Stock market gains Tuesday, but S&P fades

Market Snapshot for session ending 1-17-12:

 

Last

Day Change

%Change

S&P 500 Index

1293.67

+4.58

+.36%

Dow Jones Industrials

12482.07

+59.97

+.48%

NASDAQ Composite

2728.08

+17.41

+.64%

Value Line Arithmetic Index

2801.26

+4.54

+.16%

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:

  • Gains were evident in major indexes again Tuesday, but strength masked fade from days highs with S&P 500 closing 73% below intraday high and Dow Jones 61% below day’s peak.
  • Short-term cycle remains “Overbought” and it now wouldn’t take much selling to push short-term Momentum into negative territory for first time since mid-December where Momentum lingered for a few days before confirming current short-term positive.
  • So long as S&P 500 holds above lower edge of 10-day Price Channel (1272.34, Wednesday), short-term trend will remain positive.
  • S&P 500 remains somewhat below our first upside measured move target at 1310.77.
  • Daily MAAD reached new short-term high last Thursday and has actually been doing better than broad market since December 19 Minor Cycle low, but that smaller cycle is now “Overbought.”
  • MAAD on larger Intermediate Cycle remains not far above major support of March 2009 indicator lows.
  • CPFL remains anemic overall and has confirmed none of strength in broad market since October lows.
  • Cumulative Volume (CV) in neither S&P 500 nor S&P Emini has bettered late October resistance highs, despite fact S&P and Dow have hit new short-term highs.
Index Daily / Weekly / Monthly Stops Weekly Monthly
1/16 1/17 1/18 1/19 1/20 1/20 1/31

S&P 500
Index

SELL
1264.88

SELL
1268.43

SELL
1272.34

SELL
1275.90

SELL
1277.29

SELL
1200.20

BUY
1336.70

Dow Jones
Industrials

SELL
12274.49

SELL
12301.59

SELL
12325.43

SELL
12344.38

SELL
12345.56

SELL
11600.84

BUY
12500.72

NASDAQ
Composite

SELL
2633.25

SELL
2646.44

SELL
2657.27

SELL
2667.84

SELL
2675.00

SELL
2545.00

BUY
2829.75

Value Line
Index

SELL
2705.13

SELL
2714.57

SELL
2727.74

SELL
2741.26

SELL
2750.65

SELL
2569.45

BUY
3054.65

Market Overview – What We Think:

  • Tuesday’s price action was telling to extent index prices could not hold early session gains. Such action is often symptomatic of price action toward end of a move as sellers eager to exit step up selling or prices hit sell stop levels.
  • Downside “failsafe” in S&P at lower edge of 10-day Price Channel (1272.34) would determine staying power of Minor Cycle and will have larger effect on Intermediate Cycle if short-term trend reverses to negative.
  • Recent improvement in MAAD was encouraging, but with Daily MAAD Ratio now “Overbought,” to expect more gains in MAAD in a market that continues to have problems with resistance might be too much to ask
  • Lack of confirming action in Cumulative Volume (CV) makes us continue to wonder if rally underway since October lows could soon play out and terminate somewhere this side of 1336.70—S&P 500 at upper edge of 10-month Price Channel or even this side of our first measured move target at 1310.77. Tuesday’s high was close to that mark.
  • Hanging over all price action is major resistance high at May 2011 peak (1370-58—S&P 500) and level we do not think this market will be able to overcome.

Click charts to enlarge

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