S&P 500 recovers some, but faces resistance

Market Snapshot for session ending 2-1-12:

 

Last

Day Change

%Change

S&P 500 Index

1324.09

+11.68

+.89%

Dow Jones Industrials

12716.48

+83.54

+.66%

NASDAQ Composite

2848.27

+34.42

1.22%

Value Line Arithmetic Index

2947.20

+53.99

+1.87%

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

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:

  • Good gains in major indexes Wednesday pushed prices back toward best bids of short-term rally (1333.47—S&P 500), levels which must be overcome to re-assert Minor Cycle advance..
  • Short and Intermediate-term trends remain positive, but “Overbought.”
  • Selling in S&P 500 below lower edge of 10-Day Price Channel (1305.34—Thursday) would suggest beginning of end of Minor Cycle advance underway since mid-December.
  • Short-term Momentum in S&P 500 remains slightly positive and has failed to confirm any of strength in index since December 19 lows. Indicator could fall into negative territory with ease.
  • Cumulative Volume (CV) in S&P 500 remains above late October resistance highs, but S&P Emini CV has yet to break above late October resistance.
  • Daily MAAD was positive Wednesday with 19 issues higher and 1 down. Indicator needs to better January 25 peak to create new short-term high.
  • Daily CPFL was positive Wednesday by 1.80 to 1, but has confirmed none of strength since October lows and remains well below February 2011 indicator highs.
Index Daily / Weekly / Monthly Stops Weekly Monthly
1/30 1/31 2/1 2/2 2/3 2/3 2/29

S&P 500
Index

SELL
1297.23

SELL
1299.92

SELL
1302.33

SELL
1305.34

SELL
1307.49

SELL
1209.43

BUY
1319.38

Dow Jones
Industrials

SELL
12506.98

SELL
12535.79

SELL
12553.44

SELL
12588.63

SELL
12606.72

SELL
11736.06

SELL
11481.71

NASDAQ
Composite

SELL
2739.93

SELL
2748.19

SELL
2758.69

SELL
2768.52

SELL
2776.91

SELL
2545.58

BUY
2802.16

Value Line
Index

SELL
2820.60

SELL
2829.91

SELL
2841.05

SELL
2853.65

SELL
2864.17

SELL
2587.41

BUY
2997.55

Market Overview – What We Think:

  • Last Thursday’s intraday high at 1333.47—S&P 500 was probably peak of Minor Cycle rally that began over month ago. Wednesday’s strength erased a large part of pullback since then, but it remains to be seen if a new short to intermediate term high will follow.
  • First serious negativity on Minor Cycle would come with break below 10-Day Price Channel (1305.34—Thursday) and could set stage up for challenge to Intermediate Cycle uptrend underway since October lows.
  • If we are correct that all of uptrend since October lows has been a “return action rally” following the creation of a major high in May 2011 (1370.58—S&P 500), a retracement of all gains since October could quickly follow.
  • Given proximity of pricing to last May’s highs and fact Minor Cycle has yet to turn negative, we cannot preclude additional upside attempts even though the odds of a continuance of short and intermediate-term rally are diminishing.

Click charts to enlarge

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