Stock buyers positioned for upside threat, but...

Market Snapshot for session ending 12-21-11:

 

Last

Day Change

%Change

S&P 500 Index

1243.72

+2.42

+.19%

Dow Jones Industrials

12107.74

+4.15

+.03%

NASDAQ Composite

2577.97

-25.76

-.99%

Value Line Arithmetic Index

2675.39

+9.87

+.37%

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:

  • Index prices, except NASDAQ, tacked on small gains Wednesday, but Minor Cycle remains negative.
  • Pre-holiday trading remains below average.
  • Buying in S&P 500 above upper edge of 10-Day Price Channel (1247.01—Thursday) would suggest beginning of end to corrective action that has persisted for past several days.
  • Nothing but buying above October 27 intraday and short-term high at 1292.66—S&P 500 would re-assert Intermediate Cycle advance begun after October lows.
  • CPFL was positive for second session in row Wednesday with Call/Put Dollar Value Ratio positive by 1.98 to 1.
  • But CPFL has confirmed none of net advance in market since October lows and continues to suggest longer-term internal market weakness as measured by options buyers.
  • Most Actives Advance/Decline Line (MAAD) was marginally positive Wednesday with 13 issues up and 7 down. Daily MAAD remains marginally above uptrend line connecting October and November lows. MAAD Daily Ratio remains near “Neutral.”
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

SELL
1188.87

BUY
1337.19

Dow Jones
Industrials

BUY
12178.50

BUY
12184.82

BUY
12145.69

BUY
12111.53

BUY
12079.16

SELL
11390.28

BUY
12488.49

NASDAQ
Composite

BUY
2645.93

BUY
2646.37

BUY
2632.08

BUY
2618.27

BUY
2609.29

SELL
2540.32

BUY
2824.47

Value Line
Index

BUY
2720.72

BUY
2718.93

BUY
2699.00

BUY
2681.65

BUY
2671.83

SELL
2546.90

BUY
3062.69

Market Overview – What We Think:

  • So long as S&P 500 remains stuck below two-month-old downtrend line connecting late October high (1292.66) and December 7 short-term high (1267.06), we must presume sellers will continue to maintain upper hand.
  • But if first downtrend line and then October resistance are overcome, we would have to presume buyers might be able to take another stab at major resistance stretching up toward May high at 1370.58—S&P 500.
  • If short-term buying proves once again that bulls do not have the power to force prices higher in face of solid resistance, we would view weakness below an intermediate uptrend line at 1190 and lower edge of 10-Week Price Channel at 1188.87 as yet another clear sign bears are winning supply/demand battle.
  • Weakness below rising uptrend of progressively defined “Rising Wedge” chart formation developing since October lows, would suggest all price action since October has been countertrend bounce within context of larger cycle negative.

Click chart to enlarge

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