Exit Strategies Seen As Prudent

“In light of uncertainty about the economic outlook, it was seen as prudent to consider possible exit strategies for a range of potential economic outcomes.” --Federal Open Market Committee minutes released on Tuesday, April 5, 2011

S&P 500 Composite rose above 6-week highs intraday at 1:11 p.m. but reversed to close lower by 0.24 points or 0.02% on Tuesday. Trading volume rose 28% on the NYSE to confirm the downside price reversal. Volume indicators continue to underperform price indicators: volume has remained at low levels as price rebounded from its low of 3/16/11, possibly reflecting trader hesitation to chase prices higher. The minor short-term trend became overbought and has lost upside momentum. Each of the past 5 trading days are Spinning Top Candlesticks, indicating indecision and exhaustion. The SPX and other large cap indexes failed to close above closing price highs of the previous 2-years and, therefore, did not confirm Monday's 2-year highs for the Dow-Jones Industrials and Transports, both of which closed lower on Tuesday, demonstrating a lack of upside follow through.

The short-term trend since 3/16/2011 obviously has been up, driven by short covering, general expectations of rising corporate profits, and merger activity. This is typical late-cycle behavior. After two years of bull trend that has doubled stock prices from their 2009 lows, it is only prudent to focus on protecting your capital.

Materials SPDR stock sector ETF Relative Strength Ratio rose above 2-year highs and remains bullish.

Technology SPDR stock sector ETF Relative Strength Ratio fell below 13-month lows and remains bearish.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio fell further below 28-year lows, again reconfirming its preexisting bearish major trend.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio rose above all-time highs, again reconfirming its preexisting bullish major trend.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio rose further above all-time highs, thereby reconfirming its preexisting bullish major trend

Gold rose above previous al-time highs, again reconfirming its preexisting bullish major trend.

Gold Mining Stocks ETF Relative Strength Ratio rose above 3-month highs, possibly signaling a new uptrend. My 50/200 Simple Moving Average System is neutral, with the Ratio's 50-day SMA below its 200-day SMA.

Silver rose above previous 31-year highs, again reconfirming its preexisting bullish major trend

Silver/Gold Ratio rose above 27-year highs, again reconfirming its preexisting bullish major trend.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio rose above 2-year highs on 4/5/11. The Ratio has been in a rising trend since making a low on 8/24/10. This rising Relative Strength Ratio reflects fixed-income investors' preference for inflation-protected TIPs over the unprotected 7-10 Year U.S. Treasury Note ETF since 8/24/10.
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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
71.00% , NSM , NATL SEMICONDUCT
8.42% , ISIL , INTERSIL CORP
1.19% , IYM , Basic Materials DJ US, IYM
5.90% , CIEN.O , CIENA
2.77% , LIZ , LIZ CLAIRBORNE
2.98% , JCP , JC PENNEY
4.41% , SIRI , Sirius Satellite
0.63% , RFV , Value MidCap S&P 400, RFV
4.56% , ODP , OFFICE DEPOT
5.15% , RSH , RADIOSHACK
2.76% , TJX , TJX
1.09% , HHH , Internet H, HHH
4.38% , NEM , NEWMONT MINING
3.95% , SIL , Silver Miners Global X, SIL
3.48% , LTD , LIMITED BRANDS
2.79% , AA , ALCOA
2.00% , SYY , SYSCO
1.70% , TXN , TEXAS INSTRUMENT
3.37% , TER , TERADYNE
1.05% , RTH , Retail H, RTH
1.12% , LNCR , Lincare Holdings Inc
1.56% , LBTYA , Liberty Global Inc.
1.60% , LLTC , LINEAR TECH
1.02% , COST , COSTCO WHOLESAL
1.73% , ERTS , ELECTRONIC ARTS
2.18% , SWY , SAFEWAY
1.53% , ROST , Ross Stores Inc
1.39% , R , RYDER SYSTEM
1.53% , XBI , Biotech SPDR, XBI
1.58% , GLD , Gold Shares S.T., GLD
1.38% , LEN , Lennar Corp.
1.42% , YHOO , YAHOO
2.37% , SMH , Semiconductor H, SMH

Bearish Stocks: Falling Price and Rising Volume
Ranked by Price Change * Volume Change
% Price Change, Symbol, Name
-7.46% , LAMR , Lamar Advertising Company
-4.18% , KBH , KB HOME
-1.10% , EWO , Austria Index, EWO
-3.16% , GOOG , Google
-0.21% , EWI , Italy Index, EWI
-1.60% , WLP , WELLPOINT HEALTH
-1.53% , CI , CIGNA
-1.65% , BEN , FRANKLIN RSC
-0.88% , EWP , Spain Index, EWP
-1.89% , FISV , FISERV
-1.56% , MU.O , MICRON TECH
-1.75% , DHI , D.R. HORTON, DHI
-1.79% , YUM , YUM BRANDS
-0.68% , BDH , Broadband H, BDH
-2.23% , LEG , LEGGETT & PLATT
-2.27% , GILD , Gilead Sciences Inc
-0.93% , PNC , PNC FINL SVC
-1.97% , EWJ , Japan Index, EWJ
-1.67% , TMO , THERMO ELECTRON
-0.54% , BBH , Biotech H, BBH
-0.40% , IYH , Healthcare DJ, IYH
-1.14% , LNC , LINCOLN NATL
-1.30% , CLX , CLOROX
-0.89% , ETR , ENTERGY
-0.54% , IYZ , Telecom DJ US, IYZ
-1.42% , WPO , Washington Post
-0.36% , GNTX , Gentex Corporation
-0.87% , GLW , CORNING
-0.40% , TLT , Bond, 20+ Years Treasury, TLT
-0.61% , MON , MONSANTO
-1.16% , VPL , Pacific VIPERs, VPL
-0.48% , SCZ , Small Cap EAFE MSCI iS, SCZ
-0.75% , MZZ , Short 200% MidCap 400 PS, MZZ

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

Energy Bullish, Over Weight. The Relative Strength Ratio rose further above 2-year highs on 3/30/11, again reconfirming its preexisting bullish major trend. Absolute price of XLE rose above 2-year closing price highs on 3/30/11, reconfirming its preexisting bullish major trend. Support 76.99, 2.90, 72.85, 68.73, 67.49, 65.25, 65.03, 60.96, 60.21, 57.70, 55.68, 53.22, 50.33, 48.56, 46.16, and 43.66. Resistance 83.27 and 91.42.

Materials Bullish, Over Weight. The Relative Strength Ratio rose above 2-year highs on 4/5/11 and remains bullish. Absolute price rose above 2-year highs on 4/5/11 and remains bullish. Support 38.78, 38.06, 36.44, 34.20, 33.70, 32.36, 29.88, 29.43, and 27.67. Resistance 41.06, 43.04, 45.21, 45.21, and 46.54.

Industrial Bullish, Over Weight. The Relative Strength Ratio rose above 12-year highs on 4/4/11 and remains bullish. Absolute price rose above 2-year highs on 4/1/11 and remains bullish. Support 35.08, 35.03, 31.82, 31.58, 30.79, 30.51, 30.32, 29.77, and 27.67. Resistance 38.22, 39.02, and 39.97.

Consumer Discretionary Neutral, Market Weight. The Relative Strength Ratio appears to be in a 6-week trading range and remains neutral. Absolute price also remains neutral. Support 36.61, 36.13, 35.32, 35.02, 34.78, 33.94, 33.11, 32.66, 31.70, 29.80, 28.64, 28.21, and 26.62. Resistance 39.58, 40.02, 40.13, and 40.70.

Technology Bearish, Under Weight. The Relative Strength Ratio fell below 13-month lows on 4/5/11. The Ratio gave a clear bearish signal on 3/22/11 when the 50-day SMA of the RS Ratio crossed below the 200-day SMA. Absolute price of XLK fell below 14-week lows on 3/16/11 and remains neutral. Support 24.87, 23.87, 23.74, 23.64, 23.56, 22.68, 22.53, 21.60, 20.01, and 19.51. Resistance 26.66, 27.09, 27.43, 27.63, and 28.60.

Health Care Neutral, Market Weight. The Relative Strength Ratio remains neutral. Support 32.57, 31.43, 30.14, 30.11, 29.87, 28.00, 27.49. Resistance 33.55 and 33.74.

Consumer Staples Neutral, Market Weight. The Relative Strength Ratio remains neutral. The Ratio is close to turning bearish again, however. Absolute price is bullish. Support 29.64, 28.71, 28.22, 28.04, 27.76, 27.63, 27.46, 26.34, 25.30, and 24.95. Resistance 30.29.

Financial Bearish, Under Weight. The Relative Strength Ratio fell further below 3-month lows on 3/31/11 and remains bearish. Absolute price broke down below 10-week lows on 3/16/11 and remains neutral. Support 15.79, 15.39, 15.08, 14.36, 14.25, 14.20, 13.29, and 13.08. Resistance 16.51, 16.85, 17.20, and 17.87.

Utilities Bearish, Under Weight. The Relative Strength Ratio fell below the lows of the previous 2 weeks on 3/25/11 and remains bearish. Absolute price broke down below 3-month lows on 3/16/11 and remains neutral. Support 30.74, 30.53, 29.66, 27.91, 27.44, and 25.76. Resistance 32.20, 32.89, 33.00, 34.89, and 36.24.
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Emerging Markets Stocks ETF Relative Strength Ratio has been rising since making a low on 2/22/11. The trend is technically neutral, with 50-day SMA below the 200-day SMA.

Foreign Stocks ETF Relative Strength Ratio fell below 11-month lows on 3/16/11, confirming its preexisting bearish trend.

NASDAQ Composite/S&P 500 Relative Strength Ratio is neutral between is 50-day SMA and 200-day SMA.

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio fell further below 28-year lows on 4/5/11, again reconfirming its preexisting bearish major trend.

The Small Cap Russell 2000 Index/Large Cap Relative Strength Ratio rose further above all-time highs on 4/5/11, thereby reconfirming its preexisting bullish major trend.

The S&P Mid Cap 400/Large Cap Relative Strength Ratio rose further above all-time highs on 4/5/11, thereby reconfirming its preexisting bullish major trend.

Crude Oil nearest futures contract price rose above 2-year highs on 4/4/11, thereby reconfirming its preexisting bullish major trend. Support 102.70, 97.02, 96.22, 95.14, 87.09, 83.85, 83.55, 80.28, 80.06, 79.84, 79.25, 78.86, 73.52, 72.63, 70.76, 70.35, 69.51, 68.59, 67.15, 65.05, and 64.24. Resistance 108.46, 110.30, 111.34, 120.42, 130.0, and 147.27.

Gold nearest futures contract price rose above previous al-time highs on 4/5/11, again reconfirming its preexisting bullish major trend. Support 1411.5, 1380.7, 1419.5, 1351.4, 1309.1, 1307.7, 1297.0, 1274.8, 1270.5, 1232.4, 1210.9, 1191.5, and 1155.6. Resistance: none.

Gold Mining Stocks ETF Relative Strength Ratio rose above 3-month highs on 4/5/11, possibly signaling a new uptrend. My 50/200 Simple Moving Average System is neutral, with the Ratio's 50-day SMA below its 200-day SMA.

Silver nearest futures contract price rose above previous 31-year highs on 4/5/11, again reconfirming its preexisting bullish major trend. Support 37.08, 36.43, 33.565, 31.695, 31.61, 30.265, 29.635, 26.30, 24.98, and 22.84. Resistance: 39.80, 40.50, and 50.35.

Silver/Gold Ratio rose above 27-year highs on 4/5/11, again reconfirming its preexisting bullish major trend.

Copper nearest futures contract price fell below 10-day lows on 4/1/11, confirming a bearish short-term trend. Copper appears to be in an intermediate-term downside correction since peaking at 4.6575 on 2/15/11. Strength in Copper suggests confidence in the economic outlook, while weakness suggests doubts. Support 4.212, 4.076, 3.9795, 3.6065, 3.3930, 3.1775, 2.9285, 2.8555, 2.8445, and 2.72. Resistance: 4.554, 4.6495, and 4.6575.

U.S. Treasury Bond nearest futures contract price continues to move sideways/choppy. Both the short-term trend and the larger 6-week trend appear uncertain. Support 119.11, 118.05, 117.04, 116.26, 115.15, 114.06, 113.04, and 112.15. Resistance 120.31, 122.08, 123.22, 123.26, 128.00 129.14, 129.27, 132.26, 133.00, 135.12, 135.19, 136.31, 137.31, and 142.31.

Junk/Investment-Grade Corporate Bonds Relative Strength Ratio has been stuck in a neutral trading range most of the time since peaking on 2/8/11.

U.S. Treasury Inflation Protected / U.S. Treasury 7-10 Year Relative Strength Ratio rose above 2-year highs on 4/5/11. The Ratio has been in a rising trend since making a low on 8/24/10. This rising Relative Strength Ratio reflects fixed-income investors' preference for inflation-protected TIPs over the unprotected 7-10 Year U.S. Treasury Note ETF since 8/24/10.

The U.S. dollar nearest futures contract price closed slightly lower on 4/5/11. The short-term trend appears neutral--but looks like it could turn weak in days ahead. Long term, USD fell below 11-month lows on 11/3/10, confirming a major downtrend. Support 75.885, 75.505, 74.27, and 70.80. Resistance 76.87, 77.675, 78.98, 79.34, 81.635, 81.935, 82.02, 83.64, 84.73, 85.36, 86.71, 88.80, 89.22, 89.71, and 92.53.

Advisory Service Sentiment: There were 51.6% Bulls versus 23.1% Bears as of 3/30/11, according to the weekly Investors Intelligence survey of stock market newsletter advisors. The Bull/Bear Ratio fell to 2.23, down from 2.26 the previous week, and now stands at its lowest level since November 2010. The Ratio also is down from peaks of 3.00 on 1/12/11, down from 3.06 on 4/21/10, and down from 3.36 on 1/13/10. No trend lasts forever, and so stock market newsletter advisors are gradually growing more cautious as the bull market matures. The Ratio's 20-year range is 0.41 to 3.74, the median is 1.56, and the mean is 1.63.

VIX Fear Index fell below its 6-week range on 4/1/11, hitting 16.44 intraday, and again confirming a return to bullish complacency. This follows a brief spike up to an intraday peak of 31.28 on 3/16/11. Fear was short-lived. 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 reconfirmed a Primary Tide Bull Market as of 4/4/11, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above closing price highs of the previous 2-years. The Dow Theory originally 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. While other Dow Theorists were fooled by the big downside Secondary Reaction in May and June 2010 and called a “Bear Market”, my interpretation of the Dow Theory has been steadily Bullish on the Primary Tide Trend every day since 7/23/09.

S&P 500 Composite rose above 6-week highs intraday at 1:11 p.m. but reversed to close lower by 0.24 points or 0.02% on Tuesday. Trading volume rose 28% on the NYSE to confirm the downside price reversal.

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
1344.07, high of 2/18/11
1338.21, high of 4/5/11

S&P 500 Cash Index Potential Support
1323.74, Fibonacci 78.6% of 2011 range
1305.26, low of 3/29/11
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
1232.85, low of 12/16/10
1228.74, Fibonacci 61.8% of 2007-2009 range
1227.08, high of 11/5/10
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

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

3.95% Silver Miners Global X, SIL
2.62% Semiconductor SPDR, XSD
2.24% Semiconductor iS IGW, SOXX
2.02% Silver Trust iS, SLV
1.58% Gold Shares S.T., GLD
1.53% Biotech SPDR, XBI
1.50% Metals & Mining SPDR, XME
1.19% Materials SPDR, XLB
1.19% Basic Materials DJ US, IYM
0.79% Energy & Nat Res iS GS, IGE
0.77% Growth SmallCap R 2000, IWO
0.71% United Kingdom Index, EWU
0.69% Chile MSCI iS, ECH
0.67% Growth SmallCap VIPERs, VBK
0.62% Microcap Russell, IWC
0.62% Growth BARRA Small Cap 600, IJT
0.59% Canada Index, EWC
0.57% Frontier Markets Guggenheim , FRN
0.54% SmallCap Russell 2000, IWM
0.50% Small Cap VIPERs, VB
0.42% Belgium Index, EWK
0.42% Value SmallCap VIPERS, VBR
0.41% Growth MidCap 400 B, IJK
0.37% Energy DJ, IYE
0.36% SmallCap S&P 600, IJR
0.35% MidCap S&P 400 iS, IJH
0.34% Growth MidCap Russell, IWP
0.33% Consumer Discretionary SPDR, XLY
0.32% MidCap S&P 400 SPDRs, MDY
0.31% Turkey MSCI iS, TUR
0.30% Energy SPDR, XLE
0.27% Homebuilders SPDR, XHB
0.26% Value MidCap S&P 400 B, IJJ
0.26% Europe 350 S&P Index, IEV
0.26% LargeCap Blend S&P=Weight R, RSP
0.24% Energy VIPERs, VDE
0.23% Preferred Stock iS, PFF
0.22% Value SmallCap Russell 2000, IWN
0.22% Financial Preferred, PGF
0.20% South Africa Index, EZA
0.20% South Korea Index, EWY
0.19% Financial Services DJ, IYG
0.17% Real Estate US DJ, IYR
0.16% Latin Am 40, ILF
0.15% European VIPERs, VGK
0.15% Growth 1000 Russell, IWF
0.15% MidCap Russell, IWR
0.13% Value SmallCap S&P 600 B, IJS
0.13% Netherlands Index, EWN
0.11% REIT Wilshire, RWR
0.11% Dividend Appreciation Vipers, VIG
0.10% Hong Kong Index, EWH
0.10% REIT VIPERs, VNQ
0.10% Emerging 50 BLDRS, ADRE
0.10% Consumer Staples SPDR, XLP
0.10% Commodity Tracking, DBC
0.09% WilderHill Clean Energy PS, PBW
0.09% Energy Global, IXC
0.09% LargeCap Blend Russell 3000, IWV
0.08% Networking, IGN
0.07% Value VIPERs, VTV
0.06% Info Tech VIPERs, VGT
0.06% Realty Cohen & Steers, ICF
0.06% Agriculture DB PS, DBA
0.06% Blend Total Market VIPERs, VTI
0.06% Bond, Corp, LQD
0.04% LargeCap 1000 R, IWB
0.04% France Index, EWQ
0.02% Pacific ex-Japan, EPP
0.02% LargeCap VIPERs, VV
0.02% Value S&P 500 B, IVE
0.00% Water Resources, PHO
0.00% Value MidCap Russell, IWS
0.00% Value LargeCap Dynamic PS, PWV
0.00% India Earnings WTree, EPI
0.00% Dividend High Yield Equity PS, PEY
0.00% Capital Markets KWB ST, KCE
0.00% Bond Muni ATM-Free S&P iS, MUB
-0.01% Value 1000 Russell, IWD
-0.02% S&P 500 SPDRs LargeCap Blend, SPY
-0.02% Financial DJ US, IYF
-0.03% EMU Europe Index, EZU
-0.03% Bond Treasury Short-Term iS, SHV
-0.04% Financial SPDR, XLF
-0.04% Thailand MSCI iS, THD
-0.05% Growth VIPERs, VUG
-0.06% Dividend SPDR, SDY
-0.06% Technology DJ US, IYW
-0.06% Dividend International, PID
-0.07% Taiwan Index, EWT
-0.07% Financials VIPERs, VFH
-0.08% Dividend DJ Select, DVY
-0.08% Mexico Index, EWW
-0.09% Global ex US ACWI iS, ACWX
-0.09% DIAMONDS , DIA
-0.10% LargeCap Blend S&P 100, OEF
-0.11% Bond, 1-3 Year Treasury, SHY
-0.11% Bond, High-Yield Corporate, HYG
-0.11% Australia Index, EWA
-0.11% S&P 500 iS LargeCap Blend, IVV
-0.12% Growth S&P 500/BARRA, IVW
-0.14% Global 100, IOO
-0.14% Growth EAFE MSCI, EFG
-0.15% Technology SPDR, XLK
-0.18% Bond, TIPS, TIP
-0.20% Switzerland Index, EWL
-0.20% Emerging Markets, EEM
-0.20% India PS, PIN
-0.21% Bond, Aggregate, AGG
-0.21% Italy Index, EWI
-0.22% Utilities VIPERs, VPU
-0.24% Bond EmrgMkt JPM iS, EMB
-0.24% Oil Fund PowerShares, DBO
-0.25% EAFE Index, EFA
-0.25% Value EAFE MSCI, EFV
-0.26% QQQ Nasdaq 100 Trust, QQQ
-0.26% Germany Index, EWG
-0.27% Bond, High-Yield Junk, JNK
-0.28% Emerging VIPERs, VWO
-0.29% Singapore Index, EWS
-0.30% Sweden Index, EWD
-0.33% Malaysia Index, EWM
-0.34% Brazil Index, EWZ
-0.35% China LargeCap Growth G D H USX PS, PGJ
-0.37% Industrial SPDR, XLI
-0.37% Oil, Crude, U.S. Oil Fund, USO
-0.40% Bond, 20+ Years Treasury, TLT
-0.41% Utilities SPDR, XLU
-0.45% Health Care SPDR, XLV
-0.46% Indonesia MV, IDX
-0.48% Small Cap EAFE MSCI iS, SCZ
-0.50% Bond, 10 Year Treasury, IEF
-0.52% Bond Ex-US Treas, BWX
-0.54% Telecom DJ US, IYZ
-0.59% Transportation Av DJ, IYT
-0.76% China 25 iS, FXI
-0.88% Spain Index, EWP
-1.10% Austria Index, EWO
-1.16% Pacific VIPERs, VPL
-1.23% Russia MV, RSX
-1.97% Japan Index, EWJ