Stocks higher as statistical non-confirmations persist

Market Snapshot for session ending 1-24-12:

 

Last

Day Change

%Change

S&P 500 Index

1326.05

+11.40

+.87%

Dow Jones Industrials

12756.96

+81.16

+.64%

NASDAQ Composite

2818.31

+31.67

+1.14%

Value Line Arithmetic Index

2917.15

+29.68

+1.03%

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 of plus/minus 1% were registered by major indexes Wednesday. Highs put in place last May (1370.58—S&P 500) are within range.
  • Short and intermediate-term cycles remain positive, but “Overbought” and Major Cycle remains near “Neutral.”
  • Short-term Momentum in S&P 500 has failed to confirm any of strength in index since December 19 lows.
  • Cumulative Volume (CV) in S&P 500 has been trending with index lately, but has not recovered as much of loss since May highs as has index. S&P Emini CV has yet to break above late October resistance.
  • Key statistical resistance in S&P holds at upper edge of 10-Month Price Channel at 1336.70. Dow Jones Industrial Average has already overcome similar level at 12500.72.
  • Daily MAAD improved Wednesday and was last only 16 issues from equaling plot high made March 3, 2011. Weekly MAAD remains nearly 47% below 2011 highs, but was closing in on downtrend line stretching back to October 2007 indicator highs.
  • Daily CPFL was positive Wednesday by 1.50 to 1, but remains substantially below February 2011 plot highs.
Index Daily / Weekly / Monthly Stops Weekly Monthly
1/23 1/24 1/25 1/26 1/27 1/27 1/31

S&P 500
Index

SELL
1277.29

SELL
1280.47

SELL
1283.20

SELL
1288.45

SELL
1293.17

SELL
1201.03

BUY
1336.70

Dow Jones
Industrials

SELL
12345.56

SELL
12364.08

SELL
12384.26

SELL
12420.29

SELL
12462.60

SELL
11637.37

BUY
12500.72

NASDAQ
Composite

SELL
2675.00

SELL
2686.12

SELL
2696.76

SELL
2714.37

SELL
2729.01

SELL
2539.02

BUY
2829.75

Value Line
Index

SELL
2750.85

SELL
2761.93

SELL
2771.73

SELL
2789.39

SELL
2806.96

SELL
2570.73

BUY
3054.65

Market Overview – What We Think:

  • Prices continue higher on short-term trend and have reached into the deepest regions of major resistance. Given proximity of pricing to May 2011 highs, we cannot rule out possibility new highs will follow (above 1370.58—S&P 500).
  • But short-term trend is “Overbought” and if trend since October lows proves to be a-b-c countertrend action developed within context of a negative “ascending wedge” price pattern, time is running out on this rally.
  • To suggest a Minor Cycle reversal to negative, however, we must first see weakness below lower edge of 10-Day Price Channel in the S&P 500 (1293.17—Thursday).
  • When 10-day Price Channel is inevitably broken, extent to which selling then develops will determine staying power of larger Intermediate Cycle in effect since October lows.
  • If major resistance is overcome and new highs follow, it wouldn’t be first time a sharp downside break (May-October) was followed by movement to a new high. Think July 2007 (1555.10--S&P 500), a brief correction, and then a short-term rally to a new high in October 2007 high (1576.09). Then followed second worst bear in stock market history.

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