Stocks look better on Minor Cycle, MAAD confirms

Market Snapshot for session ending 1-10-12:

Market Overview – What We Know:

• Further buying and marginal gains Tuesday reinforced positive tone of short and intermediate trends.
• Via intraday buying, S&P bettered October 27 high at 1292.66 and infused more positivity into larger Intermediate Cycle.
• MAAD rose to another new short-term high and has recovered about 50% of its losses since peaking early last March while S&P has come back about 65%. MAAD Daily Ratio remains moderately “Overbought.”
• Trading volume in S&P 500 increased about 22% Tuesday.
• Movement to new short-term high in S&P 500has breathed some new life into S&P 500, but until index overcomes major resistance at May high (1370.58), all strength must be regarded as “return action” in larger cycle negative.
• CPFL was positive Tuesday by 2.15 to 1 and indicator continues to flirt with positive levels. But CPFL has confirmed none of strength since October lows. Indicator was last holding only slightly above new lows made December 19.
• Cumulative Volume remains lackluster on Minor Cycle and has not made new short-term highs as has S&P 500.

Market Overview – What We Think:

• Further strength in broad market Tuesday with additional positive tone from MAAD after indicator lead market on way up with new highs Monday, has infused short- to intermediate-term with some new life.
• While price gains are encouraging, lack on confirming action in Cumulative Volume (CV) makes us continue to wonder if rally underway since October lows could soon play out as “ascending wedge” price pattern is completed somewhere this side of 1336.70—S&P 500.
• Hanging over all price action, however, is major resistance high at May peak (1370-58—S&P 500) that must be overcome if bull market begun in March 2009 is to resume in earnest. Failing that, all strength back toward that level will have to be viewed as mere “return action” in larger cycle negative.
• If such strength to new highs does occur, we also think it is unlikely any of our key indicators will confirm new highs.

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