Market stalls with time running out on Minor Cycle uptrend

Market Snapshot for session ending 1-4-12:

 

Last

Day Change

%Change

S&P 500 Index

1277.3

+.23

+.02%

Dow Jones Industrials

12418.42

+21.04

+.17%

NASDAQ Composite

2648.36

-.36

-.01%

Value Line Arithmetic Index

2729.49

-10.21

-.37%

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

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:

  • Stock market closed mixed Wednesday with only the Dow Jones Industrial average posting a measureable gain.
  • Trading volume remained light and was even about 50% below activity for the same period in early 2010.
  • Short and intermediate trends in S&P 500 remain positive with Major Cycle fractionally positive. Long-term Momentum is just above “Neutral.”
  • S&P continues to face major resistance stretching nearly 100 points higher to May 2011 high at 1370.58, level that must be overcome if Major Cycle trend is to be re-asserted.
  • MAAD improved Wednesday, but on net basis remains weaker than S&P 500. MAAD Daily Ratio continues to move into moderately “Overbought” territory.
  • CPFL was slightly positive Wednesday, but indicator continues to hold not far above new lows made October 19. CPFL confirmed none of market’s strength since October lows.
Index Daily/Weekly/Monthly Stops Weekly Monthly
1/2 1/3 1/4 1/5 1/6 1/6 1/31

S&P 500
Index

SELL
1226.23

SELL
1233.58

SELL
1237.81

SELL
1241.71

SELL
1246.28

SELL
1185.22

BUY
1336.70

Dow Jones
Industrials

SELL
11944.71

SELL
12010.95

SELL
12047.60

SELL
12082.13

SELL
12121.22

SELL
11404.48

BUY
12500.72

NASDAQ
Composite

SELL
2561.12

SELL
2570.69

SELL
2575.55

SELL
2581.21

SELL
2587.74

SELL
2530.52

BUY
2829.75

Value Line
Index

SELL
2627.00

SELL
2642.98

SELL
2651.35

SELL
2658.92

SELL
2669.31

SELL
2536.46

BUY
3054.65

Market Overview – What We Think:

  • We remain unimpressed by market’s price action, but must hold out possibility for more gains so long and short and intermediate-term cycles remain favorable.
  • If strength does not soon resume, an end to short-term term advance begun after December 19 intraday lows is likely.
  • Failure in the face of major resistance in a market that keeps inching toward “Overbought” territory is not a sign of trend health.
  • There is also fact that possible “ascending wedge” pattern under development since October lows is maturing and may not have much life left.
  • Upside profit targets for S&P 500 at 1310.77 and 1376.55 come into view via measured moves from October lows with likelihood S&P 500 could stall anywhere this side of upper edge of 10-month Price Channel at 1336.70.
  • Odds are good that even if market is somehow able to reach new highs, none of our key indicators will confirm price strength to suggest staying power of rally could be highly suspect and could turn out to be classic ‘draw play” for unwary buyers.

Click charts to enlarge

Next page: Indicator review

Comments
comments powered by Disqus