Stocks likely see short-term low, resistance remains

Market Snapshot for session ending 11-28-11:

 

Last

Day Change

%Change

S&P 500 Index

1192.55

+33.88

+2.92%

Dow Jones Industrials

11523.01

+291.22

+2.59%

NASDAQ Composite

2527.34

+85.75

+3.51%

Value Line Arithmetic Index

2561.10

+97.56

+3.96%

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

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

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

Market Overview – What We Know:

  • Sharp post holiday rally lifted S&P 500 33.88 points Monday, but strength was still within context of short-term negative trend.
  • S&P 500 came close to tapping lower edge of 10-Week Price Channel (1154.28) with an intraday low bid of 1158.67.
  • Short-term trend is as “Oversold” as at any time over past several years.
  • 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.
  • Daily Most Actives Advance/Decline Line Ratio (MAAD) remains in deeply “Oversold” territory on the short-term cycle.
  • Despite rally Monday, 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 Monday by 1.027 to 1.
Index Daily/Weekly/Monthly Stops Weekly Monthly
11/28 11/29 11/30 12/1 12/2 12/2 12/31

S&P 500
Index

BUY
1251.75

BUY
1244.11

BUY
1233.89

BUY
1223.43

BUY
1211.88

SELL
1154.28

BUY
1337.19

Dow Jones
Industrials

BUY
12051.40

BUY
11999.40

BUY
11911.75

BUY
11820.94

BUY
11718.50

SELL
11038.44

BUY
12488.49

NASDAQ
Composite

BUY
2661.42

BUY
2637.09

BUY
2614.62

BUY
2590.07

BUY
2563.81

BUY
2639.20

BUY
2824.47

Value Line
Index

BUY
2714.00

BUY
2696.35

BUY
2671.55

BUY
2645.20

BUY
2613.81

SELL
2451.94

BUY
3062.69

Market Overview – What We Think:

  • Short-term low (1158.66—S&P) was probably put in place last Friday with some possible “testing” of that low developing in sessions just ahead.
  • What now remains to be seen is how much power a return rally will have. S&P 500 must move above October 27 intraday high at 1292.66 to re-assert larger Intermediate Cycle uptrend.
  • Also, fact that S&P and other major indexes have given back substantial of rally since October lows should be cause for concern in bullish camp.
  • 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 lackluster, 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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