Index topping formation resolved, down volume expands

Market Snapshot:

 

Last

Week Chg

Week %Chg

S&P 500 Index

1199.38

-92.90

-7.1%

Dow Jones Industrials

11444.61

-638.84

-5.2%

NASDAQ Composite

2532.41

-223.97

-8.1%

Value Line Arithmetic Index

2622.99

-279.32

-9.6%

Market Cycle Status:

Minor Cycle
(Short-term trend lasting days to a few weeks)

Intermediate Cycle
(Medium trend lasting weeks to several months)

Major Cycle
(Long-term trend lasting several months to years)

Negative

Negative

Positive / Neutral

Week’s Market Highlights:

  • Sharp losses in major indexes last week re-asserted Minor and Intermediate Cycle negativity and seriously threatened Major Cycle uptrend.
  • Last Thursday's 512.76 decline in Dow Jones Industrials was the ninth largest trading loss in a single session in stock market history.
  • Cumulative Volume in both the S&P Cash Index and CV in the S&P Emini futures contract declined below defined long-term uptrends in effect since March 2009.
  • Cumulative Volume in S&P 500 Emini also broke below long-term support lows at the March 2009 bottom on highest trading volume in contract history.
  • All major indexes declined below 200-Day Moving Averages.
  • Topping action since mid-February has proved to be classic Head and Shoulders Top which resolved itself on the downside on sharply higher volume.

That was quite a week wasn’t it? History making. Not only did our prescient political class on its way to economic Elysium manage to "hammer out" a "ground-breaking" compromise that saved the country from possible default, forget about the $66 Trillion (that’s 14 digits folks) in future liabilities that extend outward nearly infinite light years past the star Alnitak in the Orion Constellation, but the Standard and Poor’s Corporation gave a giant thumbs up to those Congressional efforts by downgrading U.S. debt for the first time in 70 years! Way to go Larry, Curly and Moe "Where no man has gone before."

And over at the financial media, print and otherwise, there was consternation as to why the market declined "despite seemingly positive news that President Barak Obama signed the long-awaited agreement to lift the federal borrowing limit…." One commentator at a major financial network, or was it the Cartoon Channel, said, "But what does it all mean?" Oh boy. Yet again the financial media eagerly attempted to coordinate news with market price action. As we suggested in our Market Summary last week, such endeavors can prove to be Quixotic since extant trends have historically tended to trump news justification. "Back to you, Fred…."

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