Stock market takes breather; CPFL fades to new low

Market Snapshot for session ending 10-11-11:

 

Last

Day Change

%Change

S&P 500 Index

1195.54

+.65

+.05%

Dow Jones Industrials

11416.30

-16.87

-.15%

NASDAQ Composite

2583.03

+16.98

+.66%

Value Line Arithmetic Index

2548.99

+11.30

+.45%

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

Intermediate Cycle
(Medium trend lasting weeks to several months)
Neutral / Positive

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

Market Overview – What We Know:

  • Index prices took breather Tuesday following Monday’s sharp gains.
  • Volume in S&P 500 was up a fraction from Monday’s levels.
  • S&P was last plotted just below secondary downtrend line (1214) connecting August 31 and September 20 intraday highs (1230.71 and 1220.39).
  • Short-term Momentum and our proprietary Trading Oscillators remain positive, but all are now moderately “Overbought” on Minor Cycle.
  • Intermediate Cycle remains “Oversold” and in zone of opportunity.
  • Intermediate Cycle Price Channel resistance in S&P 500 was last plotted at 1241.71.
  • Major Cycle Momentum remains marginally negative in all of major indexes.
  • Daily MAAD was positive again Tuesday, but indicator remains below defined downtrend line stretching back to early March statistical high on daily cycle.
  • CPFL was negative Tuesday and indicator declined to new Intermediate Cycle low with negative Daily CPFL Ratio of 1.43 to 1.

Market Overview – What We Think:

  • “Oversold” Intermediate Cycle continues to offer upside potential, but without strength above secondary downtrend line in S&P 500 at 1214 with subsequent upside follow-through, we must continue to view recent strength as merely a rebound.
  • While Intermediate Cycle could allow for a larger rally, possibility market could fail in face of resistance and then resume downtrend would simply cause intermediate trend to get more “Oversold.”
  • Lacking upside confirmation by Cumulative Volume, CPFL, and MAAD, recent strength would be viewed as nothing but countertrend rebound.
  • There is also issue of substantial “Overhead” resistance stretching up to May highs that begins at breakdown level of Head and Shoulders Top formed between February and late July with a “Neckline,” now major resistance, toward 1255.
  • If Intermediate Cycle gains positive traction, strength will depend on market’s ability to overcome and absorb resistance as intermediate “Oversold” conditions are eliminated.

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