S&P sinks again toward trendline, statistical support

Market Snapshot for session ending 12-19-11:

 

Last

Day Change

%Change

S&P 500 Index

1205.35

-14.31

-1.17%

Dow Jones Industrials

11766.26

-100.12

-.84%

NASDAQ Composite

2523.14

-32.19

-1.26%

Value Line Arithmetic Index

2570.52

-47.31

-1.81%

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

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:

  • Further losses in major indexes Monday solidified Minor Cycle negative while further threatening tentatively positive Intermediate Cycle.
  • Lower edge of 10-Week Price Channel comes under serious threat at 1188.87 for balance of week while defined uptrend line connecting October 4 (1074.77—S&P 500) and November 25 (1158.66—S&P 500) short-term lows is threatened toward 1185—S&P 500.
  • Downside break below 10-Week Price Channel and intermediate uptrend line would suggest end to market retracement since October lows.
  • Underscoring market vulnerability, our Call/Put Dollar Value Flow Line (CPFL) sank to new Intermediate Cycle low Monday on negative ratio of 2.45 to 1.
  • CPFL has confirmed none of net advance in market since October lows and continues to suggest internal market negativity as measured by options buyers.
  • Most Actives Advance/Decline Line (MAAD) was net negative Monday with 3 issues up and 17 down. Weakness last placed MAAD plot at uptrend line connecting October and November short-term lows. MAAD Daily Ratio has moved back toward “Oversold” territory.
  • Cumulative Volume (CV) in S&P 500 and S&P Emini futures contract remains S&P sensitive, but CV in neither issue on long-term trend looks healthy based on volume stats.
Index Daily/Weekly/Monthly Stops Weekly Monthly
12/19 12/20 12/21 12/22 12/23 12/23 12/31

S&P 500
Index

BUY
1259.14

BUY
1258.46

BUY
1252.55

BUY
1247.01

BUY
1242.92

BUY
1188.87

BUY
1337.19

Dow Jones
Industrials

BUY
12178.50

BUY
12184.82

BUY
12145.69

BUY
12111.53

BUY
12079.16

BUY
11390.28

BUY
12488.49

NASDAQ
Composite

BUY
2645.93

BUY
2646.37

BUY
2632.08

BUY
2618.27

BUY
2609.29

BUY
2540.32

BUY
2824.47

Value Line
Index

BUY
2720.72

BUY
2718.93

BUY
2699.00

BUY
2681.65

BUY
2671.83

BUY
2546.90

BUY
3062.69

Market Overview – What We Think:

  • Monday’s selling in broad market as measured by S&P 500 moved index a step closer to downside “failsafe” levels on larger Intermediate Cycle that must hold if Major Cycle is to remain positive.
  • Until rising uptrend line connecting October and November lows is fractured (1185—S&P 500) and 10-week Price Channel (1188.87) is decisively penetrated, we cannot rule out possibility currently developing short-term “oversold” conditions could lead to yet another upside attempt after stability is found toward intermediate trendline and 10-week Price Channel low.
  • To suggest resumption of Intermediate Cycle positive, however, S&P must rally back above October 27 high (1292.66), but must first rise above December 7 intraday high (1267.06).
  • Yet another upside failure in face of developing “Rising Wedge” chart formation, a negatively biased pattern, would suggest all price action since October lows has been countertrend bounce within context of larger cycle negative.
  • 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.
  • While there are some who believe price action since May will prove to be merely a pullback in primary bull market, time may be running out on that strategy.

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