Market recovers, but volume abnormally light

Market Snapshot for session ending 12-29-11:

 

Last

Day Change

%Change

S&P 500 Index

1263.02

+13.38

+1.07%

Dow Jones Industrials

12287.04

+135.62

+1.12%

NASDAQ Composite

2613.74

+23.76

+.92%

Value Line Arithmetic Index

2704.26

+34.67

+1.30%

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

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:

  • Market recovers Thursday majority of loss suffered Wednesday to keep short-term trend positive within context of still positive Intermediate Cycle.
  • Trading volume remains abnormally light and was running at about 50% of normal levels.
  • Short-term trend remains positive until 1226.23 (Friday) until lower edge of 10-Day Price Channel while Intermediate Cycle remains positive this week until 1187.25 at lower edge of 10-Week Price Channel.
  • S&P 500 must better 1292.66 at October 27 high to re-assert Intermediate Cycle uptrend begun after October lows.
  • MAAD recovered all of Wednesday’s loss less I issue Thursday, but MAAD Daily Ratio has begun moving back toward moderately “Overbought” territory.
  • CPFL was positive Thursday by 1.20 to 1, but on longer-term basis, CPFL has remained consistently negative since February 2011 and could make new lows with ease.
Index Daily/Weekly/Monthly Stops Weekly Monthly
12/26 12/27 12/28 12/29 12/30 12/30 12/31

S&P 500
Index

SELL
1217.30

SELL
1213.80

SELL
1215.49

SELL
1220.04

SELL
1226.23

SELL
1187.25

BUY
1337.19

Dow Jones
Industrials

SELL
11855.30

SELL
11829.45

SELL
11851.12

SELL
11893.52

SELL
11944.71

SELL
11401.03

BUY
12488.49

NASDAQ
Composite

SELL
2554.71

SELL
2553.48

SELL
2549.53

SELL
2553.60

SELL
2561.12

SELL
2529.43

BUY
2824.47

Value Line
Index

SELL
2603.96

SELL
2594.07

SELL
2598.04

SELL
2610.46

SELL
2627.00

SELL
2541.41

BUY
3062.69

Market Overview – What We Think:

  • Market’s modest recovery Thursday notwithstanding, price action has nonetheless faded each time price obstacles have appeared.
  • We continue to think market internals do not justify substantially higher prices even though short-term trend remains positive along with Intermediate Cycle. It remains to be seen if strength can be sustained.
  • S&P 500 continues to confront 100 points of major resistance which must be overcome to make new highs. That is a very tall order since that resistance band has been an impediment for the past eight months.
  • We suspect intermediate-term rally will fade somewhere this side of 1370.58 and that bearish case will prevail on the longer term.
  • Ongoing development and maturation of potential ascending wedge chart pattern developing since October lows is suggestion all strength since October could ultimately prove to be reflex rally in bear market.
  • None of our key indicators including CPFL, MAAD, CV, or Momentum looks as if it will confirm index prices to new highs even if such price action is possible.

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