The S&P 500 Composite (SPX, 1,172.53) rose 53.07 points or 4.74% on Tuesday, August 9, 2011. Stock prices were trying to hang on to modest gains before turning slightly higher following the Fed policy statement at 2:15 p.m. But after just a few minutes of firming, prices suddenly collapsed below 11-month intraday extreme price lows. By 2:45 p.m., the selling was spent, apparently. Stocks reversed to the upside again and continued to rise into a strong close that was well above the previous day’s close.
NYSE trading volume was active again, especially after the Fed policy statement at 2:15 p.m. By the close at 4:00 p.m., volume was 9% below Monday’s extremely active pace.
We may have just witnessed a temporary selling climax that could clear the decks for further recovery attempts in days ahead. Because it is now a Dow Theory Primary Tide Bear Market (since 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), playing Minor Ripple rally attempts against the Primary Tide probably will be difficult and risky.
In days ahead, I would not be surprised to see two-way volatility as the bulls and bears struggle for dominance in an atmosphere of substantial uncertainty.
Before the open on Tuesday 8/9/11, I wrote that RSI(14) at 16.46 and “many other oscillators are deeply oversold…VIX Fear Index rose to 48.00, its highest level in 14 months, since 5/21/10….CBOE Options Total Put/Call Volume Ratio is at the top end of its range, indicating relatively heavy trading volume in puts….The stock market is very oversold….”
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Stock Market Indicators
NASDAQ Composite/S&P 500 Relative Strength Ratio fell below the lows of the previous 5 weeks and its 200-day SMA on 8/8/11. The Ratio’s 50-day SMA remains below the 200-day SMA, but the spread is closing and the SMAs may cross in days ahead. Absolute price broke down below 10-month lows on 8/9/11 and remains bearish.
Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) remains bearish. The EEM/SPY Ratio broke down below 5-month lows on 8/8/11, remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 13-month lows on 8/8/11.
Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) has been in a major long-term downtrend since peaking on 11/27/07. The EFA/SPY Ratio remains below its 50- and 200-day SMAs, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 11-month lows on 8/8/11.
The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above the highs of the previous 12 months on 8/8/11, confirming a relatively modest recovery in comparison to the previous major decline. OEX/SPX fell below 28-year lows on 5/26/11, confirming a bearish major trend. Absolute price of OEX fell below the lows of the previous 11 months on 8/9/11 and remains bearish.
The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) remains bearish. IWM/SPY fell below 10-month lows on 8/8/11.
The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) remains bearish. MDY/SPY fell below 11-month lows on 8/8/11.
Advisory Service Sentiment: There were 46.3% Bulls versus 24.7% Bears as of 8/3/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio fell to 1.87, down from 2.30. This ratio indicates moderate bullish complacency when compared to the 20-year median of 1.56 and mean of 1.64.
VIX Fear Index rose to 48.00 on 8/8/11, its highest level in 14 months, since 5/21/10. Options players appear to be growing more fearful as the stock price decline accelerates. 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 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 S&P 500 Composite (SPX, 1,172.53) rose 53.07 points or 4.74% on Tuesday, August 9, 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
1347.00, high of 7/21/11
1238.81, Fibonacci 78.6% of 1,576.09 high
1235.05, high of 12/7/10
1,234.56, low of 8/3/11
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
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
S&P 500 Cash Index Potential Support
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
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Fixed-Income Investments
Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) rose above the highs of the previous 11 months on 8/9/11, again confirming a significant uptrend. Support 102.27, 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 109.37, 116.92, and 123.15.
Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below 2-year lows and fell further below its 20-, 50-, and 200-day simple moving averages on 8/8/11, confirming a major bearish trend.
U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) fell below the lows of the previous 7 weeks on 8/8/11, confirming a short-term downtrend. TIP/IEF remains below 3 key SMAs, of 20, 50, and 200 days. This means fixed-income investors currently prefer the unprotected 7-10 Year U.S. Treasury Note ETF (IEF) over the inflation-protected TIPs.
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Tangible Assets, Commodities
U.S. dollar ETF (UUP) remains in a major downtrend. UUP had been consolidating sideways since hitting a low of 20.84 on 5/4/11. On 8/9/11 UUP fell below the lows of the previous 5 trading days, which might be bearish for the short term. Support 20.91 and 20.84. Resistance 21.74, 21.86, and 22.21.
Agriculture, PowerShares DB Agriculture Fund ETF (DBA) topped out on 3/4/11 and remains bearish.
Crude Oil, United States Oil ETF (USO) fell below the lows of the previous 14 months on 8/9/11, again confirming a significant downtrend. Support 30.31, 26.28, 22.74. Resistance 39.25, 40.74, and 45.60.
Gold, SPDR Gold Shares ETF (GLD) rose above all-time highs on 8/9/11. Although minor price consolidations and corrections are to be expected in bullish price trends, the dominant trend remains persistently bullish. In a world of too much debt, weak currencies, and self-serving politicians, investors around the globe seek the safety of gold as the only forever-true money. Support: 159.68, 156.11, 154.10, 153.61, 147.19, 143.97, 143.42, and 142.55. Resistance: none.
Gold Mining Stocks ETF (GDX) Relative (to the Gold bullion ETF) Strength Ratio (GDX/GLD) fell below 29-month lows on 8/8/11, again confirming a bearish major trend for the long term.
Silver, iShares Silver Trust ETF (SLV) fell below 3-week lows on 8/9/11, confirming a short-term price pullback. Longer term, the price action in Silver appears choppy and erratic since the spike top at 48.35 on 4/28/11. Support 35.29, 34.02, and 31.97. Resistance: 44.71 and 48.35.
Silver/Gold ETFs Ratio (SLV/GLD) fell below 6-month lows on 8/9/11, suggesting a significant downtrend.
Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) fell below the lows of the previous 8 months on 8/9/11, again confirming a short-term downtrend. Strength in Copper suggests confidence in the economic outlook, while Weakness suggests doubts about the future. Support 49.00. Resistance: 56.64, 57.48, 59.06, 60.04, and 61.69.
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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
6.39% , TTH , Telecom H, TTH
6.58% , KCE , Capital Markets KWB ST, KCE
4.37% , PJP , Pharmaceuticals, PJP
6.08% , ACWX , Global ex US ACWI iS, ACWX
7.92% , VIA , VIACOM INC. (New)
11.83% , SNI , Scripps Networks Interactive
6.47% , VB , Small Cap VIPERs, VB
5.60% , JKJ , SmallCap Core iS M, JKJ
7.49% , MCK , MCKESSON CORP
5.02% , EZA , South Africa Index, EZA
4.98% , FEZ , Euro STOXX 50, FEZ
11.47% , DLX , DELUXE
8.17% , EPP , Pacific ex-Japan, EPP
5.11% , IGN , Networking, IGN
12.88% , MVV , Ultra MidCap400 Double, MVV
6.94% , IEV , Europe 350 S&P Index, IEV
9.99% , BLL , BALL
8.94% , TNB , THOMAS & BETTS
6.11% , ERIC.O , LM Ericsson Telephone Company
4.54% , FDO , FAMILY DLR STRS
9.52% , PLL , PALL
4.98% , RL , Polo Ralph Lauren
11.91% , EBAY , EBAY
4.61% , PXN , Nanotech Lux, PXN
6.25% , PBE , Biotech & Genome, PBE
7.78% , CHD , Church & Dwight
8.39% , VGK , European VIPERs, VGK
10.58% , TUP , TUPPERWARE
4.93% , IWW , Value LargeCap Russell 3000, IWW
9.76% , EWA , Australia Index, EWA
4.18% , IYW , Technology DJ US, IYW
5.78% , ABC , AMERISOURCEBERGN
8.35% , SCZ , Small Cap EAFE MSCI iS, SCZ
Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-6.34% , MYY , Short 100% MidCap 400, MYY
-9.60% , QID , Short 200% QQQ PS, QID
-4.80% , SH , Short 100% S&P 500, SH
-3.99% , DOG , Short 100% Dow 30, DOG
-7.99% , DXD , Short 200% Dow 30 PS, DXD
-4.87% , PSQ , Short 100% QQQ, PSQ
-4.35% , SLV , Silver Trust iS, SLV
-1.47% , MHP , MCGRAW HILL
-9.48% , SDS , Short 200% S&P 500 PS, SDS
-1.49% , PST , 200% Short Bond 7-10 Yr T, PST
-1.52% , CVG , CONVERGYS
-0.91% , FII , FED INVESTORS STK B
-0.71% , TBT , 200% Short US T Bond, TBT
-2.46% , CAG , CONAGRA FOODS
-0.18% , EMB , Bond EmrgMkt JPM iS, EMB
-0.05% , SO , SOUTHERN
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One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
10.45% Financial Preferred, PGF
9.87% Realty Cohen & Steers, ICF
9.76% Australia Index, EWA
9.44% REIT Wilshire, RWR
9.26% Real Estate US DJ, IYR
9.10% REIT VIPERs, VNQ
8.99% Turkey MSCI iS, TUR
8.50% WilderHill Clean Energy PS, PBW
8.39% European VIPERs, VGK
8.35% Small Cap EAFE MSCI iS, SCZ
8.17% Pacific ex-Japan, EPP
7.85% Metals & Mining SPDR, XME
7.76% Financial SPDR, XLF
7.72% Chile MSCI iS, ECH
7.65% Financial DJ US, IYF
7.61% Financials VIPERs, VFH
7.56% Sweden Index, EWD
7.53% Switzerland Index, EWL
7.43% Financial Services DJ, IYG
7.27% Growth EAFE MSCI, EFG
7.10% United Kingdom Index, EWU
7.08% Preferred Stock iS, PFF
7.06% Biotech SPDR, XBI
6.94% Europe 350 S&P Index, IEV
6.91% Growth SmallCap R 2000, IWO
6.87% France Index, EWQ
6.76% Value SmallCap VIPERS, VBR
6.74% EAFE Index, EFA
6.72% Value SmallCap Russell 2000, IWN
6.66% SmallCap Russell 2000, IWM
6.64% Microcap Russell, IWC
6.58% Capital Markets KWB ST, KCE
6.56% Growth MidCap 400 B, IJK
6.48% Basic Materials DJ US, IYM
6.47% Small Cap VIPERs, VB
6.42% Growth SmallCap VIPERs, VBK
6.38% Value EAFE MSCI, EFV
6.36% Value SmallCap S&P 600 B, IJS
6.32% India PS, PIN
6.25% MidCap S&P 400 SPDRs, MDY
6.22% Silver Miners Global X, SIL
6.21% EMU Europe Index, EZU
6.18% Water Resources, PHO
6.17% China LargeCap Growth G D H USX PS, PGJ
6.16% Materials SPDR, XLB
6.15% Indonesia MV, IDX
6.09% Growth BARRA Small Cap 600, IJT
6.09% SmallCap S&P 600, IJR
6.08% Global ex US ACWI iS, ACWX
6.05% Value MidCap S&P 400 B, IJJ
6.03% MidCap S&P 400 iS, IJH
6.02% Pacific VIPERs, VPL
6.01% Value MidCap Russell, IWS
6.00% Belgium Index, EWK
5.95% Germany Index, EWG
5.87% Emerging Markets, EEM
5.81% Telecom DJ US, IYZ
5.79% Mexico Index, EWW
5.79% Latin Am 40, ILF
5.74% Growth MidCap Russell, IWP
5.69% Italy Index, EWI
5.63% Energy Global, IXC
5.62% Taiwan Index, EWT
5.61% Singapore Index, EWS
5.61% MidCap Russell, IWR
5.58% Canada Index, EWC
5.45% India Earnings WTree, EPI
5.42% Energy & Nat Res iS GS, IGE
5.39% Dividend High Yield Equity PS, PEY
5.33% Emerging VIPERs, VWO
5.15% Japan Index, EWJ
5.15% S&P 500 iS LargeCap Blend, IVV
5.12% Value S&P 500 B, IVE
5.11% Networking, IGN
5.09% Energy SPDR, XLE
5.09% Netherlands Index, EWN
5.06% LargeCap Blend S&P=Weight R, RSP
5.02% Dividend International, PID
5.02% South Africa Index, EZA
5.00% Blend Total Market VIPERs, VTI
5.00% Value 1000 Russell, IWD
4.95% Industrial SPDR, XLI
4.91% Value VIPERs, VTV
4.90% Frontier Markets Guggenheim , FRN
4.88% Global 100, IOO
4.85% Energy VIPERs, VDE
4.85% Growth VIPERs, VUG
4.85% LargeCap Blend Russell 3000, IWV
4.84% LargeCap VIPERs, VV
4.82% QQQ Nasdaq 100 Trust, QQQ
4.80% Energy DJ, IYE
4.79% Spain Index, EWP
4.75% Value LargeCap Dynamic PS, PWV
4.74% Growth 1000 Russell, IWF
4.65% S&P 500 SPDRs LargeCap Blend, SPY
4.64% Consumer Discretionary SPDR, XLY
4.63% Dividend SPDR, SDY
4.60% Russia MV, RSX
4.57% Technology SPDR, XLK
4.55% Info Tech VIPERs, VGT
4.54% Emerging 50 BLDRS, ADRE
4.51% Brazil Index, EWZ
4.47% Semiconductor iS IGW, SOXX
4.41% Transportation Av DJ, IYT
4.31% Growth S&P 500/BARRA, IVW
4.28% Dividend DJ Select, DVY
4.21% Semiconductor SPDR, XSD
4.21% LargeCap Blend S&P 100, OEF
4.18% Technology DJ US, IYW
4.15% LargeCap 1000 R, IWB
4.13% Homebuilders SPDR, XHB
4.08% China 25 iS, FXI
4.03% Malaysia Index, EWM
3.98% DIAMONDS (DJIA), DIA
3.89% Hong Kong Index, EWH
3.83% Thailand MSCI iS, THD
3.82% Dividend Appreciation Vipers, VIG
3.77% South Korea Index, EWY
3.77% Utilities VIPERs, VPU
3.64% Health Care SPDR, XLV
3.55% Austria Index, EWO
3.28% Utilities SPDR, XLU
3.05% Bond, High-Yield Corporate, HYG
2.67% Bond, High-Yield Junk, JNK
2.43% Consumer Staples SPDR, XLP
1.02% Agriculture DB PS, DBA
0.97% Commodity Tracking, DBC
0.89% Bond, Corp, LQD
0.89% Gold Shares S.T., GLD
0.87% Bond Ex-US Treas, BWX
0.83% Bond, TIPS, TIP
0.59% Bond, Aggregate, AGG
0.58% Bond, 10 Year Treasury, IEF
0.35% Oil, Crude, U.S. Oil Fund, USO
0.30% Bond, 20+ Years Treasury, TLT
0.23% Bond Muni ATM-Free S&P iS, MUB
0.11% Bond, 1-3 Year Treasury, SHY
0.04% Bond Treasury Short-Term iS, SHV
-0.04% Oil Fund PowerShares, DBO
-0.18% Bond EmrgMkt JPM iS, EMB
-4.35% Silver Trust iS, SLV
