Well, the IRS instructions do not help, because they use terms such as "Foreign losses", but the do NOT define them.
However just for future reference, by sheer luck I was able to find definitions in "26 U.S. Code § 865 - Source rules for personal property sales" that (to my layman's understanding) appear to apply here: https://www.law.cornell.edu/uscode/text/26/865
According to this the gain from the sale of personal property (which I assume a stock sale to be) is generally sourced in the United States. One exception might potentially be, if one sells stocks of a foreign company on a foreign stock exchange and the tax treaty between the U.S. and that foreign country (where the exchange is based) calls for different treatment (subsection (h), (2), (A)).
But in general such a gain or loss would appear to be U.S. sourced, which would mean that it should not be reported on Form 1116 at all.
Disclaimer: I'm not a tax pro, so use this at your own personal risk.
