S&P smiles Wednesday, but indicators still sulky

Market Snapshot for session ending 11-30-11:

 

Last

Day Change

%Change

S&P 500 Index

1246.96

+51.77

+4.33%

Dow Jones Industrials

12045.68

+490.05

+4.24%

NASDAQ Composite

2620.34

+104.83

+4.17%

Value Line Arithmetic Index

2690.79

+133.71

+5.23%

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

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

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

Market Overview – What We Know:

  • Market posts powerful rally Wednesday and moves, as measured by S&P 500, back to short-term downtrend line (1250) connecting October 27 (1292.66) and November 8 (1277.55) highs.
  • S&P 500 must better trendline resistance and then October 27 high to resume Intermediate Cycle uptrend begun after October 4 low (1074.77).
  • Volume in S&P 500 was higher Wednesday by nearly 40%.
  • Short-term trend indicators have begun moving upward from deeply “Oversold” territory.
  • Wednesday’s strength also caused S&P 500 to rally above upper edge of 10-Day Price Channel (1233.89) a positive first sign on Minor Cycle.
  • Most Actives Advance/Decline Line (MAAD) improved Wednesday, but not as much as index pricing. Indicator still has a long way to go before threatening highs made March 3, 2011. MAAD Daily Ratio, however, remains deeply “Oversold.”
  • Call/Put Dollar Value Flow Line (CPFL) improved Wednesday and was positive by 2.08 to 1, but indicator remains decidedly lackluster relative to index prices.
  • Cumulative Volume (CV) in S&P 500 was in synch with index pricing Wednesday, but on relative basis continues to underperform.
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:

  • Wednesday’s rally simply underscored end of short-term pullback begun after October 27 intraday highs (1292.66—S&P 500) and re-asserted Intermediate Cycle advance initiated after October 4 lows (1074.77—S&P 500).
  • If it turns out pullback from October 27 to November 25 was a “B” leg correction in an A-B-C rally begun after October 4 low, then upside measured move to 1376.55 comes into view. Level would create a new high for move since March 2009 and would better May 2011 peak by 5.97points.
  • But with all of our key indicators (MAAD, CPFL, CV, and Momentum) lagging pricing, could move to new high prove to massive market hook?
  • Another possibility is that market simply fails to overcome major resistance up to 1370.58 and Intermediate Cycle top is created somewhere this side of there. That scenario would feed into presumption all strength since October lows is bear market retracement.
  • Key to current Intermediate Cycle uptrend will be market’s ability to over come massive resistance stretching up to May high at 1370.58.

Click charts to enlarge

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