It still appears that the popular stock market indexes may hold near the yearly lows.

RSI(14) shows a clear loss of downside momentum since Thursday 5/20/10.

The Dow-Jones Industrial and Transportation Averages are holding above February lows. If they continue to hold the line, the current correction may prove to be a Secondary Reaction, and not a Primary Trend.

Consumer Discretionary (XLY) Stock Sector Relative Strength Ratio (XLY/SPY) rose above 4-week highs on 5/26/10 and remains bullish. Absolute price of XLY remains above its 200-day SMA and February low.

Industrial (XLI) Stock Sector Relative Strength Ratio (XLI/SPY) crossed back above its 50-day SMA on 5/26/10 and so turned bullish again. Absolute price of XLI remains above its 200-day SMA and February low and remains neutral.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 22 months on 5/26/10 and remains bearish.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below 5-year lows on 5/26/10 and remains bearish. Absolute price of EFA fell below 10-month lows on 5/25/10 and remains bearish.

S&P 500 Composite (SPX) absolute price tested its low of 2/5/10 and closed slightly higher on 5/25/10. Although further bottom testing cannot be ruled out, holding the previous low suggests that bargain hunting demand appeared where it should have, technically speaking. SPX is still looking oversold for the short term.

Clearly, excessive bullish sentiment has been wrung out of the stock market. This is a major change from last month. On 4/26/10, I wrote: “Investors Intelligence survey of stock market newsletter advisors, Call/Put Volume Ratios, and implied option volatility have shown bullish complacency in recent weeks. Excessive bullish sentiment sometimes precedes a shakeout to the downside.” We got that shakeout. And now it may be over—or the worst of it, at least.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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
0.82% , PSTL , Steel Global PS ETF, PSTL
3.29% , CEG , CONSTELL ENERGY
8.31% , BHH , Internet B2B H, BHH
3.63% , PWER , POWER ONE
5.49% , SLM , SLM CORP
3.68% , ZION , ZIONS
2.32% , TIF , TIFFANY
0.69% , PWT , Growth SmallCap Dynamic PS, PWT
4.05% , TIN , TEMPLE INLAND
4.95% , EK , EASTMAN KODAK
1.53% , ZEUS , Olympic Steell, ZEUS
2.26% , WPI , WATSON PHARM
2.91% , EP , EL PASO
1.89% , MHS , MEDCO HEALTH
1.79% , PCAR , PACCAR
1.94% , VRSN , VeriSign Inc
4.27% , TBH , Telebras HOLDRS, TBH
1.83% , APD , AIR PRODS & CHEM
2.06% , CR , CRANE
3.34% , NOV , NATIONAL OILWELL VARC0
1.85% , PTEN , Patterson-UTI Energy Inc
0.88% , SNDK , SanDisk Corporation
0.60% , PWO , OTC Dynamic PS, PWO
2.12% , C , CITIGROUP
1.60% , JCI , JOHNSON CONTROLS
0.90% , CMS , CMS ENERGY
3.01% , AES , AES
1.25% , EIX , EDISON INTL
0.99% , SNPS , Synopsys Inc
1.18% , EFX , EQUIFAX
0.36% , PWP , Value MidCap Dynamic PS, PWP
2.59% , FO , FORTUNE BRANDS
1.52% , RSX , Russia MV, RSX
1.12% , MRK , MERCK & CO
1.57% , HAS , HASBRO
0.95% , IYT , Transportation Av DJ, IYT
3.01% , ECH , Chile MSCI iS, ECH
0.74% , LBTYA , Liberty Global Inc. (LBTYA)
0.66% , TNB , THOMAS & BETTS
3.36% , F , FORD MOTOR

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-2.91% , CHKP , Check Point Software Technologies Ltd
-0.49% , PFM , Dividend Achievers PS, PFM
-1.01% , TTH , Telecom H, TTH
-4.56% , CECO , CAREER EDUCATION CORP
-4.66% , EWP , Spain Index, EWP
-3.72% , TEVA , Teva Pharmaceutical Industries Limited
-11.11% , SIRI , Sirius Satellite
-1.82% , EWK , Belgium Index, EWK
-1.25% , EWL , Switzerland Index, EWL
-3.01% , APOL , APOLLO GROUP
-4.07% , MSFT , MICROSOFT
-2.11% , EIS , Israel MSCI iS, EIS
-2.53% , PBI , PITNEY BOWES
-3.24% , GPS , GAP
-3.76% , GILD , Gilead Sciences Inc
-0.34% , ELG , Growth Large Cap, ELG
-0.63% , KWT , Solar Energy MV, KWT
-2.64% , PEP , PEPSICO
-1.32% , SWH , Software H, SWH
-3.25% , MAS , MASCO
-1.31% , SCZ , Small Cap EAFE MSCI iS, SCZ
-0.14% , ELV , Value Large Cap DJ, ELV
-2.49% , FITB , FIFTH THIRD BANC
-2.77% , BC , BRUNSWICK
-2.62% , JCP , JC PENNEY
-4.17% , AMGN , AMGEN
-3.21% , URBN , Urban Outfitters Inc.
-0.26% , VHT , Health Care VIPERs, VHT
-1.84% , XRAY , DENTSPLY International Inc
-1.83% , VGK , European VIPERs, VGK
-0.67% , IGM , Technology GS, IGM
-4.30% , SHLD , SEARS HOLDINGS
-1.93% , ADBE , ADOBE SYS
-2.05% , BIIB , BIOGEN IDEC
-1.62% , QLGC , QLOGIC
-2.70% , MCD , MCDONALDS
-2.52% , FDO , FAMILY DLR STRS
-0.54% , KLD , LargeCap Blend Socially Responsible iS, KLD
-0.56% , ASH , ASHLAND
-0.56% , MZZ , Short 200% MidCap 400 PS, MZZ

9 major U.S. stock sectors ranked in order of long-term relative strength:

Consumer Discretionary (XLY) Bullish, Overweight. The Relative Strength Ratio (XLY/SPY) rose above 4-week highs on 5/26/10 and remains bullish. Absolute price of XLY remains above its 200-day SMA and February low and remains neutral. Support 30.34. Resistance 34.39, 36.13, 38.25 and 39.09.

Industrial (XLI) Bullish, Overweight. The Relative Strength Ratio (XLI/SPY) crossed back above its 50-day SMA on 5/26/10 and so turned bullish again. Absolute price of XLI remains above its 200-day SMA and February low and remains neutral. Support 27.91. Resistance 32.41, 33.46, 34.24, 34.50, and 35.00.

Technology (XLK) Neutral, Market Weight. The Relative Strength Ratio (XLK/SPY) has been chopping sideways and remains neutral. Absolute price of XLK held above its previous 5/6/10 low and remains neutral. Support 20.64. Resistance 23.27, 24.16, 24.68, and 25.69.

Consumer Staples (XLP) Neutral, Market Weight. The Relative Strength Ratio (XLP/SPY) rose to a 7-month high on 5/20/10 but has had a mild correction since and remains neutral. Absolute price of XLP also remains neutral. Support 25.87 and 24.95. Resistance 27.83, 27.95, 28.20, 28.75, 29.29 and 30.29.

Financial (XLF) Neutral, Market Weight. The Relative Strength Ratio (XLF/SPY) remains neutral. Absolute price of XLF fell below its 2-month lows 5/25/10 and remains neutral. Support 13.84 and 13.51. Resistance 15.67, 16.13, 16.90, 17.12, 17.16, and 17.87.

Materials (XLB) Neutral, Market Weight. The Relative Strength Ratio (XLB/SPY) fell below 10-month lows on 5/20/10 and remains bearish. Absolute price of XLB crossed below the 200-day SMA on 5/14/10 and remains neutral. Support 28.87. Resistance 33.06, 35.47, and 37.56.

Health Care (XLV) Neutral, Market Weight. The Relative Strength Ratio (XLV/SPY) fell below 18-month lows on 4/26/10 and remains bearish. Absolute price of XLV fell below 6-month lows on 5/25/10 and remains neutral. Support 27.96. Resistance 30.83, 32.05, 32.18, 32.42, 32.69, 33.16, 33.37 and 33.74.

Utilities (XLU) Neutral, Market Weight. The Relative Strength Ratio (XLU/SPY) rose above 2-month highs 5/20/10 and remains neutral. Absolute price of XLU fell below 9-month lows on 5/6/10 and remains neutral. Support 27.44, 25.76. Resistance 30.59, 30.91, 31.64 and 32.08.

Energy (XLE) Neutral, Market Weight. The Relative Strength Ratio (XLE/SPY) fell below 7-week lows on 5/24/10 and remains bearish. Absolute price of XLE fell below its 8-month lows on 5/25/10 and remains neutral. Support 50.15 Resistance 58.11, 59.84, 62.30, 62.73, 69.95, and 78.10.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) fell to a 12-month low on 5/20/10. EEM/SPY trend turned bearish on 4/16/10, according to strict moving average analysis. Absolute price of EEM fell to an 8-month low on 5/25/10.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) fell below 5-year lows on 5/26/10 and remains bearish. Absolute price of EFA fell below 10-month lows on 5/25/10 and remains bearish.

NASDAQ Composite/S&P 500 Relative Strength Ratio whipsawed back down slightly below its 50-day simple moving average on 5/25/10 thereby turning neutral again. Absolute price of the NASDAQ has been holding above its low of 2/5/10.

Growth Stock/Value Stock Relative Strength Ratio (IWF/IWD) has modestly underperformed YTD in 2010 and is neutral. Absolute price of IWF also remains neutral.

Russell 1000 Value ETF Relative Strength Ratio (IWD/SPY) has underperformed moderately since 5/3/10 and remains neutral.

The S&P 500 Equally Weighted ETF Relative Strength Ratio (RSP/SPY) lost very little upside momentum in recent weeks and remains bullish. Absolute price of RSP tested its 200-day SMA on 5/25/10 and closed above it.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) fell below the lows of the previous 22 months on 5/26/10 and remains bearish. Absolute price of OEX remains neutral.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) remains bullish. Absolute price of IWM tested its 200-day SMA on 5/25/10 and closed above it.

The S&P MidCap 400/Large Cap Relative Strength Ratio (MDY/SPY) lost very little upside momentum in recent weeks and remains bullish. Absolute price of MDY tested its 200-day SMA on 5/25/10 and closed above it.

Crude Oil nearest futures contract price appears to be losing downside momentum after a steep 3-week short-term downtrend, which became quite oversold. Support 67.15 and 65.05. Resistance 78.81, 81.29, 87.15, 90.51, 98.65, and 102.84.

Gold nearest futures contract price appears to be consolidating gains following a big 7-week price run-up to a new all-time high at 1249.7 on 5/14/10. Support 1156.2, 1124.3, 1084.8, 1045.2, 1026.9 and 989.3. Resistance: 1249.7.

Gold Mining Stocks ETF (GDX) Relative Strength Ratio (relative to the Gold bullion ETF, GDX/GLD) fell below 2-month lows and both 50 & 200 SMAs on 5/20/10 and remains bearish. Absolute price fell below 3-week lows on 5/20/10 and is neutral.

Silver/Gold Ratio turned bearish on 5/17/10 when it crossed below both 50- and 200-day SMAs, with the 50-day SMA below the 200-day SMA.

Copper nearest futures price may be finding support above its February low. Copper entered a correction phase since peaking at 3.68 on 4/12/10.Strength in Copper suggests renewed hope about prospects for the world economy, while weakness suggests doubts. Support 2.8525 and 2.811. Resistance 3.2675, 3.3225, 3.795 and 4.27.

U.S. Treasury Bond nearest futures contract price jumped up to a new 13-month high of 126.15 on 5/25/10 and remains bullish. Support 124.04, 119.26, 118.24, 118.12, 115.15, 114.06. 113.04 and 112.15. Resistance 130.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio (JNK/LQD) fell below 8-month lows on 5/20/10 and remains neutral.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio (TIP/IEF) fell below 6-month lows on 5/20/10 but still remains neutral for the intermediate-term trend. This implies that investors are choosing somewhat less inflation protection. Absolute price of TIP remains bullish.

The U.S. dollar nearest futures contract price appears to be consolidating gains following a big 5-week price run-up. USD main trend remains bullish. Support 85.46, 83.07, 81.74, 80.14, 79.73, 79.61, 78.83, 78.20, 76.74 and 75.90. Resistance 89.71 and 92.53.

The Art of Contrary Thinking: The various surveys of investor sentiment are best considered as background factors. The majority of investors can be right for a long time before a major trend finally changes course. The Art of Contrary Thinking is best used together with more precise market timing tools.

Advisory Service Sentiment: There were 39.3% Bulls versus 29.2% Bears as of 5/26/10, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear ratio fell to 1.35, down from 1.77 the previous week. The current Bull/Bear ratio has fallen substantially from its peak at 3.36 set on 1/13/10, which was the highest bullish sentiment in 6 years. The 20-year range is 0.41 to 3.74, the median is 1.51, and the mean is 1.57.

VIX Fear Index rose to a 14-month high of 48.20 on 5/21/10. A high and rising VIX suggests increasing bearish sentiment. 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.

VXN Fear Index rose to a 14-month high of 48.89 on 5/21/10. A high and rising VIX suggests increasing bearish sentiment. VXN measures NASDAQ Volatility using a method comparable to that used for VIX.

ISEE Call/Put Ratio fell to .059 on 5/7/10, a low level that indicates bearish sentiment. Its 2-year mean is 1.20, and its typical range is 0.69 to 1.71, which represents two standard deviations from the mean.

CBOE Put/Call Ratio rose to 0.96 on 5/20/10, its highest level of the year. A high level indicates bearish sentiment. The 2-year mean is 0.70, and the typical range is 0.44 to 0.96, which represents two standard deviations from the mean.

The Dow Theory again confirmed a Bullish Major Trend on 4/26/10, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 18 months. The Dow Theory signaled the current 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. That 7/23/09 bullish signal reversed the previous bearish signal: the two Averages signaled a Primary Tide Bear Market on 11/21/07, when both Averages closed below their closing price lows of August 2007.

S&P 500 Composite (SPX) absolute price tested its low of 2/5/10 and closed slightly higher on 5/25/10. Although further bottom testing cannot be ruled out, holding the previous low suggests that bargain hunting demand appeared where it should have, technically speaking. SPX is still looking oversold for the short term. Support 1040.78, 1029.38, 1019.95, 1012.42, and 1008.55. Resistance 1173.57, 1219.80, 1220.03 and 1228.74.

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
1366.59, high of 6/17/2008
1335.63, high of 6/25/2008
1313.15, high of 8/11/2008
1274.42, high of 9/8/2008
1255.09, high of 9/12/2008
1238.81, Fibonacci 78.6% of 1,576.09 high
1228.74, Fibonacci 61.8% of 2007-2009 range
1220.03, high of 9/25/2008
1219.80, high of 4/26/2010
1173.57, high of 5/13/2010

S&P 500 Cash Index Potential Support
1040.78, low of 5/25/2010
1029.38, low of 11/2/2009
1019.95, low of 10/2/2009
1012.42, Gann 37.5% of 2009-2010 range
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

4.92% Indonesia MV, IDX
3.01% Chile MSCI iS, ECH
2.32% Oil, Crude, U.S. Oil Fund, USO
2.11% South Africa Index, EZA
1.58% Mexico Index, EWW
1.57% WilderHill Clean Energy PS, PBW
1.52% Russia MV, RSX
1.14% Silver Trust iS, SLV
1.13% Financial Preferred, PGF
1.08% Commodity Tracking, DBC
0.97% Preferred Stock iS, PFF
0.95% Transportation Av DJ, IYT
0.95% Gold Shares S.T., GLD
0.83% Latin Am 40, ILF
0.56% Value SmallCap S&P 600, RZV
0.54% Brazil Index, EWZ
0.50% Bond EmrgMkt JPM iS, EMB
0.44% Growth SmallCap VIPERs, VBK
0.42% Homebuilders SPDR, XHB
0.30% Agriculture DB PS, DBA
0.29% Small Cap VIPERs, VB
0.27% MidCap S&P 400 iS, IJH
0.26% Emerging 50 BLDRS, ADRE
0.24% SmallCap Russell 2000, IWM
0.24% MidCap S&P 400 SPDRs, MDY
0.22% Energy VIPERs, VDE
0.21% Industrial SPDR, XLI
0.19% Value MidCap S&P 400 B, IJJ
0.19% Water Resources, PHO
0.19% Bond, TIPS, TIP
0.17% Growth BARRA Small Cap 600, IJT
0.17% Semiconductor iS GS, IGW
0.17% Value SmallCap Russell 2000, IWN
0.16% Semiconductor SPDR, XSD
0.16% Canada Index, EWC
0.15% Growth MidCap 400 B, IJK
0.14% Growth SmallCap R 2000, IWO
0.12% Microcap Russell, IWC
0.11% Value MidCap Russell, IWS
0.11% Value SmallCap VIPERS, VBR
0.09% China LargeCap Growth G D H USX PS, PGJ
0.07% Bond, Corp, LQD
0.06% MidCap Russell, IWR
0.00% Emerging VIPERs, VWO
-0.03% Utilities VIPERs, VPU
-0.04% Utilities SPDR, XLU
-0.04% Bond Muni ATM-Free S&P iS, MUB
-0.05% Emerging Markets, EEM
-0.07% SmallCap S&P 600, IJR
-0.08% Bond, 1-3 Year Treasury, SHY
-0.11% Growth MidCap Russell, IWP
-0.11% Bond, Aggregate, AGG
-0.13% Value SmallCap S&P 600 B, IJS
-0.13% China 25 iS, FXI
-0.16% Natural Resource iS GS, IGE
-0.18% Value 1000 Russell, IWD
-0.20% Bond, 10 Year Treasury, IEF
-0.21% REIT VIPERs, VNQ
-0.21% Energy SPDR, XLE
-0.25% Dividend DJ Select, DVY
-0.26% South Korea Index, EWY
-0.27% Energy DJ, IYE
-0.27% Biotech SPDR, XBI
-0.28% Bond, 20+ Years Treasury, TLT
-0.30% LargeCap Blend S&P=Weight R, RSP
-0.31% Consumer Discretionary SPDR, XLY
-0.33% Energy Global, IXC
-0.34% REIT Wilshire, RWR
-0.36% Metals & Mining SPDR, XME
-0.38% Dividend High Yield Equity PS, PEY
-0.39% Dividend SPDR, SDY
-0.39% Real Estate US DJ, IYR
-0.41% Value VIPERs, VTV
-0.42% Blend Total Market VIPERs, VTI
-0.44% Networking, IGN
-0.45% LargeCap 1000 R, IWB
-0.46% LargeCap Blend Russell 3000, IWV
-0.47% Financials VIPERs, VFH
-0.48% Value S&P 500 B, IVE
-0.48% Financial DJ US, IYF
-0.49% Value LargeCap Dynamic PS, PWV
-0.49% Basic Materials DJ US, IYM
-0.53% Realty Cohen & Steers, ICF
-0.55% LargeCap VIPERs, VV
-0.55% Dividend International, PID
-0.56% Singapore Index, EWS
-0.59% United Kingdom Index, EWU
-0.60% S&P 500 SPDRs LargeCap Blend, SPY
-0.62% Capital Markets KWB ST, KCE
-0.63% Health Care SPDR, XLV
-0.63% Growth VIPERs, VUG
-0.64% Financial Services DJ, IYG
-0.64% Turkey MSCI iS, TUR
-0.65% S&P 500 iS LargeCap Blend, IVV
-0.65% Consumer Staples SPDR, XLP
-0.69% Financial SPDR, XLF
-0.70% Info Tech VIPERs, VGT
-0.73% Pacific ex-Japan, EPP
-0.74% Dividend Appreciation Vipers, VIG
-0.78% LargeCap Blend S&P 100, OEF
-0.78% DIAMONDS (DJIA), DIA
-0.79% Materials SPDR, XLB
-0.81% Taiwan Index, EWT
-0.83% Telecom DJ US, IYZ
-0.83% Malaysia Index, EWM
-0.84% Australia Index, EWA
-0.85% Thailand MSCI iS, THD
-0.85% Growth 1000 Russell, IWF
-0.87% Growth S&P 500/BARRA, IVW
-0.99% Technology SPDR, XLK
-1.02% India Earnings WTree, EPI
-1.03% Technology DJ US, IYW
-1.05% Pacific VIPERs, VPL
-1.09% Sweden Index, EWD
-1.09% Global ex US ACWI iS, ACWX
-1.10% India PS, PIN
-1.12% Growth LargeCap NASDAQ 100, QQQQ
-1.15% Bond Ex-US Treas, BWX
-1.16% Global 100, IOO
-1.20% Bond, High-Yield Corporate, HYG
-1.21% Growth EAFE MSCI, EFG
-1.25% Switzerland Index, EWL
-1.26% Japan Index, EWJ
-1.31% Small Cap EAFE MSCI iS, SCZ
-1.41% Europe 350 S&P Index, IEV
-1.48% EAFE Index, EFA
-1.56% Germany Index, EWG
-1.63% Netherlands Index, EWN
-1.80% Value EAFE MSCI, EFV
-1.82% Belgium Index, EWK
-1.83% European VIPERs, VGK
-1.98% Hong Kong Index, EWH
-2.12% Austria Index, EWO
-2.15% France Index, EWQ
-2.53% EMU Europe Index, EZU
-2.72% Italy Index, EWI
-4.66% Spain Index, EWP