Minor trend as oversold as at any time since ’09 lows

Market Snapshot for session ending 11-22-11:

 

Last

Day Change

%Change

S&P 500 Index

1188.04

-4.94

-.41%

Dow Jones Industrials

11493.72

-53.58

-.46%

NASDAQ Composite

2521.28

-1.85

-.07%

Value Line Arithmetic Index

2552.26

-21.32

--.83%

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 / Neutral

Market Overview – What We Know:

  • Modest losses in broad market Tuesday in marginally lighter pre-holiday volume pushed bellwether S&P 500 a bit deeper into a broad band of support while creating somewhat more “Oversold” readings on Minor Cycle.
  • Short-term weakness continues to develop within context of still positive Intermediate Cycle. But S&P 500 must hold above lower edge of Weekly Price Channel (1138.76) to keep Intermediate Cycle positive intact.
  • Minor Cycle is currently as “Oversold” as at any time over past several years. Only caveat is that “Oversold” conditions can persist.
  • To reassert Intermediate Cycle uptrend begun after October low (1074.77—S&P 500), S&P would have to better October 27 intraday high at 1292.66.
  • Most Actives Advance/Decline Line (MAAD) remains in synch with broad market. Daily MAAD Ratio has moved back into “Oversold” territory. Indicator on longer term has continued to underperform broad market, a suggestion Smart Money remains skeptical of longer-term stock market prospects.
  • Call/Put Dollar Value Flow Line (CPFL) remains remarkably weaker than market and could sink to new lows with little additional effort. CPFL Ratio was negative Tuesday by 2.26 to 1.
Index Daily stops Weekly Monthly
11/21 11/22 11/23 11/24 11/25 11/25 11/30

S&P 500
Index

BUY
1263.27

BUY
1263.88

BUY
1263.41

BUY
1258.64

BUY
1251.75

SELL
1138.76

BUY
1325.13

Dow Jones
Industrials

BUY
12104.57

BUY
12122.27

BUY
12125.89

BUY
12096.09

BUY
12051.40

SELL
10891.88

BUY
12357.72

NASDAQ
Composite

BUY
2683.38

BUY
2686.28

BUY
2686.86

BUY
2677.36

BUY
2661.42

SELL
2442.51

BUY
2795.45

Value Line
Index

BUY
2743.53

BUY
2742.54

BUY
274115

BUY
2730.06

BUY
2714.00

SELL
2414.39

BUY
3027.66

Market Overview – What We Think:

  • So long as Minor Cycle pullback develops within context of lingering Intermediate Cycle positive and does not terminate downside supports at lower edge of 10-Week Price Channel (1138.76—S&P 500), there is chance October 27 intraday high (1292.66) could be challenged via snap back rally.
  • Given range of normal pullback, S&P 500 could find support somewhere between 40% and 60% (1205.50 to 1161.92) of advance since October low (1074.77).
  • Ability of market to find support in sessions just ahead will determine not only power of current short-term negative, but also of larger Intermediate Cycle positive.
  • To prove a bullish point, S&P must rally back above 1292.66 at October 27 intraday high. Otherwise issue becomes longer term in that market must be able to make new highs. Failure by prices or indicators or both would underscore potential for longer-term bearish outcome. Simply put, S&P 500 must surpass 1370.58 to re-assert bull trend begun in March 2009.
  • With key indicators still exhibiting lackluster performance, we can only continue to wonder at market’s longer-term upside prospects since lack of indicator confirmation has never favored bullish case on historical basis.

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