S&P close to breaking downside minor support levels

Market Snapshot for session ending 11-16-11:

 

Last

Day Change

%Change

S&P 500 Index

1236.91

-20.90

-1.66%

Dow Jones Industrials

11905.59

-190.57

-1.58%

NASDAQ Composite

2639.61

-46.59

-1.73%

Value Line Arithmetic Index

2679.13

-45.74

-1.68%

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

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

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

Market Overview – What We Know:

  • Losses Wednesday in S&P 500 not only put index bids at lower edge of rising three-week-old trendline, but weakness left closing level of S&P just below lower edge of trailing 10-Day Price Channel.
  • S&P is on verge of confirming reversal to negative on Minor Cycle.
  • Ongoing failure of S&P to break above October 27 intraday high and near-term resistance (1292.66) is near-term bearish.
  • S&P 500 also remains stalled in vicinity of ‘Neckline” of Head and Shoulders Top that was created prior to August selloff. That level is now acting as resistance.
  • Short-term trend remains “Neutral” with marginally negative bias. Intermediate Cycle remains positive, albeit moderately “Overbought.” Major Cycle remains near “Neutral.”
  • After holding in synch with market since November 1 S&P low, MAAD looked a bit weaker than broad market Wednesday. Daily MAAD Ratio was last back into moderately “Overbought” territory.
  • Cumulative Volume in S&P 500 and S&P Emini has begun to deteriorate again. CV in Emini was last back below November 1 support low even though S&P Emini prices remain somewhat stronger.
  • Call/Put Dollar Value Flow Line (CPFL) continues to underperform broad market by wide margin.
Index Daily stops Weekly

Monthly

11/14 11/15 11/16 11/17 11/18 11/18 11/30

S&P 500
Index

SELL
1236.41

SELL
1240.35

SELL
1237.92

SELL
1235.59

SELL
1235.81

SELL
1126.98

BUY
1325.13

Dow Jones
Industrials

SELL
11829.88

SELL
11862.70

SELL
11841.37

SELL
11827.08

SELL
11835.63

SELL
10803.00

BUY
12357.72

NASDAQ
Composite

SELL
2645.79

SELL
2651.83

SELL
2645.55

SELL
2635.99

SELL
2636.86

SELL
2413.64

BUY
2795.45

Value Line
Index

SELL
2684.63

SELL
2690.54

SELL
2683.54

SELL
2675.95

SELL
2674.09

SELL
2392.31

BUY
3027.66

Market Overview – What We Think:

  • Short-term trend in market as measured by S&P 500 is looking increasingly precarious. Wednesday’s 21 point loss in S&P to lower edge of near-term trendline (1230) and 10-Day Price Channel support (see table above) could mean more near-term selling is possible.
  • But if such weakness develops it must be viewed within context of still positive Intermediate Cycle which could absorb Minor Cycle selling down to 1126.98 without turning intermediate trend negative.
  • Larger Intermediate Cycle remains favorable but moderately “Overbought.”
  • Until S&P breaks decidedly below near-term uptrend line near 1230 and even though 10-Day Price Channel was fractured by a couple of points on downside via Wednesday’s S&P close, we cannot 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. Such is the nature of symmetrical triangle formations that can act as continuation patterns in larger cycle positive.
  • But time is running out on a possible positive resolution of near-term price pattern.
  • 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.

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