S&P Intermediate Cycle must hold or all is lost on Major Cycle

Market Snapshot for session ending 12-15-11:

 

Last

Day Change

%Change

S&P 500 Index

1215.75

+3.93

+.32%

Dow Jones Industrials

11868.81

+45.32

+.38%

NASDAQ Composite

2541.01

+1.69

+.07%

Value Line Arithmetic Index

2601.21

+19.86

+.77%

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:

  • S&P 500 remains marginally negative on Minor Cycle, but so long as larger Intermediate Cycle remains positive, downside potential could be limited.
  • S&P prices remain locked between uptrend line (1180) connecting October and November lows and October 27 high (1292.66—S&P 500), the point which must be exceeded on upside to re-assert Intermediate Cycle advance begun after October lows.
  • Upside failure would simply amplify inability of market to overcome major resistance stretching from October high up to May price peak (1370.58—S&P) and point that would have to be exceeded to re-assert Major Cycle advance.
  • Call/Put Dollar Value Flow Line (CPFL) declined to new low Thursday and lowest level indicator high back on February 25. CPFL has confirmed none of on-balance market strength since October lows.
  • Most Actives Advance/Decline Line (MAAD) was positive Thursday by 12 to 7, but remains within range of uptrend line connecting October and November reaction lows.
  • MAAD Daily Ratio was last toward “Neutral.” Weekly MAAD Ratio is moderately “Overbought.” MAAD on longer term cycle remains close to major cycle low created in March 2009.
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:

  • With reversal to negativity on Minor Cycle Wednesday, lingering positive flavor of larger Intermediate Cycle is rapidly fading, but until Intermediate Cycle turns negative, we cannot rule out possibility all weakness since October 27 intraday high (1292.66) has been corrective.
  • To prove bullish point, however, S&P 500 would have to rise above first resistance at 1267.06 and December intraday high and then October 27 intraday high at 1292.66 or failure and subsequent downside break below 1180—S&P 500 would suggest all price action since October lows has been countertrend bounce within context of larger cycle negative.
  • In meantime, 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 bullish cause.

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