Stock indexes stuck in trading range for 14th session

Market Snapshot for session ending 11-15-11:

Market Overview – What We Know:

• For 14th session in row S&P 500 remains locked in trading range bounded by October 27 high (1292.66) and November 1 low (1215.42).
• Trading range has much the look of classic “symmetrical triangle” which can act as a “continuation” pattern in next larger trend, in this case a positive intermediate trend.
• To end consolidation S&P must break above defined short-term downtrend line of possible symmetrical triangle (1275) with subsequent upside follow-through above 1292.66 to suggest a resumption of larger intermediate positive.
• S&P 500 remains stalled in vicinity of ‘Neckline” of Head and Shoulders Top that was evident prior to and into early August and early October lows. Neckline is now acting as resistance and could impede further strength.
• Short-term trend remains “Neutral.” Intermediate Cycle remains positive, albeit moderately “Overbought.” Major Cycle remains near “Neutral.”
• Daily Most Actives Advance/Decline Line (MAAD) rallied to new short-term high last Friday and remains somewhat stronger than broad market. Daily MAAD Ratio was last back into moderately “Overbought” territory.
• Cumulative Volume in both S&P 500 and S&P Emini has recently been in synch with S&P, but on relative basis has not recovered as much of decline from May high as has S&P index.
• Call/Put Dollar Value Flow Line (CPFL) continues to underperform broad market by a wide margin.

Market Overview – What We Think:

• Fact that stock market as measured by S&P 500 index continues to stall in face of major resistance should be a concern for bulls.
• While larger Intermediate Cycle remains favorable to extent trend is not “Overbought,” fact intermediate trend has eliminated much of deeply “Oversold” conditions means buying power could dissipate in sessions just ahead if resistance continues to stifle market advance.
• But we cannot as yet rule out possibility trading range developing in S&P 500 since October 27 intraday high could prove to be consolidation pattern in positive larger Intermediate Cycle.
• Lacking net strength to new short-term highs and absorption of overhead resistance stretching to 1370.58 we must regard all strength as “return action” rally within context of developing longer-term top.
• But if S&P is able to better 1292.66, net hesitation in market over past few weeks could be suggestion market is embarking upon another up leg within context of Intermediate Cycle positive.
• Failure of CPFL to demonstrate little net strength since October lows is not a positive omen.

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