The S&P 500 Composite (SPX, 1,194.89) rose 39.43 points or 3.41% on Monday, October 10, 2011. SPX closed above the highs of the previous 8 trading days.
Price momentum, which was decelerating on Friday, not only turned back up but also accelerated late in the session as SPX crossed above its popular 50-day simple moving average and a downtrend line.
The formerly weakest stocks bounced the most in recent days, while the stocks that previously had held up best have lagged. This is typical of a short-covering rally. With reduced trading activity on Monday, as some traders took off for Columbus Day, it was a good day for stampeding the shorts, and there have been plenty of shorts.
Markets are likely to remain volatile, with large daily swings in both directions. Fundamentally, timing of the Daily Fluctuations may depend on the next overnight news headline about the debt crisis in Europe, since that crisis appears to be a key driver of Daily Fluctuations. Over the past 2 months, there have been 10 bounces lasting 1 to 5 trading days. Such minor bounces tend to be fickle and fleeting and difficult to trade.
Daily upside reversals against the dominant bear trend lure short-term traders into trying to trade a bounce. Such minor price corrections are normal and expected, of course, but playing brief 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, as we have seen repeatedly over the past 2 months. And in a Dow Theory Primary Tide Bear Market, the big surprises come to the downside.
The Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed below their closing price lows of June, 2011. The Bear Market was confirmed on 10/3/11 by lower closing price lows for both Averages. A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated.
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Includes Top Ten ETFs, Major Trend Relative Strength Rankings, charts, support and resistance levels, and much more.
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Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio fell below the lows of the previous 4 weeks on 10/3/11, confirming a minor downside correction. The Ratio rose above previous 10-year highs on 9/23/11, reconfirming a major long-term uptrend. A long NASDAQ Composite and short S&P 500 hedge was a winning trade from 10/8/2002 to 9/23/11, and that major trend probably will resume–in time. NASDAQ absolute price trend has been whipsawing and is now neutral.
iShares MSCI BRIC Fund (BKF) Relative Strength Ratio (BKF/SPY) fell below 31-month lows on 10/4/11, reconfirming a major long-term downtrend. This basket of the stocks of Brazil, Russia, India and China is in a relatively bearish major trend.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) consolidated losses since breaking down below 29-month lows on 9/22/11, and thereby reconfirming its preexisting bearish major trend. Absolute price broke down below 2-year lows on 10/4/11 and remains bearishly below falling 50- and 200-day SMAs.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) consolidated losses since breaking down below 7-year lows on 9/19/11, and thereby reconfirming its preexisting bearish major trend. Absolute price broke down below 2-year lows on 10/4/11 and remains bearishly below falling 50- and 200-day SMAs.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) OEX/SPX consolidated after rising above 50-day and 200-day SMAs on 9/21/11, which was a RELATIVELY bullish sign of the OEX outperforming the SPX. Absolute price of OEX has been whipsawing and is now neutral.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) consolidated after falling below 20-month lows on 10/3/11, and thereby reconfirming a major downtrend. Absolute price has been weak since 5/2/11, broke down below 13-month lows on 10/4/11, and remains bearishly below falling 50- and 200-day SMAs.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) consolidated after falling below the lows of the previous 18-months on 10/3/11, and thereby reconfirming a bearish long-term major trend.
Advisory Service Sentiment: There were 34.4% Bulls versus 45.2% Bears as of 10/5/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio was 0.76, which is the lowest level since the big bear market of 2007- 2009. The Bull/Bear Ratio is now more 1 standard deviation below the 20-year average. It was more than 2 standard deviations above the 20-year average at the end of April, 2011. The 20-year median is 1.56 and the mean is 1.64. Sentiment is not so easy to interpret. Contrary to what many contrarians seem to believe, when advisors turn this cautious, stocks sometimes have much further to fall. Examples include similar levels of bearish sentiment in April 1973 and in July 2008, after which stock prices fell much further.
VIX Fear Index remains stuck in its 8-week, relatively high level trading range, from a low of 30.16 to a high of 48.00. 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 (SPX: 1,194.89) 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
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
1234.56, low of 8/3/11
1232.85, low of 12/16/10
1230.71, high of 8/31/11
1228.74, Fibonacci 61.8% of 2007-2009 range
1220.39, high of 9/20/11
1195.86, high of 9/27/11
S&P 500 Cash Index (SPX: 1,194.89) Potential Support
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
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
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) price pulled back but held above the 115.76 low on 9/28/11. So, the bullish pattern of higher highs and higher lows is still intact. TLT rose above all-time highs on 10/4/11, reconfirming a long-term, major uptrend. Support 115.76, 114.05, 111.25, 106.08, 103.20, 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 125.03.
Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) fell below 5-week lows on 10/8/11, suggesting a correction or downside shakeout. Support 102.50 and 102.38. Resistance 106.66.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) consolidated losses since breaking down below the lows of the previous 29-months on 10/3/11, thereby reconfirming a bearish long-term major trend.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below 13-month lows on 9/30/11, reconfirming a bearish long-term major trend. This bearish trend means that fixed-income investors have been choosing the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs. So, fixed-income investors may be more worried about deflation than inflation.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) price fell below the lows of the past 2 weeks on 10/10/11, after rising above the highs of the previous 8 months on 10/4/11, and thereby reconfirming a major price uptrend. After the collapse of gold and the Swiss Franc, the U.S. dollar may be the last refuge for risk-averse investors. Support 21.75, 21.56, 21.42, and 20.84. Resistance 22.63.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) price fell below the lows of the previous 10 months on 10/3/11, reconfirming a major long-term downtrend.
Crude Oil, United States Oil ETF (USO) price bounced after breaking down below 17-month lows on 10/4/11, and thereby reconfirming a major long-term downtrend. Support 28.10, 26.28, and 22.74. Resistance 35.08, 35.14, 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) price rose above the highs of the past 2 weeks on 10/10/11, which could be bullish for the short-term trend. The medium-term trend appears doubtful, however. Support: 154.19, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: 170.32, 177.40, and 185.85.
Gold Mining Stocks ETF/ Gold Shares ETF Relative Strength Ratio (GDX/GLD) remains bearishly below its falling 50-day and 200-day SMAs. 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 consolidated losses since breaking down below the lows of the previous 7 months on 9/26/11, and confirming a bearish major trend for the long term. SLV fell back below its 50-day SMA on 9/19/11 and fell below its 200-day SMA on 9/22/11. Support 27.41, 26.03, and 24.44. Resistance: 32.62, 34.51, 40.23, 41.49, 42.30, 42.78, 44.71 and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) broke down below the lows of the previous 11 months on 9/30/11, reconfirming a bearish major trend for the long term. 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) price consolidated losses since breaking down below the lows of the previous 14 months on 10/5/11, and thereby reconfirming a bearish major trend for the long term. 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
6.43% , PXJ , Oil & Gas, PXJ
3.77% , ADRD , Developed 100 BLDRS, ADRD
4.40% , EWL , Switzerland Index, EWL
5.55% , PSTL , Steel Global PS ETF, PSTL
3.16% , EIS , Israel MSCI iS, EIS
3.18% , ISI , LargeCap Blend S&P 1500 iS, ISI
0.96% , PIC , Insurance, PIC
2.88% , PIV , Value Line Timeliness MidCap Gr, PIV
3.86% , IXN , Technology Global, IXN
1.86% , ADRA , Asia 50 BLDRS, ADRA
3.35% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
4.08% , PEJ , Leisure & Entertainment, PEJ
2.77% , XSD , Semiconductor SPDR, XSD
6.32% , WYN , Wyndham Worldwide
8.33% , JBL , JABIL CIRCUIT
3.13% , TMW , Wilshire 5000 ST TM, TMW
2.53% , PKB , Building & Construction, PKB
3.10% , EPU , Peru MSCI iS, EPU
2.87% , ADRU , Europe 100 BLDRS, ADRU
7.21% , HOT , STARWOOD HOTELS
3.41% , IYY , LargeCap Blend Total Market DJ, IYY
2.76% , NY , Value LargeCap NYSE 100 iS, NY
4.14% , PHO , Water Resources, PHO
6.63% , NBR , NABORS
7.08% , SNV , SYNOVUS
2.47% , VOX , Telecom Services VIPERs, VOX
5.32% , FXI , China 25 iS, FXI
4.90% , EWQ , France Index, EWQ
2.99% , IWZ , Growth LargeCap Russell 3000, IWZ
4.00% , EWC , Canada Index, EWC
5.54% , DYN , DYNEGY
3.79% , IDX , Indonesia MV, IDX
1.96% , UTH , Utilities H, UTH
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.25% , HGSI , Human Genome Sciences Inc
-7.88% , S , SPRINT NEXTEL
-3.58% , MYY , Short 100% MidCap 400, MYY
-0.63% , GVI , Bond Interm U.S. Gov, GVI
-3.36% , PSQ , Short 100% QQQ, PSQ
-1.22% , BMC.O , BMC SOFTWARE
-0.07% , APOL , APOLLO GROUP
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
6.64% Italy Index, EWI
6.22% Russia MV, RSX
6.05% Sweden Index, EWD
5.91% Germany Index, EWG
5.54% Metals & Mining SPDR, XME
5.32% China 25 iS, FXI
5.31% Capital Markets KWB ST, KCE
5.29% Financial Services DJ, IYG
5.26% Singapore Index, EWS
5.16% Financial SPDR, XLF
5.13% REIT Wilshire, RWR
5.11% Realty Cohen & Steers, ICF
5.09% EMU Europe Index, EZU
5.03% Financials VIPERs, VFH
4.99% REIT VIPERs, VNQ
4.90% France Index, EWQ
4.86% Financial DJ US, IYF
4.82% Real Estate US DJ, IYR
4.77% Homebuilders SPDR, XHB
4.73% European VIPERs, VGK
4.66% South Korea Index, EWY
4.63% Energy & Nat Res iS GS, IGE
4.63% Energy VIPERs, VDE
4.62% Turkey MSCI iS, TUR
4.62% Australia Index, EWA
4.60% Energy DJ, IYE
4.55% Growth SmallCap R 2000, IWO
4.53% Energy SPDR, XLE
4.52% South Africa Index, EZA
4.51% Emerging VIPERs, VWO
4.48% Basic Materials DJ US, IYM
4.48% Pacific ex-Japan, EPP
4.47% Emerging Markets, EEM
4.46% Europe 350 S&P Index, IEV
4.40% Switzerland Index, EWL
4.39% Value SmallCap S&P 600 B, IJS
4.38% SmallCap Russell 2000, IWM
4.36% Value SmallCap Russell 2000, IWN
4.31% Microcap Russell, IWC
4.23% Netherlands Index, EWN
4.23% Silver Miners Global X, SIL
4.22% Latin Am 40, ILF
4.21% Materials SPDR, XLB
4.20% Value SmallCap VIPERS, VBR
4.15% Small Cap VIPERs, VB
4.14% Thailand MSCI iS, THD
4.14% Water Resources, PHO
4.14% SmallCap S&P 600, IJR
4.12% India PS, PIN
4.05% Growth SmallCap VIPERs, VBK
4.04% Global ex US ACWI iS, ACWX
4.03% Hong Kong Index, EWH
4.02% Growth BARRA Small Cap 600, IJT
4.00% Canada Index, EWC
3.99% Value EAFE MSCI, EFV
3.96% Energy Global, IXC
3.90% Brazil Index, EWZ
3.85% WilderHill Clean Energy PS, PBW
3.82% EAFE Index, EFA
3.81% Chile MSCI iS, ECH
3.80% Small Cap EAFE MSCI iS, SCZ
3.79% Indonesia MV, IDX
3.76% Transportation Av DJ, IYT
3.75% Oil, Crude, U.S. Oil Fund, USO
3.73% Growth EAFE MSCI, EFG
3.73% Value MidCap S&P 400 B, IJJ
3.65% MidCap S&P 400 SPDRs, MDY
3.64% MidCap S&P 400 iS, IJH
3.63% Growth MidCap Russell, IWP
3.60% Emerging 50 BLDRS, ADRE
3.59% MidCap Russell, IWR
3.58% Oil Fund PowerShares, DBO
3.58% Spain Index, EWP
3.57% Mexico Index, EWW
3.55% Value MidCap Russell, IWS
3.54% India Earnings WTree, EPI
3.52% Global 100, IOO
3.49% Industrial SPDR, XLI
3.49% Value 1000 Russell, IWD
3.48% LargeCap Blend S&P=Weight R, RSP
3.48% Value S&P 500 B, IVE
3.47% LargeCap Blend Russell 3000, IWV
3.46% QQQ Nasdaq 100 Trust, QQQ
3.45% Taiwan Index, EWT
3.44% Blend Total Market VIPERs, VTI
3.42% United Kingdom Index, EWU
3.41% Belgium Index, EWK
3.41% Growth MidCap 400 B, IJK
3.40% Silver Trust iS, SLV
3.40% LargeCap 1000 R, IWB
3.40% Growth 1000 Russell, IWF
3.39% Value VIPERs, VTV
3.38% Consumer Discretionary SPDR, XLY
3.37% Info Tech VIPERs, VGT
3.37% LargeCap VIPERs, VV
3.37% S&P 500 iS LargeCap Blend, IVV
3.35% Growth VIPERs, VUG
3.34% S&P 500 SPDRs LargeCap Blend, SPY
3.30% China LargeCap Growth G D H USX PS, PGJ
3.25% Technology DJ US, IYW
3.25% Growth S&P 500/BARRA, IVW
3.21% Pacific VIPERs, VPL
3.16% LargeCap Blend S&P 100, OEF
3.13% Value LargeCap Dynamic PS, PWV
3.09% Technology SPDR, XLK
3.00% Dividend Appreciation Vipers, VIG
2.92% Dividend International, PID
2.87% DIAMONDS (DJIA), DIA
2.83% Dividend SPDR, SDY
2.82% Semiconductor iS IGW, SOXX
2.77% Semiconductor SPDR, XSD
2.74% Frontier Markets Guggenheim , FRN
2.65% Dividend High Yield Equity PS, PEY
2.59% Malaysia Index, EWM
2.57% Gold Shares S.T., GLD
2.56% Japan Index, EWJ
2.44% Telecom DJ US, IYZ
2.43% Bond, High-Yield Junk, JNK
2.40% Networking, IGN
2.37% Biotech SPDR, XBI
2.37% Dividend DJ Select, DVY
2.29% Health Care SPDR, XLV
2.24% Commodity Tracking, DBC
2.15% Bond, High-Yield Corporate, HYG
2.09% Utilities VIPERs, VPU
1.95% Austria Index, EWO
1.95% Utilities SPDR, XLU
1.56% Consumer Staples SPDR, XLP
1.44% Bond EmrgMkt JPM iS, EMB
1.17% Financial Preferred, PGF
0.96% Preferred Stock iS, PFF
0.67% Agriculture DB PS, DBA
0.22% Bond Ex-US Treas, BWX
0.19% Bond, Corp, LQD
0.02% Bond Treasury Short-Term iS, SHV
-0.04% Bond Muni ATM-Free S&P iS, MUB
-0.08% Bond, 1-3 Year Treasury, SHY
-0.20% Bond, Aggregate, AGG
-0.69% Bond, TIPS, TIP
-1.05% Bond, 10 Year Treasury, IEF
-1.41% Bond, 20+ Years Treasury, TLT
