The S&P 500 (SPX: 1,414.20) is down 3.52% over the past 7 weeks. The SPX shows a descending 5-point reversal top: 1) a high on 9/14/12; 2) a low on 9/26/12; 3) a lower high on 10/5/12; 4) a lower low on 10/12/12; and 5) a final lower high on 10/18/12. These 5 points were immediately followed by a breakdown away from the top pattern. A classic throwback rally/reaction on Friday fizzled in the vicinity of the recent lows, exactly as a chartist would expect. The topping process appears to be complete.

On-Balance Volume for the SPX has been demonstrating bearish divergence by lagging below its March 2012 high as the SPX index made higher highs in September. On-Balance Volume remains below both its 50-day and 200-day SMAs and is closer to its 9-month lows than to its 9-month highs.

The 10 X 3 Point-and-Figure Chart for the S&P 500 shows a Descending Triple Bottom Breakdown with a downside objective of 1380.

NYSE Cumulative Volume of Advancing Stocks minus Volume of Declining Stocks has been lagging the SPX index for 19 months, since April, 2011, thereby demonstrating relative weakness and bearish divergence. Clearly, volume has not been confirming the price up move for many months.

It takes volume to push prices up. After the shorts have been forced to cover and the longs have had their fill of buying, in the absence of a fresh source of demand, stocks fall of their own weight.

Market breadth indicators are in downtrends after diverging bearishly at the top for the S&P 500 Composite Stock Price Index.

Most stocks have turned corrective. A majority of stocks in the S&P 500 Composite Price Index are now below their own 50-day SMAs. As the chart shows, the percentage above their own 50-day SMAs is now below 50%, down from 85% in September, and down from a peak of 90% in February, 2012.

The percentage of these same S&P 500 stocks that are above their own 200-day SMAs (now at 65%, down from 82% in September, and down from a peak of 85% in March) is in a down trend, below both 50-day and 200-day SMAs.

The percentage in bullish Point-and-Figure Chart uptrends (now at 70%, down from 79% in September, and down from a peak of 85% in February) also is trending downward, below both 50-day and 200-day SMAs.

The SPX clearly shows lower highs and lower lows since its intraday peak at 1474.51 set on 9/14/12 (the day after the Fed’s QE3 generous gift to banks). That is the definition of a downtrend. Each rally attempt has been weaker than the previous one, and each decline has been deeper than the than the previous one. Failed rally attempts and lower lows may lead the bullish majority to question their assumptions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The technical condition of the stock market does not support the months-long excessive optimism of the bullish majority of stock investors and traders. Fed and ECB plans to buy bonds in unlimited quantities (with fiat currencies printed out of thin air and backed by nothing but a theory and a hope) do not guarantee that stock prices will continue to rise, especially now that the news is out. Typically, action is followed by reaction, and so a downside correction seems overdue. Choosing safety over risk still 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 6 consecutive quarters; see:
Robert W. Colby Asset Management, Inc. (click here).

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

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
1474.51, high of 9/14/2012
1464.02, high of 10/18/2012
1440.24, high of 5/19/2008
1439.15, high of 9/12/2012
1434.48, 50-day SMA
1434.27, high of 11/2/2012
1430.53, low of 9/26/2012
1425.53, low of 10/12/2012
1425.48, Fibonacci 23.6% of June-Sept 2012 range
1422.38, high of 4/2/2012
1422.06, low of 10/22/2012
1421.12, high of 10/25/2012
1418.71, high of 8/17/2012
1415.32, high of 5/1/2012

The S&P 500 Composite Potential Support
1403.28, low of 10/26/12
1396.56, low of 9/4/2012
1395.14, Fibonacci 38.2% of June-Sept 2012 range
1391.04, low of 8/6/2012
1388.71, low of 5/3/2012
1381.50, Fibonacci 78.6% of 2007-2009 range
1380.39, high of 7/19/2012
1378.93, 200-day SMA
1374.81, high of 7/3/2012
1370.62, Fibonacci 50.0% of June-Sept 2012 range
1370.58, high of 5/2/2011
1363.49, high of 6/19/2012
1357.38, low of 4/10/2012
1355.70, low of 7/2/2012
1346.11, Fibonacci 61.8% of June-Sept 2012 range
1340.03, low of 3/6/2012
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
1325.41, low of 7/12/2012
1311.20, Fibonacci 78.6% of June-Sept 2012 range
1306.62, low of 6/12/2012
1291.98, low of 5/18/2012
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
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
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
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) has turned choppy and corrective since crossing down below its 50-day SMA on 8/6/12 and turning systematically neutral. TLT is modestly above its 200-day SMA, and TLT’s 50-day SMA has remained above the 200-day SMA every day since 6/24/11. Support 119.87, 118.05, 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: 123.71, 124.78, 125.09, 127.72, 130.69, and 132.22.

Bond, iShares Barclays 7-10 Year U.S. Treasury ETF (IEF) has turned choppy and corrective since crossing down below its 50-day SMA on 8/3/12 and turning systematically neutral. Longer term, IEF has remained above its 200-day SMA consistently since 4/5/12, and the 50-day SMA has remained above the 200-day SMA every day since 6/21/11. Support 106.59, 106.42, 105.84, 105.22, 104.77, 103.90, 102.51, 101.77, 101.36, 101.11, 99.79, and 97.66. Resistance: 108.38, 108.70, 108.99, 109.32, and 109.89.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below its 50-day SMA on 9/25/12, thereby turning systematically bearish again. JNK/LQD fell below its 200-day SMA on 9/20/12. JNK/LQD 50-day SMA has remained consistently below the 200-day SMA every day since 6/1/12.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year ETFs Relative Strength Ratio (TIP/IEF) turned systematically bullish on 10/10/12 when the TIP/IEF 50-day SMA rose above the 200-day SMA. TIP/IEF remains above both the 50-day SMA and 200-day SMA.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tangible Assets, Commodities

U.S. dollar ETF (UUP) price rose above its 50-day SMA on 11/2/12, thereby turning systematically neutral. UUP fell below its 200-day SMA on 8/31/12, and the 50-day SMA fell below the 200-day SMA on 10/2/12. Support 21.57, 21.07, and 20.84. Resistance 22.36, 22.45, 23.14, 23.52, 25.84, 27.19, 28.97.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) fell below its lows of the previous 3 months on 10/15/12, confirming a loss of upside momentum. DBA turned systematically neutral on 9/17/12 when price crossed below its 50-day SMA. Price remains above its 200-day SMA, and the 50-day SMA remains above the 200-day SMA.

Crude Oil, United States Oil ETF (USO) fell below its lows of the previous 4 months on 11/2/12, confirming its preexisting bearish trend. USO turned systematically bearish on 9/19/12, when price fell below its 50-day SMA. USO price fell below its 200-day SMA on 9/17/12, and the 50-day SMA remains below its 200-day SMA. Support 29.02, 26.28, and 22.74. Resistance 34.70, 37.17, 38.31, 40.29, 41.38, 42.30, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. GLD turned systematically neutral on 10/23/12, when price fell below its 50-day SMA. GLD price rose above its 200-day SMA on 8/22/12. GLD 50-day SMA rose above the 200-day SMA on 9/20/12. Support: 159.56, 154.83, 148.27, 147.19, 143.97, 143.42, and 142.55. Resistance: 167.28, 174.07, 175.46, 177.40, and 185.85.

Gold Mining Stocks ETF/Gold Shares ETF Relative Strength Ratio (GDX/GLD) turned systematically bullish on 10/19/12, when the 50-day SMA rose above the 200-day SMA. GDX/GLD rose above its 50-day SMA on 8/16/12 and rose above its 200-day SMA on 9/13/12 .

Silver, iShares Silver Trust ETF (SLV) fell below its lows of the previous 2 months on 11/2/12, confirming its preexisting corrective trend. SLV fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral. SLV fell below its 200-day SMA on 11/2/12. SLV price 50-day SMA crossed above the 200-day SMA on 10/1/12. Support 29.28, 26.87, 26.13, 25.34, 25.00, 24.44, 22.52, 20.73, and 19.44. Resistance: 31.52, 32.23, 33.23, 34.08, 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 2 months on 11/2/12, confirming its preexisting corrective trend. SLV/GLD fell below its 50-day SMA on 10/19/12, thereby turning systematically neutral again. SLV/GLD crossed back below its 200-day SMA on 11/2/12. Longer term, SLV/GLD 50-day SMA crossed above the 200-day SMA on 10/9/12.

Copper, iPath DJ-UBS Copper TR Sub-Index ETN (JJC) fell below its lows of the previous 8 weeks on 11/2/12, confirming its preexisting bearish trend. JJC price fell below its 50-day SMA on 10/22/12, thereby turning systematically bearish again. JJC fell below its 200-day SMA on 10/19/12, and the 50-day SMA has remained below the 200-day SMA every day since 5/31/12. “Dr. Copper” is one of the better indicators of investor confidence (or lack thereof) in the global industrial economy, and so this bearish signal may be taken as a warning about economic conditions ahead.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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
13.40% , CTB , COOPER TIRE
4.39% , FMCN , Focus Media, FMCN
5.02% , WPO , Washington Post
9.05% , SBUX , STARBUCKS
4.70% , ININ , Interactive Intelligence ININ
2.85% , WFM.O , Whole Foods Market Inc
2.10% , SPG , SIMON PROP GRP
1.41% , HES , AMERADA HESS
0.74% , AMP , Ameriprise Financial Inc.
1.03% , AVY , AVERY DENNISON
2.61% , CPWR , COMPUWARE
1.79% , BAX , BAXTER INTL
1.33% , CROX , CROCS Inc., CROX
0.96% , MYY , Short 100% MidCap 400, MYY
2.42% , QID , Short 200% QQQ PS, QID
1.89% , SDS , Short 200% S&P 500 PS, SDS
1.08% , RL , Polo Ralph Lauren
0.94% , YHOO , YAHOO
0.52% , NIHD , NII Holdings, Inc.
1.34% , LLL , L-3 COMMS HLDGS
0.73% , SCHW.K , CHARLES SCHWAB, SCHW.O
1.12% , PX , PRAXAIR
1.30% , CMI , CUMMINS
0.58% , LOW , LOWES
0.36% , K , KELLOGG
0.66% , VNQ , REIT VIPERs, VNQ
0.25% , TAP , ADOLPH COORS STK B, TAP
0.46% , MKC , MCCORMICK
1.13% , BAC , BANK OF AMERICA
0.32% , PLD , PROLOGIS TRUST
0.38% , BBT , BB&T
1.63% , EQR , EQUITY RESIDENT BEN INT
0.13% , ISIL , INTERSIL CORP

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-13.05% , PBI , PITNEY BOWES
-9.80% , FLR , FLUOR
-7.16% , AIG , AMER INTL GROUP
-4.07% , SLV , Silver Trust iS, SLV
-8.42% , NEM , NEWMONT MINING
-2.90% , AIV , APT INV MNGMT
-2.42% , LVLT.K , LEVEL 3 COMMUNICATIONS
-3.99% , RFMD , RF Micro Devices Inc
-2.09% , GLD , Gold Shares S.T., GLD
-2.51% , PBW , WilderHill Clean Energy PS, PBW
-2.68% , XL , XL CAPITAL STK A
-2.95% , ZEUS , Olympic Steel, ZEUS
-3.01% , HIG , HARTFORD FINL
-3.18% , XME , Metals & Mining SPDR, XME
-2.60% , HAR , Harman International
-3.31% , AAPL , APPLE COMPUTER
-0.81% , PRF , Value LargeCap Fundamental RAFI 1000, PRF
-2.10% , IAU , Gold COMEX iS, IAU
-1.34% , VXF , Extended Mkt VIPERs, VXF
-2.52% , WM , WASTE MANAGEMENT
-2.05% , SPLS , STAPLES
-1.72% , WAG , WALGREEN
-0.64% , GCI , GANNETT
-0.90% , XLG , LargeCap Rydex Rus Top 50, XLG
-0.97% , RSP , LargeCap Blend S&P=Weight R, RSP
-2.27% , BK , BANK OF NEW YORK
-0.89% , IWW , Value LargeCap Russell 3000, IWW
-0.62% , EWL , Switzerland Index, EWL
-2.77% , CVX , CHEVRONTEXACO
-1.41% , IJJ , Value MidCap S&P 400 B, IJJ
-0.98% , MMC , MARSH & MCLENNAN
-1.22% , EWM , Malaysia Index, EWM
-0.97% , PID , Dividend International, PID
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol
0.94% REIT Wilshire, RWR
0.85% Bear, Short S&P 500, SH
0.79% Realty Cohen & Steers, ICF
0.67% Real Estate US DJ iS, IYR
0.66% REIT VIPERs, VNQ
0.23% Mexico Index, EWW
0.08% Bond, 10 Year Treasury, IEF
0.06% Bond, Intermediate US Aggregate iS, AGG
0.05% India Earnings WTree, EPI
0.03% Bond, Muni S&P ATM-Free iS, MUB
0.00% Bond Treasury Short-Term iS, SHV
-0.01% Bond, 1-3 Year Treasury, SHY
-0.05% Financial Preferred, PGF
-0.06% Bond, TIPS U.S. Treasury iS, TIP
-0.06% Consumer Discretionary SPDR, XLY
-0.07% Bond, 20+ Years Treasury, TLT
-0.08% Preferred Stock iS, PFF
-0.12% Bond, High-Yield Junk, JNK
-0.14% Bond, High Yield Corp iBoxx iS, HYG
-0.20% Bond, Long-Term Corp iBoxx iS, LQD
-0.21% Hong Kong Index, EWH
-0.33% India PS, PIN
-0.34% Bond, Emerg Mkt JPM iS, EMB
-0.37% South Korea Index, EWY
-0.43% Russia MV, RSX
-0.44% Brazil Index, EWZ
-0.45% Thailand MSCI iS, THD
-0.45% Agriculture DB PS, DBA
-0.48% Chile MSCI iS, ECH
-0.48% Emerging 50 BLDRS, ADRE
-0.49% Bond Ex-US Treas, BWX
-0.52% Financial DJ US, IYF
-0.53% Emerging Markets MSCI iS, EEM
-0.54% Latin Am 40, ILF
-0.55% Health Care SPDR, XLV
-0.57% Financials VIPERs, VFH
-0.59% Financial SPDR, XLF
-0.59% Consumer Staples SPDR, XLP
-0.61% Emerging VIPERs, VWO
-0.61% Sweden Index, EWD
-0.62% Switzerland Index, EWL
-0.62% Financial Services DJ, IYG
-0.65% Water Resources, PHO
-0.65% Telecom DJ US, IYZ
-0.66% SmallCap Blend EAFE MSCI iS, SCZ
-0.67% South Africa Index, EZA
-0.68% Utilities SPDR, XLU
-0.70% Utilities VIPERs, VPU
-0.71% Indonesia MV, IDX
-0.77% Japan Index, EWJ
-0.77% China 25 iS, FXI
-0.78% Global 100, IOO
-0.80% Growth EAFE MSCI, EFG
-0.83% Global LargeCap Blend MSCI iS, ACWI
-0.83% LargeCap Value S&P 500 iS, IVE
-0.84% Industrial SPDR, XLI
-0.85% Value MidCap Russell, IWS
-0.86% Value VIPERs, VTV
-0.87% Global ex U.S. LargeCap Blend, ACWX
-0.88% Netherlands Index, EWN
-0.89% S&P 500 SPDRs LargeCap Blend, SPY
-0.90% Frontier Markets Guggenheim , FRN
-0.91% LargeCap Value Russell 1000 iS, IWD
-0.91% Value LargeCap Dynamic PS, PWV
-0.92% LargeCap VIPERs, VV
-0.94% LargeCap Blend Russell 1000 iS, IWB
-0.94% LargeCap Blend Russell 3000 iS, IWV
-0.94% Pacific VIPERs, VPL
-0.94% Growth VIPERs, VUG
-0.95% LargeCap Blend S&P 500 iS, IVV
-0.96% Dividend Appreciation Vipers, VIG
-0.96% LargeCap Blend S&P 100, OEF
-0.97% Foreign LargeCap EAFE MSCI iS, EFA
-0.97% LargeCap Blend S&P=Weight R, RSP
-0.97% Dividend International, PID
-0.99% DIAMONDS (DJIA), DIA
-1.00% Transportation Av DJ, IYT
-1.01% LargeCap Growth S&P 500 iS, IVW
-1.01% Value EAFE MSCI, EFV
-1.02% Capital Markets KWB ST, KCE
-1.02% Taiwan Index, EWT
-1.02% Belgium Index, EWK
-1.04% Value SmallCap VIPERS, VBR
-1.04% LargeCap Growth Russell 1000 iS, IWF
-1.04% Blend Total Market VIPERs, VTI
-1.04% MidCap Russell, IWR
-1.05% Canada Index, EWC
-1.05% European VIPERs, VGK
-1.07% QQQ Nasdaq 100 Trust, QQQ
-1.07% SmallCap Value S&P 600 iS, IJS
-1.08% Germany Index, EWG
-1.10% France Index, EWQ
-1.12% EMU Europe Index, EZU
-1.13% United Kingdom Index, EWU
-1.13% Dividend U.S. DJ iS, DVY
-1.15% China LargeCap Growth G D H USX PS, PGJ
-1.19% Spain Index, EWP
-1.20% Growth MidCap Russell, IWP
-1.20% Singapore Index, EWS
-1.22% Malaysia Index, EWM
-1.22% Europe 350 S&P Index, IEV
-1.24% Dividend SPDR, SDY
-1.30% Technology SPDR, XLK
-1.30% Networking, IGN
-1.30% Energy Global, IXC
-1.32% Dividend ex-U.S. DJ iS, IDV
-1.34% SmallCap Blend S&P 600 iS, IJR
-1.35% Pacific ex-Japan, EPP
-1.37% SmallCap Value Russell 2000 iS, IWN
-1.38% Small Cap VIPERs, VB
-1.40% Microcap Russell, IWC
-1.41% MidCap Value S&P 400 iS, IJJ
-1.42% Info Tech VIPERs, VGT
-1.43% SmallCap Growth S&P 600 iS, IJT
-1.46% Austria Index, EWO
-1.47% MidCap Blend S&P 400 iS, IJH
-1.47% MidCap S&P 400 SPDRs, MDY
-1.48% MidCap Growth S&P 400 iS, IJK
-1.55% Australia Index, EWA
-1.55% Technology DJ US, IYW
-1.57% SmallCap Blend Russell 2000 iS, IWM
-1.62% Energy DJ, IYE
-1.64% Energy SPDR, XLE
-1.69% Energy VIPERs, VDE
-1.70% Commodity Tracking, DBC
-1.71% Growth SmallCap VIPERs, VBK
-1.75% Homebuilders SPDR, XHB
-1.77% Dividend High Yield Equity PS, PEY
-1.78% Turkey MSCI iS, TUR
-1.80% Materials SPDR, XLB
-1.80% Oil Fund PowerShares, DBO
-1.80% SmallCap Growth Russell 2000 iS, IWO
-1.87% Semiconductor iS IGW, SOXX
-1.97% Energy & Nat Res iS GS, IGE
-2.09% Gold Shares S.T., GLD
-2.13% Biotech SPDR, XBI
-2.20% Italy Index, EWI
-2.21% Oil, Crude, U.S. Oil Fund, USO
-2.24% Basic Materials DJ US, IYM
-2.51% WilderHill Clean Energy PS, PBW
-2.92% Semiconductor SPDR, XSD
-3.18% Metals & Mining SPDR, XME
-4.07% Silver Trust iS, SLV