AAII Sentiment shifted to bullish opinion. According to the AAII weekly survey of individual investors reported on 8/9/12, there were 36.47% Bulls and 27.35% Bears. This is the fewest Bears since March, 2012, just before the high of the year.

The S&P 500 (SPX: 1,402.80) rose 0.58 points or 0.04% on Thursday. SPX is demonstrating a loss of momentum over the past 2 days, however. Short-term momentum oscillators failed to rise above June-July highs to confirm the higher high for the S&P 500. Cracks are becoming more visible.

Both Dow-Jones Industrials and Transports closed lower. The Industrials remain above June-July highs but the Transports continue to lag well below June-July highs.

NYSE volume fell 3% to the lowest levels in 18 trading days and one of the lowest levels of the year, possibly reflecting diminishing enthusiasm for chasing a 5-day SPX rally, as well as summer vacations. On-Balance Volume for the SPX remains in a downtrend with bearish divergence. NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks remains weak relative to price. Volume has not been confirming the price up move.

Technical market conditions suggest that downside risk still may exceed upside potential for the stock market. Choosing safety over risk appears to be the most reasonable approach for conservative traders and investors.

For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report —
click here.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hedge funds and equity mutual funds both lost money last year, 2011, and some are down again this year as well.

Meanwhile, one money manager made gains for 5 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sentiment for Contrary Thinking

Investor sentiment data indicated alarming degrees of optimism and bullish complacency at the February to May 2012 market highs. That was bearish because when the majority of investors has been bullish for some time, investors are already fully invested in the market. Once everyone who is going to buy has already bought, stocks are vulnerable to a downside shakeout. The pendulum of emotion tends to swing too far in one direction, but market mood always reverts to the mean, as it did during the April-June downside stock market correction.

AAII Sentiment shifted to bullish opinion. According to the AAII weekly survey of individual investors reported on 8/9/12, there were 36.47% Bulls and 27.35% Bears. This is the fewest Bears since March, just before the high of the year.

Investors Intelligence Sentiment has shifted toward bullish confidence since May. According to the Investors Intelligence weekly survey of stock market newsletter advisors reported on 8/8/12, there were 43.6% Bulls and 25.5% Bears. Advisors consistently have been demonstrating above-average bullish sentiment since 1/4/12.

Hulbert Stock Newsletter Sentiment Index showed that the average recommended equity exposure among a subset of the shortest-term stock market timers jumped to 50.0% in early August, up from previous peaks at 47.0% in July and 42.0% in May. “Watch out for a correction — or worse. The odds of a stock market correction are now quite elevated,” according to Mark Hulbert, writing for MarketWatch on 8/8/12.

Corporate Insiders Are Bearish. Insiders sold 5.5 shares for each share bought as of 7/6/12–up from 1.6-to-1 in May and up from a long-term average of 2.25-to-1. The data was reported by Vickers Weekly Insider Report, published by Argus Research, and Mark Hulbert.

NYSE Short Interest fell by more than 0.5 billion shares, the largest drop since January. This source of short-covering, potential demand for stocks has diminished.

The ICI reported $62.6 billion has been withdrawn from domestic equity mutual funds so far in 2012. This is another confirmation that supply is greater than demand for stocks.

VIX Fear Index fell to 15.27 intraday on 8/8/12, its lowest level since 4/2/12. VIX fell from an intraday peak of 27.73 on 6/4/12. This large drop suggests a shift from worried concern 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 S&P 500 Composite 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
1422.38, high of 4/2/2012
1415.32, high of 5/1/2012
1407.14, high of 8/7/2012

The S&P 500 Composite Potential Support
1391.04, low of 8/6/2012
1389.07, Fibonacci 78.6% of April-June 2012 range
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1374.81, high of 7/3/2012
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1362.93, Fibonacci 61.8% of April-June 2012 range
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1344.56, Fibonacci 50% of April-June 2012 range
1340.34, Fibonacci 23.6% of 2011-12 range
1340.03, low of 3/6/2012
1347.81, 50-day SMA
1335.52, high of 6/11/2012
1334.93, high of 5/31/2012
1329.24, low of 7/24/2012
1329.05, high of 6/7/2012
1328.49, high of 5/22/2012
1326.19, Fibonacci 38.2% of April-June 2012 range
1325.41, low of 7/12/2012
1325.50, 200-day SMA
1306.62, low of 6/12/2012
1303.47, Fibonacci 23.6% of April-June 2012 range
1291.98, low of 5/18/2012
1289.59, Fibonacci 38.2% of 2011-12 range
1266.74, low of 6/4/2012
1265.26, low of 1/5/2012
1262.30, low of 12/27/2011
1257.58, Fibonacci 61.8% of 2011 range
1248.58, Fibonacci 50.0% of 2011-12 range
1244.80, low of 12/7/2011
1239.73, low of 12/1/2011
1238.81, Fibonacci 78.6% of 1,576.09 high
1234.81, low of 11/3/2011
1231.04, high of 12/16/2011
1228.74, Fibonacci 61.8% of 2007-2009 range
1226.64, low of 11/9/2011
1224.57, high of 12/19/2011
1215.20, low of 12/16/2011
1207.56, Fibonacci 61.8% of 2011-12 range
1202.37, low of 12/19/2011
1158.66, low of 11/25/2011
1121.44, Fibonacci 50% of 2007-2009 range
1074.77, low of 10/4/2011
1149.16, Fibonacci 78.6% R of 2011-12 range
1014.14, Fibonacci 38.2% of 2007-2009 range
1010.91, low of 7/1/2010
991.97, low of 9/2/2009
978.51, low of 8/17/2009
956.23, high of 6/11/2009
881.38, Fibonacci 23.6% of 2007-2009 range
869.32, low of 7/8/2009
666.79, intraday low of 3/6/2009
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) fell below its 50-day SMA on 8/7/12 turning systematically neutral. TLT remains above its 200-day SMA, and its 50-day SMA has remained above its 200-day SMA every day since 6/24/11. TLT rose to a new high on 7/24/12, thereby confirming its preexisting major uptrend. Support 123.75, 122.06, 120.60, 117.44, 115.69, 114.82, 109.69, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance: 130.69 and 132.22.

Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below its 50-day SMA on 8/7/12 turning systematically neutral. IEF remains above its 200-day SMA, and its 50-day SMA has remained above its 200-day SMA every day since 6/21/11. IEF rose to a new high on 7/24/12, thereby confirming its preexisting major uptrend. Support 107.42, 107.43, 105.85, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 109.32 and 109.89.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) whipsawed back above its 50-day SMA on 8/7/12, thereby turning systematically neutral again. JNK/LQD remains below its 200-day SMA, and its 50-day SMA fell below its 200-day SMA on 6/1/12.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) rose above its 50-day SMA on 8/1/12, thereby turning systematically neutral. TIP/IEF remains below its 200-day SMA, and its 50-day SMA crossed below its 200-day SMA on 6/27/12.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tangible Assets, Commodities

U.S. dollar ETF (UUP) fell below its 50-day SMA on 8/3/12, turning systematically neutral. UUP remains above its 200-day SMA, and its 50-day SMA has stayed above its 200-day SMA every day since 10/26/11. Support 22.38, 22.14, 21.89, 21.74, 21.58, 21.07, and 20.84. Resistance 23.14, 23.52, 25.84, 27.19, 28.97.

CRB Commodity Price Index remains systematically neutral: above its 50-day SMA, above its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 8/18/11.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) remains systematically neutral: above its 50-day SMA, above its 200-day SMA, but its 50-day SMA has remained below its 200-day SMA every day since 8/8/11. The 50-200 spread has been narrowing since late June and may be only days away from the 2 SMAs meeting. A trend of rising food prices could bring trouble for the general economy because more consumer spending for food means less consumer spending available for other goods and services.

Crude Oil, United States Oil ETF (USO) turned systematically neutral on 7/16/12, when price rose above its 50-day SMA. USO remains below its 200-day SMA, and its 50-day remains far below its 200-day SMA. Support 32.45, 31.40, 29.02, 26.28, and 22.74. Resistance 35.37, 36.97, 40.29, 41.38, 42.30, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) rose above its 50-day SMA on 8/3/12, thereby turning systematically neutral. GLD remains below its 200-day SMA, and its 50-day SMA has stayed below its 200-day SMA every day since 4/17/12. Support: 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 159.20, 162.18, 163.20, 164.89, 166.57, 174.00, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) fell below its 50-day SMA on 7/9/12, turning systematically bearish again. GDX/GLD remains below its 200-day SMA, and the 50-day SMA has remained bearishly below the 200-day SMA every day since 2/22/11.

Silver, iShares Silver Trust ETF (SLV) price whipsawed back above its 50-day SMA on 8/3/12, thereby turning systematically neutral again. SLV remains below its 200-day SMA, and its 50-day SMA has remained below the 200-day SMA every day since 10/27/11. Support 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 27.98, 28.26, 29.02, 30.52, 31.64, 32.34, 33.44, 36.44, 40.23, 41.49, 42.30, 42.78, 44.71, and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) fell below its lows of the previous 20 months on 6/28/12, reconfirming its major downtrend. SLV/GLD is now systematically neutral: above its 50-day SMA, below its 200-day SMA, and the 50-day SMA has remained below the 200-day SMA every day since 8/30/11.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) price rose above its 50-day SMA on 8/7/12, thereby turning systematically neutral. JJC fell to its lowest level in 8 months on 8/2/12, thereby confirming its major bearish trend. JJC price remains below its 200-day SMA, and its 50-day SMA has remained below its 200-day SMA every day since 5/31/12. In addition, JJC remains far below its 2011 high at 61.69 and has underperformed the stock market since 12/31/10. Given that “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, this relative weakness may be suggesting rising doubts about prospects going forward.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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 later revealed to be deal stocks 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
6.86% , ETFC , E*TRADE FINANCIAL
14.84% , MBI , MBIA
5.74% , CTB , COOPER TIRE
6.34% , KBH , KB HOME
1.28% , PXN , Nanotech Lux, PXN
3.15% , CSCO , CISCO SYSTEMS
4.12% , S , SPRINT NEXTEL
3.15% , CTXS , CITRIX SYSTEMS
4.36% , PTEN , Patterson-UTI Energy Inc
0.22% , EWN , Netherlands Index, EWN
5.52% , DDS , DILLARD STK A
3.37% , NVDA , NVIDIA
4.05% , IPG , INTERPUBLIC GRP
1.66% , PXJ , Oil & Gas, PXJ
1.71% , EWY , South Korea Index, EWY
1.86% , VMC , VULCAN MATERIALS
1.11% , ROK , ROCKWELL AUTOMAT
1.63% , DVN , DEVON ENERGY
2.76% , NBR , NABORS
2.70% , RSH , RADIOSHACK
4.80% , PHM , PULTE HOMES
1.81% , RHI , ROBERT HALF
0.76% , HAR , Harman International
5.35% , AM , AMER GREETINGS STK A
1.08% , ZEUS , Olympic Steel, ZEUS
0.72% , KCE , Capital Markets KWB ST, KCE
1.60% , PWER , POWER ONE
2.54% , LEN , Lennar Corp. (LEN)
0.90% , IGE , Energy & Nat Res iS GS, IGE
0.66% , FDV , Value 40 Large Low P/E FT DB, FDV
0.56% , PPA , Aerospace & Defense, PPA
2.33% , LNC , LINCOLN NATL
1.49% , SWY , SAFEWAY

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-1.23% , KSS , KOHLS
-1.49% , EFX , EQUIFAX
-2.58% , NTAP , NETWK APPLIANCE
-3.37% , BBY , BEST BUY
-3.26% , SHLD , SEARS HOLDINGS
-1.65% , FHN , First Horizon National
-2.49% , AXP , AMERICAN EXPRESS
-1.35% , BIIB , BIOGEN IDEC
-0.95% , OMX , OFFICEMAX INC., OMX
-1.22% , EWP , Spain Index, EWP
-0.69% , HSP , HOSPIRA
-0.38% , VDC , Consumer Staples VIPERs, VDC
-0.70% , BF.B , BROWN FORMAN STK B
-0.73% , ROST , Ross Stores Inc
-0.99% , SWK , Stanley Black & Decker
-0.60% , CB , CHUBB
-0.99% , MDT , MEDTRONIC
-2.04% , FDO , FAMILY DLR STRS
-2.23% , MPEL , Melco Crown Entertainment, MPEL
-0.87% , INTU , INTUIT
-1.50% , NSC , NORFOLK SOUTHERN
-0.10% , PBJ , Food & Beverage, PBJ
-0.50% , MZZ , Short 200% MidCap 400 PS, MZZ
-1.16% , COL , ROCKWELL COLLINS
-0.90% , SPG , SIMON PROP GRP
-0.43% , PWB , Lg Cap Growth PSD, PWB
-0.26% , SNA , SNAP ON
-0.27% , RWR , REIT Wilshire, RWR
-0.79% , NEE , NextEra Energy Resources LLC
-0.60% , MSI , Motorola Solutions, MSI
-0.58% , SYMC , SYMANTEC
-0.95% , EQR , EQUITY RESIDENT BEN INT
-0.68% , SRCL , Stericycle, SRCL
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
1.90% Metals & Mining SPDR, XME
1.77% Networking, IGN
1.71% South Korea Index, EWY
1.36% Taiwan Index, EWT
1.17% Homebuilders SPDR, XHB
0.96% WilderHill Clean Energy PS, PBW
0.91% Semiconductor SPDR, XSD
0.90% Energy & Nat Res iS GS, IGE
0.89% China LargeCap Growth G D H USX PS, PGJ
0.82% Commodity Tracking, DBC
0.82% Canada Index, EWC
0.79% Semiconductor iS IGW, SOXX
0.72% Capital Markets KWB ST, KCE
0.71% Basic Materials DJ US, IYM
0.68% Energy SPDR, XLE
0.60% Agriculture DB PS, DBA
0.60% Technology DJ US, IYW
0.57% Energy VIPERs, VDE
0.56% Materials SPDR, XLB
0.55% Growth SmallCap VIPERs, VBK
0.52% Hong Kong Index, EWH
0.51% Energy DJ, IYE
0.49% Emerging VIPERs, VWO
0.48% SmallCap Russell 2000, IWM
0.47% Growth SmallCap R 2000, IWO
0.47% Energy Global, IXC
0.46% Emerging 50 BLDRS, ADRE
0.42% Emerging Markets, EEM
0.42% Telecom DJ US, IYZ
0.40% Microcap Russell, IWC
0.40% Value MidCap Russell, IWS
0.39% Small Cap VIPERs, VB
0.38% Info Tech VIPERs, VGT
0.35% SmallCap S&P 600, IJR
0.35% Growth BARRA Small Cap 600, IJT
0.34% Value SmallCap Russell 2000, IWN
0.33% Technology SPDR, XLK
0.33% Value SmallCap VIPERS, VBR
0.33% Gold Shares S.T., GLD
0.31% Thailand MSCI iS, THD
0.30% Value MidCap S&P 400 B, IJJ
0.30% QQQ Nasdaq 100 Trust, QQQ
0.29% Silver Trust iS, SLV
0.26% Global ex US ACWI iS, ACWX
0.25% Sweden Index, EWD
0.22% Netherlands Index, EWN
0.22% Japan Index, EWJ
0.21% Malaysia Index, EWM
0.20% Preferred Stock iS, PFF
0.20% Pacific VIPERs, VPL
0.19% LargeCap Blend Russell 3000, IWV
0.19% Oil Fund PowerShares, DBO
0.19% MidCap S&P 400 SPDRs, MDY
0.19% MidCap S&P 400 iS, IJH
0.19% Value SmallCap S&P 600 B, IJS
0.18% Value 1000 Russell, IWD
0.18% Pacific ex-Japan, EPP
0.18% Russia MV, RSX
0.18% South Africa Index, EZA
0.17% Indonesia MV, IDX
0.17% Oil, Crude, U.S. Oil Fund, USO
0.17% Value S&P 500 B, IVE
0.16% Financial Preferred, PGF
0.16% LargeCap Blend S&P=Weight R, RSP
0.14% LargeCap 1000 R, IWB
0.14% Value LargeCap Dynamic PS, PWV
0.14% Global 100, IOO
0.14% Small Cap EAFE MSCI iS, SCZ
0.13% MidCap Russell, IWR
0.13% Growth EAFE MSCI, EFG
0.13% LargeCap VIPERs, VV
0.11% China 25 iS, FXI
0.11% Dividend High Yield Equity PS, PEY
0.10% Value VIPERs, VTV
0.10% Frontier Markets Guggenheim , FRN
0.10% Growth MidCap 400 B, IJK
0.09% S&P 500 SPDRs LargeCap Blend, SPY
0.08% Blend Total Market VIPERs, VTI
0.08% Industrial SPDR, XLI
0.08% Bond, High-Yield Junk, JNK
0.08% Utilities VIPERs, VPU
0.06% S&P 500 iS LargeCap Blend, IVV
0.06% EAFE Index, EFA
0.05% Growth S&P 500/BARRA, IVW
0.03% Growth VIPERs, VUG
0.02% LargeCap Blend S&P 100, OEF
0.02% Growth 1000 Russell, IWF
0.02% DIAMONDS (DJIA), DIA
0.01% Bond, High-Yield Corporate, HYG
0.01% Bond Muni ATM-Free S&P iS, MUB
0.00% Bond Treasury Short-Term iS, SHV
0.00% Bond, 1-3 Year Treasury, SHY
0.00% Singapore Index, EWS
0.00% Switzerland Index, EWL
0.00% Utilities SPDR, XLU
-0.02% Brazil Index, EWZ
-0.03% Bond, Aggregate, AGG
-0.03% Growth MidCap Russell, IWP
-0.04% Australia Index, EWA
-0.05% Latin Am 40, ILF
-0.05% Health Care SPDR, XLV
-0.06% Bear, Short S&P 500, SH
-0.07% Dividend International, PID
-0.07% Bond, Corp, LQD
-0.07% Financial SPDR, XLF
-0.07% Consumer Discretionary SPDR, XLY
-0.07% Austria Index, EWO
-0.07% Bond, 20+ Years Treasury, TLT
-0.07% Bond, 10 Year Treasury, IEF
-0.08% Biotech SPDR, XBI
-0.09% Dividend Appreciation Vipers, VIG
-0.09% Dividend SPDR, SDY
-0.10% Financials VIPERs, VFH
-0.11% Europe 350 S&P Index, IEV
-0.12% Financial DJ US, IYF
-0.13% Mexico Index, EWW
-0.15% France Index, EWQ
-0.16% European VIPERs, VGK
-0.16% Chile MSCI iS, ECH
-0.17% Dividend DJ Select, DVY
-0.18% Value EAFE MSCI, EFV
-0.19% Financial Services DJ, IYG
-0.19% Bond, TIPS, TIP
-0.21% Water Resources, PHO
-0.23% United Kingdom Index, EWU
-0.27% REIT Wilshire, RWR
-0.29% Real Estate US DJ, IYR
-0.32% REIT VIPERs, VNQ
-0.33% Bond Ex-US Treas, BWX
-0.34% Belgium Index, EWK
-0.34% Realty Cohen & Steers, ICF
-0.42% Consumer Staples SPDR, XLP
-0.42% Transportation Av DJ, IYT
-0.45% Turkey MSCI iS, TUR
-0.48% Germany Index, EWG
-0.48% Bond EmrgMkt JPM iS, EMB
-0.49% EMU Europe Index, EZU
-0.64% India Earnings WTree, EPI
-0.93% India PS, PIN
-1.06% Italy Index, EWI
-1.22% Spain Index, EWP