Major indexes close to ‘Do or Die’ on minor cycle

Market Snapshot for session ending 10-20-11:

 

Last

Day Change

%Change

S&P 500 Index

1215.39

+5.51

+.46%

Dow Jones Industrials

11541.78

+37.15

+.32%

NASDAQ Composite

2598.62

-5.42

-.21%

Value Line Arithmetic Index

2583.00

+7.95

+.31%

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

  • Major indexes as measured by S&P 500 have been stuck in trading range for past seven sessions (1233.10-1190.58).
  • S&P 500 needs to break above upper edge of trading range (1233.10) to re-assert not only short-term positive, but also Intermediate Cycle which continues to offer upside potential via “Oversold” readings.
  • Biggest problem for short-term cycle is fact that Momentum and our proprietary Trading Oscillators remain extremely “Overbought.”
  • S&P 500 remains stalled just below 200-day exponential moving average (1234.00) and upper edge of defined 10-Week Price Channel high (1232.07). Decisive movement above those levels would be bullish.
  • Cumulative Volume in both S&P 500 and S&P Emini futures contract remains weaker than S&P pricing.
  • CPFL was negative Thursday by 1.20 to 1. Indicator remains in downtrend and has failed to confirm any of recent strength in broad market. New lows could easily be created.
  • MAAD was marginally positive Thursday with 12 issues up and 4 down. MAAD remains within range of downtrend line stretching back to March 3 indicator high, but is still decidedly below actual March high.
  • Major Cycle Momentum remains marginally negative in all of major indexes.

Market Overview – What We Think:

  • Intermediate Cycle continues to hold toward “Oversold” territory while offering upside potential, but time is running out on smaller short-term trend which could turn out to be sixth failed rally since early August lows if buyers remain unable to push bids higher.
  • Eventual failure of this rally and ability of market to head higher after two months of consolidation could be sign movement since early August was merely lull in primary bear market.
  • “Overbought” short-term statistics remain in place and continue to underscore potential for some corrective action within context of still potentially favorable Intermediate Cycle
  • But even if market is able to break to upside with S&P 500 moving above Price Channel resistance (1232.07), 200-Day Moving Average (1234.00), and the upper edge of trading range defined over past seven sessions (1233.10), massive major resistance beginning at 1255—S&P and stretching up to 1370.58—S&P looms.
  • Fact that Cumulative Volume remains weaker than prices (S&P 500 and S&P Emini futures contract) is suggestion market internals remain tentative and that upside volume relative to price action has been less enthusiastic.

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