeCap Blend S&P=Weight R, RSP
-2.12% MidCap S&P 400 iS, IJH
-2.13% SmallCap Russell 2000, IWM
-2.14% Malaysia Index, EWM
-2.16% Biotech SPDR, XBI
-2.18% MidCap Russell, IWR
-2.19% Growth MidCap 400 B, IJK
-2.20% Semiconductor SPDR, XSD
-2.21% Value MidCap Russell, IWS
-2.22% Small Cap VIPERs, VB
-2.23% Energy VIPERs, VDE
-2.25% Growth MidCap Russell, IWP
-2.34% China 25 iS, FXI
-2.37% Energy SPDR, XLE
-2.38% Silver Trust iS, SLV
-2.41% China LargeCap Growth G D H USX PS, PGJ
-2.41% Thailand MSCI iS, THD
-2.42% Emerging 50 BLDRS, ADRE
-2.43% Growth SmallCap R 2000, IWO
-2.43% Energy Global, IXC
-2.44% Energy & Nat Res iS GS, IGE
-2.48% Global 100, IOO
-2.49% Basic Materials DJ US, IYM
-2.51% Growth SmallCap VIPERs, VBK
-2.56% United Kingdom Index, EWU
-2.57% Homebuilders SPDR, XHB
-2.64% South Korea Index, EWY
-2.66% Financial DJ US, IYF
-2.69% Financials VIPERs, VFH
-2.69% Water Resources, PHO
-2.71% Pacific ex-Japan, EPP
-2.72% Financial SPDR, XLF
-2.75% Networking, IGN
-2.75% Growth EAFE MSCI, EFG
-2.79% Latin Am 40, ILF
-2.80% Emerging Markets, EEM
-2.81% Australia Index, EWA
-2.82% Frontier Markets Guggenheim , FRN
-2.83% Silver Miners Global X, SIL
-2.86% Emerging VIPERs, VWO
-2.89% Turkey MSCI iS, TUR
-2.91% Brazil Index, EWZ
-2.92% Russia MV, RSX
-2.95% Small Cap EAFE MSCI iS, SCZ
-3.01% Global ex US ACWI iS, ACWX
-3.01% WilderHill Clean Energy PS, PBW
-3.03% EAFE Index, EFA
-3.03% South Africa Index, EZA
-3.04% Financial Services DJ, IYG
-3.37% Value EAFE MSCI, EFV
-3.44% Capital Markets KWB ST, KCE
-3.68% European VIPERs, VGK
-3.74% Europe 350 S&P Index, IEV
-3.85% Metals & Mining SPDR, XME
-3.94% Belgium Index, EWK
-4.43% Netherlands Index, EWN
-4.50% Austria Index, EWO
-4.62% Germany Index, EWG
-4.72% Sweden Index, EWD
-4.97% EMU Europe Index, EZU
-5.15% France Index, EWQ
-5.17% Spain Index, EWP
-6.21% Italy Index, EWI