Fear

by Robert W. Colby

VIX Fear Index rose to 32.07, its highest level in 13 months. Options players appear to be growing more fearful as the stock price decline accelerates.

The S&P 500 Composite (SPX, 1,200.07) fell 60.27 points or 4.78% on Thursday, August 4, 2011. NYSE volume rose 33% to confirm the downtrend.

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.

Bear Markets typically unfold in three moves down, stretching out in time over several quarters or more. The first move down occurs when far-sighted investors sell based on their experienced judgment that high valuations and booming corporate earnings are unsustainable. The second move down reflects panic as a now fearful public dumps at any price the same stock they just recently bought at much higher prices. The final move down results from distress selling and the need to raise cash.

Stock Market Indicators

NASDAQ Composite/S&P 500 Relative Strength Ratio has been firm since bottoming on 6/20/11. Although the Ratio’s 50-day SMA remains below the 200-day SMA, the spread is closing and the SMAs may cross in days ahead. Absolute price broke down below 8-monthlows on 8/4/11 and is bearish.

Emerging Markets Stocks ETF (EEM) Relative Strength Ratio (EEM/SPY) broke down below the 50-day SMA on 8/4/11. It remains below its 200-day SMA. And the 50-day SMA remains below the 200-day SMA, so the trend is bearish. Absolute price is bearish: EEM broke down below 10-month lows on 8/4/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) has been in a major long-term downtrend since peaking on 11/27/07. The Ratio is below its 50-day SMA, below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 10-month lows on 8/4/11.

Foreign Stocks ETF (EFA) Relative Strength Ratio (EFA/SPY) has been in a major long-term downtrend since peaking on 11/27/07. The Ratio fell below its 50-day SMA on 8/1/11, remains below the 200-day SMA, and the 50-day SMA remains below the 200-day SMA. Absolute price has been weak since 5/2/11 and broke down below 10-month lows on 8/4/11.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio (OEX/SPX) rose above the highs of the previous 6 months on 8/4/11, confirming a medium-term recovery. Longer term, OEX/SPX fell below 28-year lows on 5/26/11, confirming a bearish major trend. Absolute price of OEX plunged below its June closing price low on 8/4/11 and is bearish.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio (IWM/SPY) fell below 6-month lows on 8/4/11. IWM/SPY appears bearish for the short term and medium term.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio (MDY/SPY) fell below 6-month lows on 8/4/11. MDY/SPY appears bearish for the medium term.

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 32.07 on 8/4/11, its highest level in 13 months. 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, 1,200.07) fell 60.27 points or 4.78% on Thursday, August 4, 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
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
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Fixed-Income Investments

Bond, iShares Barclays 20+ Year U.S. Treasury ETF (TLT) closed above the highs of the previous 10 months on 8/4/11, again confirming a significant uptrend. Support 96.31, 94.83, 93.14, 89.65, and 88.14. Resistance 106.32, and 109.34.

Junk/Investment-Grade Corporate Bond ETFs Relative Strength Ratio (JNK/LQD) fell below 2-year lows and fell further below its 20-, and 50-, and 200-day simple moving averages on 8/4/11, confirming a significant 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 5 weeks on 8/4/11, 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) closed above the highs of the previous 11 trading days on 8/4/11, suggesting a minor uptrend. On 7/21/11, UUP fell below the lower boundary line of a Symmetrical Triangle Consolidation Pattern from the low at 20.84 on 5/4/11. Support 20.91 and 20.84. Resistance 21.18, 21.74, 21.86, and 22.21.

Agriculture, PowerShares DB Agriculture Fund ETF (DBA) broke down below 4-week lows on 8/4/11, suggesting a downtrend. In the longer time frame. DBA may be forming a bearish Descending Triangle Top Reversal Pattern since its high at 35.58 set on 3/4/11. Support 31.65, and 31.46. Resistance 33.42, 34.83, and 35.58.

Crude Oil, United States Oil ETF (USO) fell below the lows of the previous 10 months on 8/4/11, suggesting a significant downtrend. Support 30.93 and 22.74. Resistance 39.25, 40.74, and 45.60.

Gold, SPDR Gold Shares ETF (GLD) rose above all-time highs early on 8/4/11 but reversed to close lower. Minor price pullbacks are to be expected in bullish price trends, but 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: 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 further below its 50- and 200-day SMAs on 8/4/11. GDX/GLD fell below 27-month lows on 6/17/11, which was a bearish indication for the long term. The Ratio is down substantially since its peak on 4/8/11, and the main trend remains bearish.

Silver, iShares Silver Trust ETF (SLV) fell below 3-week lows on 8/4/11, suggesting a pullback. Longer term, Silver appears to have emerged on the bullish side of a 2-month Triangle Consolidation. Support 35.29, 34.02, and 31.97. Resistance: 44.71 and 48.35.

Silver/Gold ETFs Ratio (SLV/GLD) fell below 3-week lows on 8/4/11, suggesting a pullback.

Copper, iPath DJ-UBS Copper TR Sub-Idx ETN (JJC ) fell further below the lows of the previous 4 weeks on 8/4/11, confirming a short-term downtrend. Strength in Copper suggests confidence in the economic outlook, while Weakness suggests doubts about the future. Support 52.93, 52.12, 51.13. Resistance: 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

9.44% , SDS , Short 200% S&P 500 PS, SDS
3.56% , TLT , Bond, 20+ Years Treasury, TLT
9.05% , QID , Short 200% QQQ PS, QID
1.96% , TLH , Bond 10-20 Year US Treas, TLH
8.59% , DXD , Short 200% Dow 30 PS, DXD
1.64% , VMC , VULCAN MATERIALS
4.69% , SH , Short 100% S&P 500, SH
1.32% , IEF , Bond, 10 Year Treasury, IEF
0.42% , PCG , PG&E
0.53% , AGG , Bond, Aggregate, AGG
0.33% , GVI , Bond Interm U.S. Gov, GVI
0.72% , LQD , Bond, Corp, LQD
0.88% , TIP , Bond, TIPS, TIP

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name

-27.04% , CTB , COOPER TIRE
-4.12% , XLG , LargeCap Rydex Rus Top 50, XLG
-5.64% , ADRD , Developed 100 BLDRS, ADRD
-4.56% , PUI , Utilities, PUI
-11.20% , LAMR , Lamar Advertising Company
-7.02% , EWU , United Kingdom Index, EWU
-3.28% , UTH , Utilities H, UTH
-6.17% , ACWX , Global ex US ACWI iS, ACWX
-15.39% , CECO , CAREER EDUCATION CORP
-7.49% , PXE , Energy Exploration & Prod, PXE
-10.20% , TIN , TEMPLE INLAND
-20.49% , MTG , MGIC INVESTMENT
-6.22% , IWP , Growth MidCap Russell, IWP
-11.61% , GPS , GAP
-4.41% , EIS , Israel MSCI iS, EIS
-10.28% , SIL , Silver Miners Global X, SIL
-9.61% , NWL , NEWELL RUBBER
-6.86% , XSD , Semiconductor SPDR, XSD
-8.14% , EWQ , France Index, EWQ
-5.98% , JKJ , SmallCap Core iS M, JKJ
-9.91% , BHH , Internet B2B H, BHH
-5.03% , IWW , Value LargeCap Russell 3000, IWW
-6.49% , IFF , INTL FLAV & FRAG
-9.47% , ZEUS , Olympic Steel, ZEUS
-9.99% , WYN , Wyndham Worldwide
-7.24% , DISH , EchoStar Communications
-14.50% , HGSI , Human Genome Sciences Inc
-8.15% , TUR , Turkey MSCI iS, TUR
-9.29% , GT , GOODYEAR TIRE
-9.74% , WOR , WORTHINGTON INDS
-5.81% , ADRU , Europe 100 BLDRS, ADRU
-5.14% , PEJ , Leisure & Entertainment, PEJ
-9.23% , KWT , Solar Energy MV, KWT
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

One-Day Ranking of Major ETFs, Ranked from Strongest to Weakest of the Day:
% Price Change, ETF Name, Symbol

3.56% Bond, 20+ Years Treasury, TLT
1.32% Bond, 10 Year Treasury, IEF
0.88% Bond, TIPS, TIP
0.72% Bond, Corp, LQD
0.53% Bond, Aggregate, AGG
0.27% Bond Muni ATM-Free S&P iS, MUB
0.09% Bond, 1-3 Year Treasury, SHY
0.00% Bond Treasury Short-Term iS, SHV
-0.48% Bond EmrgMkt JPM iS, EMB
-0.53% Gold Shares S.T., GLD
-1.46% Bond Ex-US Treas, BWX
-1.96% Agriculture DB PS, DBA
-2.55% Financial Preferred, PGF
-2.68% Preferred Stock iS, PFF
-2.88% Bond, High-Yield Corporate, HYG
-3.03% Bond, High-Yield Junk, JNK
-3.12% Consumer Staples SPDR, XLP
-3.19% Malaysia Index, EWM
-3.27% Utilities SPDR, XLU
-3.32% Utilities VIPERs, VPU
-3.46% Dividend High Yield Equity PS, PEY
-3.79% Commodity Tracking, DBC
-3.82% Thailand MSCI iS, THD
-3.83% Hong Kong Index, EWH
-3.86% Dividend SPDR, SDY
-3.94% Dividend DJ Select, DVY
-3.98% Health Care SPDR, XLV
-4.04% Technology SPDR, XLK
-4.13% China 25 iS, FXI
-4.22% Dividend Appreciation Vipers, VIG
-4.28% DIAMONDS (DJIA), DIA
-4.35% India Earnings WTree, EPI
-4.39% Singapore Index, EWS
-4.52% Technology DJ US, IYW
-4.58% LargeCap Blend S&P 100, OEF
-4.65% QQQ Nasdaq 100 Trust, QQQ
-4.65% Growth S&P 500/BARRA, IVW
-4.66% Value LargeCap Dynamic PS, PWV
-4.68% S&P 500 SPDRs LargeCap Blend, SPY
-4.69% Info Tech VIPERs, VGT
-4.72% India PS, PIN
-4.72% S&P 500 iS LargeCap Blend, IVV
-4.74% Dividend International, PID
-4.80% Value VIPERs, VTV
-4.80% Canada Index, EWC
-4.83% Real Estate US DJ, IYR
-4.86% Taiwan Index, EWT
-4.86% Value S&P 500 B, IVE
-4.87% Consumer Discretionary SPDR, XLY
-4.89% REIT VIPERs, VNQ
-4.92% Financial DJ US, IYF
-4.94% LargeCap VIPERs, VV
-4.96% Value 1000 Russell, IWD
-4.97% LargeCap 1000 R, IWB
-5.02% Blend Total Market VIPERs, VTI
-5.03% Growth 1000 Russell, IWF
-5.06% Value SmallCap S&P 600 B, IJS
-5.06% Financial SPDR, XLF
-5.06% Transportation Av DJ, IYT
-5.07% LargeCap Blend Russell 3000, IWV
-5.10% Financials VIPERs, VFH
-5.10% Growth VIPERs, VUG
-5.14% Indonesia MV, IDX
-5.18% REIT Wilshire, RWR
-5.21% Realty Cohen & Steers, ICF
-5.23% Oil Fund PowerShares, DBO
-5.23% Emerging 50 BLDRS, ADRE
-5.27% Telecom DJ US, IYZ
-5.28% Mexico Index, EWW
-5.29% LargeCap Blend S&P=Weight R, RSP
-5.29% Frontier Markets Guggenheim , FRN
-5.35% SmallCap S&P 600, IJR
-5.35% Financial Services DJ, IYG
-5.36% China LargeCap Growth G D H USX PS, PGJ
-5.36% Industrial SPDR, XLI
-5.38% Water Resources, PHO
-5.43% Chile MSCI iS, ECH
-5.44% Value MidCap Russell, IWS
-5.45% Networking, IGN
-5.49% Microcap Russell, IWC
-5.53% Growth BARRA Small Cap 600, IJT
-5.54% Value SmallCap Russell 2000, IWN
-5.61% Switzerland Index, EWL
-5.64% Global 100, IOO
-5.69% Value SmallCap VIPERS, VBR
-5.70% Value MidCap S&P 400 B, IJJ
-5.72% Emerging Markets, EEM
-5.72% Emerging VIPERs, VWO
-5.73% Capital Markets KWB ST, KCE
-5.74% MidCap Russell, IWR
-5.77% Semiconductor iS IGW, SOXX
-5.79% Homebuilders SPDR, XHB
-5.83% Latin Am 40, ILF
-5.93% MidCap S&P 400 iS, IJH
-5.95% Oil, Crude, U.S. Oil Fund, USO
-6.02% MidCap S&P 400 SPDRs, MDY
-6.03% SmallCap Russell 2000, IWM
-6.07% Japan Index, EWJ
-6.08% Small Cap VIPERs, VB
-6.10% Growth MidCap 400 B, IJK
-6.17% Pacific ex-Japan, EPP
-6.17% Global ex US ACWI iS, ACWX
-6.19% Pacific VIPERs, VPL
-6.22% Growth MidCap Russell, IWP
-6.30% Belgium Index, EWK
-6.34% Netherlands Index, EWN
-6.43% Growth SmallCap VIPERs, VBK
-6.54% Growth SmallCap R 2000, IWO
-6.61% South Korea Index, EWY
-6.71% Brazil Index, EWZ
-6.71% Russia MV, RSX
-6.77% Energy Global, IXC
-6.78% Materials SPDR, XLB
-6.85% Energy DJ, IYE
-6.85% Energy SPDR, XLE
-6.86% Semiconductor SPDR, XSD
-6.96% Value EAFE MSCI, EFV
-6.98% EAFE Index, EFA
-7.01% Growth EAFE MSCI, EFG
-7.02% United Kingdom Index, EWU
-7.06% Australia Index, EWA
-7.09% Small Cap EAFE MSCI iS, SCZ
-7.14% Energy & Nat Res iS GS, IGE
-7.20% Energy VIPERs, VDE
-7.25% Silver Trust iS, SLV
-7.27% Europe 350 S&P Index, IEV
-7.39% Austria Index, EWO
-7.58% European VIPERs, VGK
-7.68% EMU Europe Index, EZU
-7.93% Spain Index, EWP
-8.03% Basic Materials DJ US, IYM
-8.04% Germany Index, EWG
-8.14% France Index, EWQ
-8.15% Turkey MSCI iS, TUR
-8.19% WilderHill Clean Energy PS, PBW
-8.40% Italy Index, EWI
-8.85% South Africa Index, EZA
-9.17% Metals & Mining SPDR, XME
-9.74% Sweden Index, EWD
-10.10% Biotech SPDR, XBI
-10.28% Silver Miners Global X, SIL

 


Article reprinted in full : http://www.traderplanet.com/newsletter_articles/view/5303/distribution:7

Friday, August 5th, 2011 Uncategorized

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