S&P 500 Composite (SPX, 1,313.64) fell 5.85 points or 0.44% on Tuesday, July 12, 2011.

SPX broke down below its 50-day SMA on 7/13/11.

SPX broke down below the lows of the previous 6 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 9% above the previous day’s pace but was 6% below its trailing 200-day SMA. Rising volume confirms the price direction, while low and falling volume indicate relatively poor demand for stocks and raises doubts about the significance of any rally attempt.

The U.S. dollar nearest futures contract price rose above the highs of the previous 16 weeks on 7/12/11, reconfirming a minor rally attempt.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell further 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 lows of the previous 2 weeks on 7/12/11, confirming a minor downtrend. JNK/LQD broke down below 9-month lows on 6/16/11, confirming a major 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
2.50% , JNY , JONES APPAREL
6.86% , MBI , MBIA
4.06% , APOL , APOLLO GROUP
2.91% , SHLD , SEARS HOLDINGS
0.77% , DBA , Agriculture DB PS, DBA
2.55% , SIL , Silver Miners Global X, SIL
2.09% , CHD , Church & Dwight
1.07% , PIC , Insurance, PIC
1.32% , CPB , CAMPBELL SOUP
0.39% , IDU , Utilities DJ, IDU
1.42% , CPWR , COMPUWARE
2.06% , SEE , SEALED AIR
1.97% , NEM , NEWMONT MINING
1.49% , MTB , M&T BANK
1.06% , AN , AUTONATION
1.10% , CSCO , CISCO SYSTEMS
1.02% , EPU , Peru MSCI iS, EPU
2.29% , KBH , KB HOME
1.15% , CEG , CONSTELL ENERGY
1.18% , LXK , LEXMARK INTL STK A
1.69% , RF , REGIONS FINAN
0.88% , PCG , PG&E
2.39% , CECO , CAREER EDUCATION CORP
1.83% , HIG , HARTFORD FINL
1.38% , KSS , KOHLS
1.72% , USO , Oil, Crude, U.S. Oil Fund, USO
0.24% , NSM , NATL SEMICONDUCT
1.12% , AEE , AMEREN
0.77% , AET , AETNA
1.10% , AON , AON
0.30% , PJP , Pharmaceuticals, PJP
2.15% , FHN , First Horizon National
0.99% , EIX , EDISON INTL

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-12.14% , MCHP , Microchip Technology Incorporated
-2.23% , BDH , Broadband H, BDH
-0.59% , IWZ , Growth LargeCap Russell 3000, IWZ
-4.57% , KWT , Solar Energy MV, KWT
-11.24% , NVLS , NOVELLUS SYS
-3.14% , NCR , NCR
-3.67% , TXN , TEXAS INSTRUMENT
-0.48% , DGT , Global Titans, DGT
-0.92% , EFV , Value EAFE MSCI, EFV
-5.14% , ADI , ANALOG DEVICES
-4.72% , TER , TERADYNE
-4.39% , LLTC , LINEAR TECH
-0.35% , PEJ , Leisure & Entertainment, PEJ
-3.79% , XLNX , XILINX
-1.53% , EWN , Netherlands Index, EWN
-3.10% , SMH , Semiconductor H, SMH
-2.87% , SOXX , Semiconductor iS IGW, SOXX
-4.22% , FAST , Fastenal Company
-0.59% , VO , MidCap VIPERs, VO
-2.94% , DOW , DOW CHEMICAL
-1.07% , IGN , Networking, IGN
-2.89% , PSTL , Steel Global PS ETF, PSTL
-3.48% , MCO , MOODYS CORP
-0.70% , PPA , Aerospace & Defense, PPA
-4.51% , ADSK , AUTODESK
-1.06% , MTK , Technology MS sT, MTK
-2.20% , ROK , ROCKWELL AUTOMAT
-3.67% , LSI , LSI LOGIC
-2.95% , QCOM , QUALCOMM
-0.61% , PWC , LargeCap Blend Dynamic PS, PWC
-4.88% , AMD , ADV MICRO DEV
-1.91% , CTAS , CINTAS
-5.02% , LRCX , LAM RESEARCH CORP
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 further below 7-week lows on 7/12/11 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 7/12/11. 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 9 weeks on 7/12/11, reconfirming a minor rally attempt. Gold’s 6-day rally is challenging the previous high of 1577.4 set on 5/2/11, where I expect resistance. 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: 1577.4 and 1577.7.

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 2 weeks on 7/12/11, reconfirming 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 lows of the previous 2 weeks on 7/12/11, confirming a minor downtrend. 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 16 weeks on 7/12/11, reconfirming a minor rally attempt. Longer term, USD has stabilized since making a low at 73.325 on 5/2/11. That stabilization appears to 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, 1,313.64) fell 5.85 points or 0.44% on Tuesday, July 12, 2011.

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
2.55% Silver Miners Global X, SIL
1.72% Oil, Crude, U.S. Oil Fund, USO
1.28% Oil Fund PowerShares, DBO
0.87% Commodity Tracking, DBC
0.86% Silver Trust iS, SLV
0.78% Gold Shares S.T., GLD
0.77% Agriculture DB PS, DBA
0.71% Italy Index, EWI
0.54% Realty Cohen & Steers, ICF
0.48% REIT Wilshire, RWR
0.46% Utilities VIPERs, VPU
0.45% Utilities SPDR, XLU
0.42% Canada Index, EWC
0.40% Bond, TIPS, TIP
0.34% Real Estate US DJ, IYR
0.34% Bond, 20+ Years Treasury, TLT
0.34% REIT VIPERs, VNQ
0.34% Dividend High Yield Equity PS, PEY
0.29% Japan Index, EWJ
0.14% Bond, 10 Year Treasury, IEF
0.12% South Africa Index, EZA
0.08% Bond, Aggregate, AGG
0.08% Bond, Corp, LQD
0.07% Dividend SPDR, SDY
0.04% Bond Muni ATM-Free S&P iS, MUB
0.04% Switzerland Index, EWL
0.02% Energy & Nat Res iS GS, IGE
0.02% Bond Ex-US Treas, BWX
0.00% Health Care SPDR, XLV
-0.01% Bond Treasury Short-Term iS, SHV
-0.01% Bond, 1-3 Year Treasury, SHY
-0.04% Dividend DJ Select, DVY
-0.07% Malaysia Index, EWM
-0.07% Metals & Mining SPDR, XME
-0.08% Biotech SPDR, XBI
-0.13% Value SmallCap S&P 600 B, IJS
-0.17% Value MidCap Russell, IWS
-0.18% Pacific VIPERs, VPL
-0.18% Russia MV, RSX
-0.21% Financials VIPERs, VFH
-0.23% Capital Markets KWB ST, KCE
-0.23% Financial DJ US, IYF
-0.25% Value MidCap S&P 400 B, IJJ
-0.25% Bond, High-Yield Junk, JNK
-0.27% Value 1000 Russell, IWD
-0.27% Microcap Russell, IWC
-0.28% Bond, High-Yield Corporate, HYG
-0.28% Dividend Appreciation Vipers, VIG
-0.31% Value SmallCap Russell 2000, IWN
-0.32% Consumer Staples SPDR, XLP
-0.33% Basic Materials DJ US, IYM
-0.33% Preferred Stock iS, PFF
-0.34% Energy VIPERs, VDE
-0.34% Value S&P 500 B, IVE
-0.34% Homebuilders SPDR, XHB
-0.35% Value SmallCap VIPERS, VBR
-0.35% Energy DJ, IYE
-0.35% Value LargeCap Dynamic PS, PWV
-0.36% MidCap S&P 400 iS, IJH
-0.36% Value VIPERs, VTV
-0.37% Energy SPDR, XLE
-0.38% Dividend International, PID
-0.38% Thailand MSCI iS, THD
-0.39% Financial Preferred, PGF
-0.39% LargeCap Blend Russell 3000, IWV
-0.40% Financial SPDR, XLF
-0.41% Materials SPDR, XLB
-0.41% Telecom DJ US, IYZ
-0.41% Financial Services DJ, IYG
-0.42% LargeCap Blend S&P=Weight R, RSP
-0.42% SmallCap S&P 600, IJR
-0.42% Growth EAFE MSCI, EFG
-0.43% MidCap S&P 400 SPDRs, MDY
-0.43% S&P 500 SPDRs LargeCap Blend, SPY
-0.43% LargeCap 1000 R, IWB
-0.44% Blend Total Market VIPERs, VTI
-0.46% MidCap Russell, IWR
-0.48% LargeCap Blend S&P 100, OEF
-0.48% S&P 500 iS LargeCap Blend, IVV
-0.48% Spain Index, EWP
-0.48% LargeCap VIPERs, VV
-0.48% Global ex US ACWI iS, ACWX
-0.49% Consumer Discretionary SPDR, XLY
-0.50% DIAMONDS (DJIA), DIA
-0.51% Small Cap VIPERs, VB
-0.52% Indonesia MV, IDX
-0.53% Energy Global, IXC
-0.54% Bond EmrgMkt JPM iS, EMB
-0.54% Growth BARRA Small Cap 600, IJT
-0.54% Latin Am 40, ILF
-0.56% SmallCap Russell 2000, IWM
-0.57% Growth VIPERs, VUG
-0.57% Growth 1000 Russell, IWF
-0.57% Frontier Markets Guggenheim , FRN
-0.59% Growth S&P 500/BARRA, IVW
-0.59% Chile MSCI iS, ECH
-0.62% Growth MidCap 400 B, IJK
-0.64% Growth SmallCap VIPERs, VBK
-0.65% Growth SmallCap R 2000, IWO
-0.66% Singapore Index, EWS
-0.67% EAFE Index, EFA
-0.68% Growth MidCap Russell, IWP
-0.71% Global 100, IOO
-0.72% Water Resources, PHO
-0.75% Austria Index, EWO
-0.76% QQQ Nasdaq 100 Trust, QQQ
-0.78% Small Cap EAFE MSCI iS, SCZ
-0.80% Europe 350 S&P Index, IEV
-0.82% Hong Kong Index, EWH
-0.86% Brazil Index, EWZ
-0.87% EMU Europe Index, EZU
-0.88% Emerging VIPERs, VWO
-0.88% Technology SPDR, XLK
-0.92% Value EAFE MSCI, EFV
-0.92% Emerging 50 BLDRS, ADRE
-0.94% China 25 iS, FXI
-0.95% France Index, EWQ
-0.96% Turkey MSCI iS, TUR
-0.96% European VIPERs, VGK
-0.97% Industrial SPDR, XLI
-1.00% India PS, PIN
-1.00% Germany Index, EWG
-1.01% Emerging Markets, EEM
-1.03% United Kingdom Index, EWU
-1.04% WilderHill Clean Energy PS, PBW
-1.04% Pacific ex-Japan, EPP
-1.05% Mexico Index, EWW
-1.06% Sweden Index, EWD
-1.07% Networking, IGN
-1.08% Technology DJ US, IYW
-1.08% Transportation Av DJ, IYT
-1.10% Info Tech VIPERs, VGT
-1.10% India Earnings WTree, EPI
-1.28% Taiwan Index, EWT
-1.31% China LargeCap Growth G D H USX PS, PGJ
-1.43% Australia Index, EWA
-1.53% Netherlands Index, EWN
-1.64% South Korea Index, EWY
-1.73% Belgium Index, EWK
-2.87% Semiconductor iS IGW, SOXX
-3.79% Semiconductor SPDR, XSD