S&P destroys three-week uptrend; support at 1200

Market Snapshot for session ending 11-17-11:

Last

Day Change

%Change

S&P 500 Index

1216.30

-20.78

-1.68%

Dow Jones Industrials

11770.73

-134.85

-1.13%

NASDAQ Composite

2587.99

-51.62

-1.963%

Value Line Arithmetic Index

2633.53

-45.59

-1.708%

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

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

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

Market Overview – What We Know:

  • Further market losses Thursday not only amplified market negativity, but S&P 500 sold down below three-week-old uptrend line after fracturing lower edge of 10-Day Price Channel Wednesday. Action has confirmed probable Minor Cycle reversal to negative.
  • Short-term trend remains “Neutral” with a negative bias. Intermediate Cycle remains positive, albeit moderately “Overbought.” Major Cycle remains near “Neutral.”
  • Despite market weakness, MAAD was somewhat less negative Thursday than S&P 500. Daily MAAD Ratio was last trending lower toward “Oversold” territory.
  • Cumulative Volume in S&P 500 and S&P Emini was last trending lower with CV more negative in Emini than in cash S&P.
  • Call/Put Dollar Value Flow Line (CPFL) continues to underperform broad market by wide margin and could sink to new lows with little additional effort. CPFL Ratio was negative Thursday by 2.17 to 1.

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:

  • Downside break below three-week-old uptrend line Thursday with confirming action below already challenged 10-Day Price Channel Wednesday may have initiated short-term pullback we have been suggesting as a possibility.
  • Only other possibility we could see developing is weakness over past few days could prove to be “C” leg of A-B-C pullback with downside measured move target toward 1200—S&P 500.
  • If S&P stabilizes near 1200 and rallies, index would have to move above downtrend line near 1265 to suggest end to consolidation underway since October 27 high at 1292.66.
  • If S&P does not have power to rally, index could still decline as low as 1126.98 without turning larger and still favorable, but moderately “Overbought,” Intermediate Cycle negative.
  • Until S&P breaks decidedly negative and sinks below possible A-B-C measured move target at 1200—S&P 500, 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.
  • Lacking a quick end to recent selling and a resumption of buying to new short-term highs (above 1292.66—S&P 500) and absorption of overhead resistance stretching to 1370.58, we must regard all strength as “return action” rally within context of developing Major Cycle top.

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