Low volume, little price movement evident Tuesday

Market Snapshot for session ending 12-27-11:

Market Overview – What We Know:

• Very light between the holidays trading volume left major indexes near even Tuesday. This kind of action should continue for the balance of week.
• Dow Jones Industrial Average remains at new short-term high and above its October 27 peak, but other major indexes have yet to follow suit.
• S&P 500, that tends to represent broad market better than Dow 30, must better 1292.66 at October 27 high to re-assert Intermediate Cycle advance begun after October lows.
• Short-term trend remains positive with caveat in terms of major resistance stretching up to last Mays highs (1370.58—S&P 500).
• MAAD faded a bit on Tuesday (8 up and 11 down) with MAAD Daily Ratio holding just above “Neutral.”
• CPFL was negative Tuesday by 1.70 to 1, but overall options volume was very low.
• On longer-term basis, CPFL has remained consistently negative since February 2011 highs and could make new lows with ease.
• Cumulative Volume has remained in synch with broad market on near term, but continues to highlight downside volume bias market suffered via selling into October lows.

Market Overview – What We Think:

• Weak holiday volume makes us continue to think market underpinnings are not solid even though short-term trend reversed to positive last week and Intermediate Cycle was infused with some new life.
• S&P 500 still has100 points of major resistance to overcome before new highs could follow.
• We suspect short- to intermediate-term rally will fade somewhere this side of 1370.58 and that bearish case will prevail.
• Ongoing development and maturation of potential ascending wedge chart pattern since inception after October lows is suggestion all strength since October could ultimately prove to be reflex rally in wake of bear market top made last May.
• Wide range of sellers will be eager to break even all way to 1370.58—S&P 500.
• None of our key indicators including CPFL, MAAD, CV, or Momentum looks eager to confirm index pricing.

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