Stock market fades after retesting resistance levels

Market Snapshot for session ending 9-28-11:

Market Overview – What We Know:

• In face of solid resistance, S&P 500 and other major indexes reversed to downside Wednesday.
• While trading volume in the S&P 500 diminished by nearly 12%, CV could move to its lowest level since the May 2 high (1370.58) in S&P with only moderately more selling.
• CPFL declined to a new low Wednesday and was last negative for the eighth day in a row to reflect more call buying than put buying on a dollar value basis.
• S&P 500 must decline below August 9 intraday low (1101.54) to make a new low for move.
• Short-term readings remain near neutral levels.
• MAAD data was negative Wednesday and it would not take much more weakness in indicator to create a low below the market lows of early August.

Market Overview – What We Think:

• Another new low in CPFL Wednesday, suggests recent strength has been a short-covering rally with countertrend strength on short-term cycle within context of larger intermediate term negative.
• Solid resistance up to August 31 intraday high in S&P 500 (1230.71), let alone back to “Neckline” of Head and Shoulders pattern (1255) recently broken on downside, suggests odds are remote market will be above to overcome significant resistance any time soon.
• It would take little net selling to push MAAD indicator to new lows on Minor Cycle while positioning indicator for serious threat to March 2009 indicator lows on larger weekly trend to underscore fact “Smart Money” remains disenchanted with market.
• 10-Day Price Channel statistical resistance (1199.73)--S&P 500 on Thursday) should contain any near-term strength that develops.

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