Minor Cycle stock trend at risk of going negative

Market Snapshot for session ending 12-13-11:

 

Last

Day Change

%Change

S&P 500 Index

1225.73

-10.74

-.87%

Dow Jones Industrials

11954.94

--66.44

-.55%

NASDAQ Composite

2579.27

-32.99

-1.26%

Value Line Arithmetic Index

2619.78

-48.71

-1.83%

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

  • Major indexes attempted to rally early in session Tuesday, but ultimately sellers won out as selling pressures accelerated into close.
  • Most negative development of day was fact that S&P 500 prices are rapidly closing in on lower boundary of defined 10-Day Price Channel which is acting as downside “failsafe” level for Minor Cycle.
  • Penetration of Price Channel on Wednesday with rising redefined level at 1227.78 would suggest an end to uptrend begun after November 25 low.
  • Tuesday’s selling also caused Call/Put Dollar Value Flow Line (CPFL) to sink to new short- to intermediate-term low and worst level since February 25, 2011. CPFL has confirmed none of on-balance market strength since October lows.
  • Minor Cycle remains positive by a toehold, but S&P 500 must better October 27 intraday and short-term high (1292.66) to re-assert larger and tentatively positive Intermediate Cycle advance begun after October lows.
  • Major resistance persists up to May highs (1370.58—S&P 500) and must be overcome to suggest resumption of Major Cycle bull trend begun in March 2009.
  • MAAD Daily Ratio moved back toward “Neutral” levels Tuesday while MAAD Weekly Ratio is moderately “Overbought.” MAAD on longer term cycle remains close to major cycle low created in March 2009.
  • Cumulative Volume in both S&P 500 and S&P Emini futures contract has remained in synch with pricing since October, but CV in neither issue on longer term and since May 2011 high has performed as well as index pricing.
Index Daily/Weekly/Monthly Stops Weekly Monthly
12/12 12/13 12/14 12/15 12/16 12/16 12/31

S&P 500
Index

SELL
1209.80

SELL
1220.17

SELL
1227.78

SELL
1231.81

SELL
1235.12

SELL
1180.00

BUY
1337.19

Dow Jones
Industrials

SELL
11695.90

SELL
11788.23

SELL
11866.28

SELL
11915.81

SELL
11957.78

SELL
11285.14

BUY
12488.49

NASDAQ
Composite

SELL
2568.09

SELL
2588.51

SELL
2597.63

SELL
2603.00

SELL
2607.89

SELL
2525.59

BUY
2824.47

Value Line
Index

SELL
2597.16

SELL
2622.27

SELL
2640.29

SELL
2648.91

SELL
2655.33

SELL
2520.12

BUY
3062.69



Market Overview – What We Think:

  • Odds do not look good for bullish cause, given downside break in market over past few sessions.
  • If bottom edge of 10-Day Price Channel is penetrated by pricing in S&P 500 on default basis Wednesday, considering fact channel is rising (1227.78), odds would increase that short-term advance begun after November 25 lows is over.
  • Short-term reversal to negative would have an effect on larger Intermediate Cycle which remains currently positive until 1180 at lower edge of its 10-Week Price Channel.
  • Inability of broad market, as measured by S&P 500 index, to overcome major resistance stretching up to 1370.58—S&P means time is wasting for bulls. As indexes find it increasingly difficult to surmount resistance, strategic ability to “overcome” is diminished by each upside failure.
  • While larger Intermediate Cycle remains positive, if market simply fails as Intermediate Cycle peaks this side of 1370.58—S&P 500, scenario would suggest all price strength since October lows has been nothing but bear market retracement.

Click charts to enlarge

Next page: Indicator review

Comments
comments powered by Disqus