The S&P 500 Composite (SPX: 1,253.23) fell 7.92 points or 0.63% on Friday, November 4, 2011.
On Tuesday 11/1/11, SPX fell below a 4-week uptrend line and below the lows of the previous 6 trading days, suggesting a short-term downside correction. A partial recovery on the following 2 trading days did not cancel this signal. Stock prices turned back down again on Friday. SPX finished down 2.48% for the week.
Combined trading volume on the rally days, Wednesday and Thursday, was less than combined volume on the falling price days, Monday and Tuesday. Relatively light volume on up days and heaver volume on down days suggests that the October bounce from 10/4/11 to 10/27/11 may have been nothing more than a minor counter trend reaction.
Just as the spike down to new lows on 10/4/11 proved to be a false breakdown, also known as a “bear trap”, so too the brief price run-up above the 200-day SMA on 10/27/11 may have been a false breakout, or “bull trap”.
Note that very high price volatility is typical of bear markets, while bull markets are much less volatile. Markets seem likely to remain volatile, with a continuing heightened sensitivity to news.
Longer-term indicators still are far from confirming any change in the major Primary Tide trend. For example, 50-day SMAs are well below 200-day SMAs for most stocks and indexes.
Ripples and Secondary Reactions opposite to the Dow Theory Primary Tide Trend lure short-term traders into trying to trade a bounce. Price corrections against the larger trends are normal and expected, of course, but playing counter-trend bounces is risky. The mood can switch from “risk on” to “risk off” overnight, leaving the too-clever trader suddenly holding the bag.
The Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both Dow-Jones Averages, Industrial and Transportation, closed below their closing price lows of the previous 11 months. This Bear Market was confirmed on 10/3/11 by lower closing price lows for both Averages. Both Averages would have to close above their closing price highs for the year to indicate a “Turn in the Tide”.
A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated. The median Dow Theory Primary Tide Bear Market in history lasts 16 months and takes stock prices down 34%. In a Dow Theory Primary Tide Bear Market, the big surprises usually come to the downside. Typically, there is no safe place to hide in a Dow Theory Primary Tide Bear Market. Even those stocks that have held up relatively well through most of the Bear Market eventually succumb to the relentless tide of selling.
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The S&P 500 Composite (SPX: 1,253.23) 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
1370.58, high of 5/2/11
1359.44, high of 5/10/11
1356.48, high of 7/7/11
1347.00, high of 7/21/11
1307.28, Fibonacci 78.6% of 2011 range
1292.66, high of 10/27/11
1273.35, 200-day SMA
1263.21, high of 11/3/2011
1258.07, low of 6/16/11
1257.58, Fibonacci 61.8% of 2011 range
1256.55, high of 10/24/11
S&P 500 Composite (SPX: 1,253.23) 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
1232.81, low of 11/3/11
1222.68, Fibonacci 50% of 2011 range
1221.06, low of 10/26/2011
1215.42, low of 11/1/2011
1204.49, Fibonacci 23.6% of 2009-11 range
1190.58, low of 10/13/2011
1187.77, Fibonacci 38.2% of 2011 range
1144.38, Fibonacci 23.6% of 2011 range
1101.73, Fibonacci 38.2% of 2009-11 range
1074.77, low of 10/4/2011
1039.70, low of 8/27/10
1039.31, Fibonacci 23.6% of June-Aug. 2010 range
1010.91, low of 7/1/2010
1018.69, Fibonacci 50% of 2009-11 range
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
935.64, Fibonacci 61.8% of 2009-11 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
817.40, Fibonacci 78.6% of 2009-11 range
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
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) consolidated gains since 11/1/11. Price gapped higher on 11/1/11, opening above the highs of the past 7 trading days, which was a bullish signal for the short-term. The rising 50-day SMA is bullishly above the 200-day SMA. Support 21.59, 21.07, and 20.84. Resistance 21.88, 21.91, and 22.63.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below the lows of the previous 14 trading days on 11/1/11, confirming a short-term downtrend. This after falling below the lows of the previous 10 months on 10/3/11, which reconfirmed a major long-term downtrend.
Crude Oil, United States Oil ETF (USO) rose to test recent highs on 11/4/11. The 50-day SMA remains far below the 200-day SMA, implying a neutral medium-term trend. Longer term, USO broke down below 2-year lows on 10/4/11 to confirm a major bear market. Support 34.54, 32.52, 29.10, 26.28, and 22.74. Resistance 36.52, 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) whipsawed back above its 50-day SMA on 11/2/11, indicating a bullish trend again. Price remains above its 200-day SMA. Longer term, new highs on 9/6/11 confirmed a major bull market. Support: 163.61, 154.19, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 170.32, 172.20, 177.40, and 185.85.
Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) again whipsawed back above its 200-day SMA, but that might have lost some significance in a whipsaw sideways trend. GDX/GLD fell below 29-month lows on 8/8/11, reconfirming a bearish major trend for the long term. Investors still prefer Gold bullion over Gold Miners.
Silver, iShares Silver Trust ETF (SLV) price fell below the lows of the previous 4 trading days on 11/1/11. Longer term, SLV price broke down below the lows of the previous 7 months on 9/26/11, which confirmed a bearish major trend for the long term. SLV fell below its 50-day SMA on 9/19/11, fell below its 200-day SMA on 9/22/11, and remains bearishly below both SMAs. Support 31.50, 27.41, 26.03, and 24.44. Resistance: 34.44, 34.51, 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) remains in bearish position, below falling 50-day and 200-day SMAs. Longer term, the SLV/GLD Ratio broke down below the lows of the previous 11 months on 9/30/11, reconfirming a bearish major trend. SLV/GLD has been mostly weak since peaking on 4/28/11. This means investors prefer Gold over Silver.
Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its 50-day SMA again on 10/31/11, returning to its persistent bearish trend. JJC broke down below the lows of the previous 14 months on 10/5/11, confirming a bearish major trend. 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
16.72% , GNW , GENWORTH FINANCIAL
6.02% , HANS , Hansen Natural, HANS
0.66% , JKG , MidCap Blend Core iS M, JKG
3.01% , MHS , MEDCO HEALTH
6.74% , SBUX , STARBUCKS
2.00% , PIC , Insurance, PIC
0.46% , PSQ , Short 100% QQQ, PSQ
1.40% , XSD , Semiconductor SPDR, XSD
0.75% , EPU , Peru MSCI iS, EPU
2.73% , ESRX , EXPRESS SCRIPTS
3.49% , MCHP , Microchip Technology Incorporated
1.82% , CBE , COOPER INDS STK A
5.16% , X , US STEEL CORP
2.15% , TXN , TEXAS INSTRUMENT
2.85% , AES , AES
2.55% , OXY , OCCIDENTAL
1.49% , BMS , BEMIS
0.33% , PEJ , Leisure & Entertainment, PEJ
0.75% , DBO , Oil Fund PowerShares, DBO
3.62% , ZEUS , Olympic Steel, ZEUS
0.57% , LMT , LOCKHEED MARTIN
3.36% , ERTS , ELECTRONIC ARTS
1.79% , SNDK , SanDisk Corporation
2.68% , RFMD , RF Micro Devices Inc
0.50% , DOG , Short 100% Dow 30, DOG
1.32% , XRX , XEROX
0.16% , GVI , Bond Interm U.S. Gov, GVI
1.42% , EWY , South Korea Index, EWY
0.28% , JKH , MidCap Growth iS M, JKH
1.23% , NCR , NCR
2.01% , ALTR , ALTERA
0.82% , SMH , Semiconductor H, SMH
0.36% , NI , NISOURCE
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-0.72% , IYK , Consumer Non-Cyclical, IYK
-6.38% , FLR , FLUOR
-1.27% , DGT , Global Titans, DGT
-11.53% , DYN , DYNEGY
-2.79% , EZU , EMU Europe Index, EZU
-1.54% , EIS , Israel MSCI iS, EIS
-5.19% , PKI , PERKINELMER
-0.96% , JKD , LargeCap Blend Core iS M, JKD
-0.76% , JKJ , SmallCap Core iS M, JKJ
-0.43% , IXC , Energy Global, IXC
-0.94% , EFG , Growth EAFE MSCI, EFG
-1.56% , EZA , South Africa Index, EZA
-1.05% , ACWX , Global ex US ACWI iS, ACWX
-1.59% , EPI , India Earnings WTree, EPI
-3.09% , RYAAY , Ryanair Holdings plc
-1.55% , YHOO , YAHOO
-0.44% , IYY , LargeCap Blend Total Market DJ, IYY
-2.86% , KMX , CarMax
-1.54% , PIN , India PS, PIN
-2.66% , EWQ , France Index, EWQ
-0.71% , FDL , Dividend Leaders, FDL
-1.39% , IYG , Financial Services DJ, IYG
-2.64% , ZMH , ZIMMER HLDGS
-1.20% , EWC , Canada Index, EWC
-0.21% , FDV , Value 40 Large Low P/E FT DB, FDV
-2.90% , EWP , Spain Index, EWP
-0.87% , IYH , Healthcare DJ, IYH
-1.62% , PRU , PRUDENTIAL FINL
-0.29% , JKI , Value MidCap iS M, JKI
-1.63% , CEG , CONSTELL ENERGY
-1.59% , EFV , Value EAFE MSCI, EFV
-1.41% , EWN , Netherlands Index, EWN
-2.92% , AIG , AMER INTL GROUP
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.42% South Korea Index, EWY
1.40% Semiconductor SPDR, XSD
1.34% WilderHill Clean Energy PS, PBW
1.14% Semiconductor iS IGW, SOXX
0.87% Metals & Mining SPDR, XME
0.75% Oil Fund PowerShares, DBO
0.62% Russia MV, RSX
0.54% Bond, TIPS, TIP
0.54% Taiwan Index, EWT
0.48% Financial Preferred, PGF
0.39% Oil, Crude, U.S. Oil Fund, USO
0.35% Preferred Stock iS, PFF
0.33% Commodity Tracking, DBC
0.33% Growth MidCap 400 B, IJK
0.30% MidCap S&P 400 iS, IJH
0.30% Bond, 10 Year Treasury, IEF
0.26% MidCap S&P 400 SPDRs, MDY
0.22% Basic Materials DJ US, IYM
0.20% Bond, Corp, LQD
0.12% Bond, 20+ Years Treasury, TLT
0.10% Brazil Index, EWZ
0.09% Bond EmrgMkt JPM iS, EMB
0.06% Homebuilders SPDR, XHB
0.05% Growth MidCap Russell, IWP
0.05% Energy DJ, IYE
0.05% Energy VIPERs, VDE
0.02% Bond Treasury Short-Term iS, SHV
0.01% Value MidCap S&P 400 B, IJJ
0.01% Bond Muni ATM-Free S&P iS, MUB
0.00% MidCap Russell, IWR
0.00% Bond, 1-3 Year Treasury, SHY
-0.03% Bond, Aggregate, AGG
-0.05% Bond, High-Yield Junk, JNK
-0.07% Emerging 50 BLDRS, ADRE
-0.07% Energy & Nat Res iS GS, IGE
-0.08% Energy SPDR, XLE
-0.10% Bond, High-Yield Corporate, HYG
-0.11% Latin Am 40, ILF
-0.13% China LargeCap Growth G D H USX PS, PGJ
-0.14% Networking, IGN
-0.21% Japan Index, EWJ
-0.22% Dividend High Yield Equity PS, PEY
-0.23% Materials SPDR, XLB
-0.23% Value MidCap Russell, IWS
-0.24% Small Cap EAFE MSCI iS, SCZ
-0.25% Singapore Index, EWS
-0.31% Growth SmallCap R 2000, IWO
-0.35% Dividend Appreciation Vipers, VIG
-0.36% Growth 1000 Russell, IWF
-0.36% Info Tech VIPERs, VGT
-0.37% Growth VIPERs, VUG
-0.38% Mexico Index, EWW
-0.38% Growth SmallCap VIPERs, VBK
-0.38% LargeCap Blend S&P=Weight R, RSP
-0.38% Consumer Discretionary SPDR, XLY
-0.39% Agriculture DB PS, DBA
-0.39% Pacific VIPERs, VPL
-0.39% Dividend SPDR, SDY
-0.41% Technology DJ US, IYW
-0.41% United Kingdom Index, EWU
-0.43% Emerging VIPERs, VWO
-0.43% Energy Global, IXC
-0.44% Austria Index, EWO
-0.44% Indonesia MV, IDX
-0.44% Growth BARRA Small Cap 600, IJT
-0.44% Bond Ex-US Treas, BWX
-0.44% Silver Miners Global X, SIL
-0.46% Utilities SPDR, XLU
-0.46% Small Cap VIPERs, VB
-0.47% Australia Index, EWA
-0.48% Transportation Av DJ, IYT
-0.48% Growth S&P 500/BARRA, IVW
-0.49% DIAMONDS (DJIA), DIA
-0.49% SmallCap Russell 2000, IWM
-0.49% Dividend DJ Select, DVY
-0.50% LargeCap Blend Russell 3000, IWV
-0.51% Gold Shares S.T., GLD
-0.52% LargeCap 1000 R, IWB
-0.52% QQQ Nasdaq 100 Trust, QQQ
-0.52% LargeCap VIPERs, VV
-0.54% Blend Total Market VIPERs, VTI
-0.56% SmallCap S&P 600, IJR
-0.56% Utilities VIPERs, VPU
-0.58% Consumer Staples SPDR, XLP
-0.61% S&P 500 SPDRs LargeCap Blend, SPY
-0.61% Technology SPDR, XLK
-0.62% S&P 500 iS LargeCap Blend, IVV
-0.65% Value LargeCap Dynamic PS, PWV
-0.65% Frontier Markets Guggenheim , FRN
-0.65% Emerging Markets, EEM
-0.68% Value S&P 500 B, IVE
-0.68% Value 1000 Russell, IWD
-0.68% Value SmallCap VIPERS, VBR
-0.71% Value VIPERs, VTV
-0.75% Pacific ex-Japan, EPP
-0.75% Real Estate US DJ, IYR
-0.76% Value SmallCap Russell 2000, IWN
-0.76% LargeCap Blend S&P 100, OEF
-0.77% Industrial SPDR, XLI
-0.79% Dividend International, PID
-0.80% Malaysia Index, EWM
-0.81% REIT VIPERs, VNQ
-0.92% China 25 iS, FXI
-0.93% Health Care SPDR, XLV
-0.94% Telecom DJ US, IYZ
-0.94% Growth EAFE MSCI, EFG
-0.98% Realty Cohen & Steers, ICF
-0.98% Value SmallCap S&P 600 B, IJS
-0.99% REIT Wilshire, RWR
-0.99% Microcap Russell, IWC
-1.04% Capital Markets KWB ST, KCE
-1.05% Global ex US ACWI iS, ACWX
-1.06% Financials VIPERs, VFH
-1.14% Financial DJ US, IYF
-1.15% Switzerland Index, EWL
-1.18% Global 100, IOO
-1.20% Canada Index, EWC
-1.20% Biotech SPDR, XBI
-1.24% Silver Trust iS, SLV
-1.26% EAFE Index, EFA
-1.26% Turkey MSCI iS, TUR
-1.37% Financial SPDR, XLF
-1.39% Financial Services DJ, IYG
-1.41% Netherlands Index, EWN
-1.48% Water Resources, PHO
-1.50% Chile MSCI iS, ECH
-1.54% India PS, PIN
-1.55% Hong Kong Index, EWH
-1.56% South Africa Index, EZA
-1.59% India Earnings WTree, EPI
-1.59% Value EAFE MSCI, EFV
-1.67% Europe 350 S&P Index, IEV
-1.86% Sweden Index, EWD
-2.00% European VIPERs, VGK
-2.03% Belgium Index, EWK
-2.21% Thailand MSCI iS, THD
-2.66% France Index, EWQ
-2.79% EMU Europe Index, EZU
-2.90% Germany Index, EWG
-2.90% Spain Index, EWP
-3.63% Italy Index, EWI
