S&P nears target at 1310.77, possible minor high

Market Snapshot for session ending 1-11-12:

 

Last

Day Change

%Change

S&P 500 Index

1292.48

+.40

+.03%

Dow Jones Industrials

12449.45

-13.01

-.10%

NASDAQ Composite

2710.76

+8.26

+.31%

Value Line Arithmetic Index

2804.21

+15.94

+1.57%

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

Intermediate Cycle
(Medium trend lasting weeks to several months)
Positive

Major Cycle
(Long-term trend lasting several months to years)
Positive / Neutral

Market Overview – What We Know:

  • S&P 500, NASDAQ, and Value Line Index rose slightly Wednesday while Dow Jones Industrial Average gave up a bit.
  • Short and intermediate-term trends remain positive so long as pricing continues to hold above lower edge of 10-day Price Channel (1258.34—S&P 500) and 10-Week Price Channel (1195.82—S&P 500).
  • S&P 500 is approaching our fist upside measured move target at 1310.77.
  • Short-term cycle remains “Overbought” with Intermediate Cycle moderately “Overbought.”
  • Trading volume in S&P 500 declined about 9% Wednesday.
  • MAAD rallied to another new short-term high Wednesday and actually looks somewhat better than S&P 500. MAAD Daily Ratio remains moderately “Overbought.”
  • Movement to new short-term high has infused 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 Wednesday by 2.06 to 1, but confirmed none of strength since October lows.
  • Cumulative Volume remains lackluster on Minor Cycle and has not made new short-term highs as has S&P 500.
Index Daily / Weekly / Monthly Stops Weekly Monthly
1/9 1/10 1/11 1/12 1/13 1/13 1/31

S&P 500
Index

SELL
1246.28

SELL
1250.28

SELL
1255.16

SELL
1258.34

SELL
1261.90

SELL
1195.82

BUY
1336.70

Dow Jones
Industrials

SELL
12121.22

SELL
12154.61

SELL
12201.78

SELL
12228.31

SELL
12254.29

SELL
11529.86

BUY
12500.72

NASDAQ
Composite

SELL
2587.74

SELL
2599.84

SELL
2607.54

SELL
2613.98

SELL
2624.98

SELL
2545.44

BUY
2829.75

Value Line
Index

SELL
2669.31

SELL
2677.81

SELL
2687.51

SELL
2691.62

SELL
2698.58

SELL
2561.44

BUY
3054.65

Market Overview – What We Think:

  • So long as short and intermediate-term trends remain positive, we must allow for further price gains. Considering fact developing “ascending wedge” price pattern is approaching possible end stage, a continuation of rally that began after October lows is a merely a 50/50 proposition.
  • The one bright spot is improvement in MAAD which continues to look better than broad market. Either indicator has gotten ahead of itself and is near an end point since MAAD Daily Ratio is somewhat overheated, or market will catch up with MAAD since indicator is hinting at Smart Money buying.
  • But 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 and possibly toward first target at 1310.77.
  • Hanging over all price action 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 occurs, we think it is unlikely any of our key indicators will confirm price strength.

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