S&P prices, indicators gaining positive momentum

Market Snapshot for session ending 9-15-11:

Market Overview – What We Know:

• Market strength Thursday caused S&P 500 to rise above statistical resistance at upper edge of 10-day Price Channel (1204-1205).
• Next short-term resistance holds at August 31 intraday high (1230.71--S&P 500).
• Trading volume in S&P declined 11% Thursday, despite price gains.
• Short-term Momentum and Trading Oscillators were last positive.
• Cumulative Volume in S&P 500 and S&P Emini has taken on some life to extent short-term resistance trendline in both has been fractured on upside via strength. CV in Emini is currently above August 31 plot high when S&P was at 1230.71.
• Price action since August lows continues to look like reflex rally within context of Intermediate Cycle negative. But strength above 1230.71 would suggest a quick move to major resistance at Head and Shoulders “Neckline” (1255-1270).
• Resolution of short-term bear flag pattern would require downside break of defined trendline stretching back to August lows.
• Daily CPFL was positive again following Wednesday’s reversal of 28 days of negativity. The CPFL Ratio was last positive by 3.55 to 1.
• Daily MAAD was positive Thursday with 18 higher and 2 lower.

Market Overview – What We Think:

• Improvement in Cumulative Volume in both S&P 500 and S&P Emini could be an indication S&P has completed “B” leg of A-B-C correction from August 31 (1230.71) through September 12 low (1136.07).
• If so, and if strength carries S&P back above 1230.71, we could see “C” leg rally to 1255-1270 and Head and Shoulders “Neckline.”
• Break above 10-Day Price Channel at 1204-1205 Thursday gives credence to possibility for further rebounding action.
• The potential for more rebounding strength aside, we continue to think price action since August lows is consistent with bear move retracement.
• And we continue to think its unlikely major resistance at “Neckline” point of S&P 500 (1255-1270) will be overcome before short-term trend turns negative.
• Breaking of losing streak Wednesday in CPFL after 28 days of net negativity with positive follow-through Thursday is favorable sign, but positive change has probably come in the latter stages of short-term rally that is toward end game, or close to it.
• In event another wave of selling develops, its likely Momentum on long-term trend will turn negative to confirm a reversal of bull trend in effect since March 2009.

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