Stock market up as MAAD breaks resistance

Market Snapshot for session ending 1-9-12:

Market Overview – What We Know:

• Small gains characterized index price movement Monday.
• While S&P 500 remains about 12 points below October 27 intraday and short-term resistance high (1292.66) Daily MAAD broke above similar resistance Monday to re-assert intermediate positive.
• MAAD strength is suggestion Smart Money has become a bit more positive on market on Minor Cycle. Daily MAAD remains moderately “Overbought.”
• Trading volume in S&P 500 decreased 7% Monday.
• Short-term trend continues to look weak in face of major resistance, but so long as short and intermediate term cycles remain positive, further gains cannot be precluded.
• S&P must better May 2011 high at 1370.58 to re-assert Major Cycle uptrend.
• CPFL, negative Monday, continues to flirt with positivity, but has confirmed none of strength since October lows. Indicator was last holding only slightly above new lows for move made December 19.
• Cumulative Volume remains lackluster on Minor and Intermediate Cycle relative to S&P.

Market Overview – What We Think:

• While Monday’s move by MAAD to new short- to-intermediate term high was encouraging, we continue to look with skepticism on Intermediate Cycle rally that has persisted since October lows (1074.77—S&P 500).
• So long as intermediate trend remains positive, we must defer to “positive” flavor.
• We continue to believe new highs (above 1370.58—S&P) will not develop, but we cannot rule out such an event so long as Intermediate Cycle remains favorable.
• If such strength does occur, we do not think any of our key indicators will confirm, a development that could weigh heavily on market pricing.
• All of major indexes (S&P 500, Dow 30, NASDAQ, and Value Line) have one thing in common in that all have stalled at “Necklines” of Head and Shoulders top initiated early last year.
• Odds remain good S&P 500 could stall anywhere this side of upper edge of 10-month Price Channel at 1336.70.

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