Market stalls again as intermediate cycle hangs in limbo

Market Snapshot for session ending 10-13-11:

 

Last

Day Change

%Change

S&P 500 Index

1203.66

-3.59

-.30%

Dow Jones Industrials

11478.13

-40.71

-.35%

NASDAQ Composite

2620.24

+15.51

+.60%

Value Line Arithmetic Index

2586.26

-4.30

-.17%

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:

  • Equity prices stalled for second session in row Thursday and marginally below first resistance (1230.71) at August 31 intraday high and defined trendline (1213) connecting with the September 20 intraday high (1220.39).
  • Trading volume in S&P 500 backed off just over 17% with Cumulative Volume in S&P 500 and S&P Emini remaining somewhat weaker than prices.
  • Intermediate Cycle Price Channel high (1241.71) in S&P 500 looms just ahead at level which can act as statistical resistance.
  • Short-term Momentum and our proprietary Trading Oscillators remain positive, but all are toward “Overbought” territory on Minor Cycle.
  • Intermediate Cycle remains “Oversold” and in zone of opportunity.
  • Major Cycle Momentum remains marginally negative in all of major indexes.
  • Daily MAAD was marginally negative Thursday with 9 issues up and 11 down.
  • CPFL was fractionally positive Thursday and holding just above new Intermediate Cycle low made Wednesday with Daily CPFL Ratio positive by 1.006 to 1.

Market Overview – What We Think:

  • “Oversold” Intermediate Cycle continues to underscore upside potential, but there must be positive follow-through above downtrend line (1213) connecting late August and September highs (1230.71 and 1220.39), or recent strength could prove to be yet another aborted rally.
  • With significant resistance looming from 1255 in S&P 500 up to May high (1370.58), market could continue to face major resistance.
  • Fact that Cumulative Volume remains weaker than prices could be sign market internals remain weaker than market pricing.
  • And fact that CPFL remains weak is further evidence market sentiment, as measured by activity of options players, is still poor.
  • If Intermediate Cycle gains upside traction, strength will depend on market’s ability to overcome and absorb resistance as intermediate “Oversold” conditions are eliminated.

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