S&P at major resistance; MAAD cracks trendline

Market Snapshot for session ending 10-24-11:

 

Last

Day Change

%Change

S&P 500 Index

1254.19

+15.94

+1.29%

Dow Jones Industrials

11913.62

+104.83

+.89%

NASDAQ Composite

2699.44

+61.98

+2.35%

Value Line Arithmetic Index

2715.26

+73.14

2.77%

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

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

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

Market Overview – What We Know:

  • Major indexes rallied to new short-term highs Monday and extended rally on Minor Cycle while solidifying Intermediate advance.
  • Volume in S&P 500 index diminished by about 11% despite index strength.
  • Minor Cycle remains “Overbought” in all of major indexes with Intermediate Cycle heading toward “Neutral” levels.
  • S&P 500 has returned to lower edge of major resistance (1255-1370.58) that stretches from early August breakdown level up to early May highs.
  • S&P 500 Cumulative volume eked out new short-term high Monday to better resistance peak made August 15. S&P Emini CV has yet to overcome minor resistance.
  • Prices in S&P 500, Dow Jones Industrials, NASDAQ Composite index, and Value Line Index have moved above upper edge of 10-week Price Channels.
  • MAAD rallied to new short-term high Monday while also fracturing downtrend line stretching back to March 3 indicator plot high. MAAD remains about 100 issues short of March peak. MAAD Daily Ratio remains “Overbought” with MAAD Weekly Ratio holds just above “Neutral.”
  • CPFL was positive Monday by 1.08 to 1, but on relative basis indicator remains unenthusiastic and has confirmed virtually none of recent market gains.

Market Overview – What We Think:

  • With major indexes within range of first levels of major resistance (S&P 500—1255), staying power of rally ought to soon be determined.
  • With Cumulative Volume still anemic on upside along with CPFL, short-term Momentum remains “Overbought” and it remains to be seen if rally is being driven by weak hands.
  • Minor Cycle is decidedly positive while Intermediate Cycle continues to get stronger. Major Cycle trend remains iffy. We could see S&P higher to upper edge of 10-Month Price Channel and statistical resistance (1325-1340), but think at this juncture new highs in prices and indicators could be a stretch.
  • Fact that MAAD has broken downtrend line in place since March highs is positive sign for larger Intermediate Cycle, but with indicator still needing to rally 100+ net positive issues to better March high, odds could be long against broad market achieving new highs.
  • “Overbought” short-term statistics remain in place and continue to underscore potential for some corrective action within context of still potentially favorable Intermediate Cycle

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Next page: Indicator update

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