Market gains Wednesday as volume remains unimpressive

Market Snapshot for session ending 2-8-12:

 

Last

Day Change

%Change

S&P 500 Index

1349.96

+2.91

+.22%

Dow Jones Industrials

12883.95

+5.74

+.04%

NASDAQ Composite

2915.86

+11.77

+.41%

Value Line Arithmetic Index

3020.81

+7.70

+.26%

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:

  • Major indexes posted small gains Wednesday and NASDAQ Composite index rallied to new high. Dow Jones Industrial Average hit new high Tuesday, but S&P 500 and Value Line index have yet to follow suit by bettering May 2011 highs.
  • Trading volume in S&P 500 index rose Wednesday by nearly 14%.
  • Short and Intermediate-term trends remain “Overbought.”
  • Selling in S&P 500 below lower edge of 10-Day Price Channel (1310.92—Thursday) would suggest beginning of end of Minor Cycle advance underway since December 19 short-term low (1202.37—S&P 500).
  • Short-term Momentum in S&P 500 remains slightly positive, but has failed to confirm any strength in index since December lows.
  • Daily MAAD rallied to new high Wednesday and was last at level not seen since March 5, 2008 when S&P 500 was quoted at 1333. Weekly MAAD continues to underperform.
  • Cumulative Volume (CV) in S&P 500 remains above late October resistance highs, but Emini CV remains weak.
  • Daily CPFL was positive Wednesday by 2.56 to 1. Indicator is closing in on late October resistance high, but remains below last October’s short-term high 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:

  • Despite marginal new highs in the Dow Jones Industrial Average and the NASDAQ Composite, we suspect 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 price strength has always accrued to benefit of indicators.
  • With major indexes still “Overbought” on both 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 (1310.92—S&P 500 Thursday) 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.

Click charts to enlarge

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