Stock resistance holds Monday, but index prices don’t

Market Snapshot for session ending 2-2-12:

 

Last

Day Change

%Change

S&P 500 Index

1344.33

-.57

-.04%

Dow Jones Industrials

12845.13

-17.10

-.13%

NASDAQ Composite

2901.99

-3.66

-.13%

Value Line Arithmetic Index

3011.83

-5.51

-.18%

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:

  • Small losses in major indexes characterized market action Monday.
  • Trading volume in S&P 500 index declined by 24%.
  • Short-term trend remains “Overbought” as does next larger Intermediate Cycle.-- Selling in S&P 500 below lower edge of 10-Day Price Channel (1307.47—Tuesday) would suggest beginning of end of Minor Cycle advance underway since mid-December.
  • Short-term Momentum in S&P 500 remains fractionally positive and has failed to confirm any of strength in index since December 19 lows. Indicator could easily fall into negative territory.
  • Daily MAAD was negative Monday by 8 to 12, but indicator nonetheless remains near new high made last Friday. Weekly MAAD, however, remains well below similar 2011 level. Weekly MAAD is “Overbought.”
  • Cumulative Volume (CV) in S&P 500 remains above late October resistance highs, as S&P Emini CV fractionally bettered late October resistance high last Friday. But Emini CV remains weak overall.
  • Daily CPFL was positive Monday for tenth session in row by 3.13 to 1. Indicator is closing in on late October resistance high, but remains below last October’s resistance and has confirmed none of strength since October lows.
Index Daily / Weekly / Monthly Stops Weekly Monthly
2/6 2/7 2/8 2/9 2/10 2/10 2/29

S&P 500
Index

SELL
1307.12

SELL
1307.47

SELL
1308.56

SELL
1310.92

SELL
1313.88

SELL
1218.64

SELL
1218.82

Dow Jones
Industrials

SELL
12061.93

SELL
12600.07

SELL
12607.49

SELL
12619.51

SELL
12634.75

SELL
11834.14

SELL
11481.71

NASDAQ
Composite

SELL
2780.79

SELL
2785.96

SELL
2794.51

SELL
2805.74

SELL
2822.28

SELL
2558.94

SELL
2592.57

Value Line
Index

SELL
2869.50

SELL
2873.72

SELL
2879.13

SELL
2892.32

SELL
2905.91

SELL
2606.41

SELL
2708.65

Market Overview – What We Think:

  • We continue to believe upside failure by majority of our key indicators is strong hint that rally since October lows is not a resumption of the primary bull trend begun in October 2009. More likely scenario is powerful countertrend rally.
  • While it’s difficult to continue holding onto bearish prognosis in the face of higher prices, we can only suggest indicator weakness in the face of higher prices has always accrued to benefit of indicators. This is not to say that profits haven’t been possible since October since even longs can occasionally make money in a bear market.
  • With the major indexes continuing to evoke “Overbought” readings on both the Minor and Intermediate Cycles, we can only defer to our indicators and their implied discipline while awaiting inevitable downside breaks in price below 10-Day Price Channels first (1307.47—S&P 500--Tuesday) and then 10-Week Channels second (1218.64—S&P 500). Point at which those breaks occur will determine staying power of longer-term trend.

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