S&P hits, fractures short-term trendline, rebounds

Market Snapshot for session ending 9-12-11:

 

Last

Net Change

%Change

S&P 500 Index

11627.27

+8.04

+.70%

Dow Jones Industrials Average

11061.12

+68.99

+.63%

NASDAQ Composite Index

2495.09

+27.10

+1.10%

Value Line Arithmetic Index

2506.58

+12.99

+.52%

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

Intermediate Cycle
(Medium trend lasting weeks to several months)
Negative

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

Market Overview – What We Know:

  • Following marginal penetration of short-term uptrend line near 1143--S&P 500 under development since early August lows, bellwether issue rebounded Monday.
  • Trading volume in S&P deteriorated about 10% on positive move relative to Friday’s decline on increasing volume.
  • Cumulative Volume remains weak to extent CV indicator has yet to overcome statistical resistance put in place August 31. S&P prices have rallied above similar price resistance (1208.47).
  • Price action since August lows continues to look like bear trend rally with suggestion that time is running out on short-term rebound.
  • Market continues to trace out what could be classic bear “flag” on short-term cycle within context of still negative Intermediate Cycle.
  • Resolution of pattern would come with downside break below trendline stretching back to August lows with break below actual low (1101.54--S&P).
  • For 27th day in a row, Daily CPFL declined to new short-term low Monday with Put Dollar Volume exceeding Call Dollar Volume by 1.38 to 1.
  • Daily MAAD was up a touch by 11 issues to 9. New indicator lows could nonetheless follow with ease

Market Overview – What We Think:

  • Short-term trend could get a bit dicey in the sessions just ahead if no decisive downside break develops. Most Short-term indicators remain near neutral and we cannot preclude possibility market is completing “B” leg of A-B-C countertrend rally.
  • Break back above upper portion of 10-Day Price Channel near 1204 could result in challenge to August 31 Minor Cycle high in S&P at 1230.71 with subsequent follow-through to Head and Shoulders Neckline resistance at 1230.71.
  • Failure of Cumulative Volume in S&P 500 and S&P Emini to better mid-August indicator resistance is an indication weaker hands have been fueling buying for past month.
  • Price action and volume since August lows is consistent with bear move retracement.
  • Despite possibility for rebound toward 1255--S&P, we continue to believe it’s a remote possibility major resistance at Neckline level in S&P 500 will be overcome.
  • Ongoing failure of CPFL to show any enthusiasm for market on upside is bearish.
  • In event another wave of selling develops, it is likely Momentum on long-term trend will turn negative to confirm a reversal of bull trend in effect since March 2009.

Click charts to enlarge

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome