Stock market flirts with highs but without conviction

Market Snapshot:

 

Last

Week Chg

Week %Chg

S&P 500 Index

1342.64

-2.26

-.16%

Dow Jones Industrials

12801.23

-61.00

-.47%

NASDAQ Composite

2903.88

-1.78

-.06%

Value Line Arithmetic Index

2984.35

-32.99

-1.09%

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

Remember one of those movies when the hero struggles for days and weeks, even months, against gargantuan odds before finally reaching his goal, exhausted, and just a stone’s throw from death. Kinda like the New York Marathon with a bowling ball attached to each shoulder of our hero. Plop. He makes it.

That struggle reminds us a lot of the current stock market. After more than four months, the major indexes have come within range of making new highs relative to the May 2011 peaks with even a few indexes and indicators such as the Dow Jones Industrial Average, NASDAQ Composite, and the Daily Most Actives Advance/Decline Line (MAAD) hitting new highs by inches over the past several days. But those few victories were nearly all erased via weakness late last week while the other indexes (S&P 500 and Value Line Index) and an array of indicators have yet to follow suit with new highs. Will they or won’t they?

Key indexes / indicators relative to May 2011 highs

Index / Indicator

New high above May 2011

% to new high

S&P 500

No

-2.03%

Dow Jones Industrials

Yes

*-.58%

NASDAQ Composite

Yes

+.55%

Value Line index

No

-5.24%

MAAD Daily

Yes

*-.72%

MAAD Weekly

No

-2.66%

CPFL Daily

No

-20.82%

CPFL Weekly

No

-.76%

S&P 500 CV Daily

No

-6.88%

S&P 500 CV Weekly

No

-6.88%

S&P Emini CV Daily

No

-10.63%

S&P Emini CV Weekly

No

-10.63%

S&P Momentum Daily

No

-44.38%

S&P Momentum Weekly

No

-20.33%

(*) Made new high, but pulled back below 2011 peak.

With both the Minor and Intermediate Cycles now in “Overbought” territory, the odds of a sustained rally, let alone strength to new highs by all indexes and indicators, may become increasingly difficult. In World War II after the German army invaded the Soviet Union via Operation Barbarossa in 1941, it reached the suburbs of Moscow and could even see the spires of the Kremlin. But the Germans were never able to get into Moscow proper. The same kind of failure could apply to this market. Prices have had a good run, but they are getting to the point when there may simply not be enough upside impetus to push prices and indicators over the goal line marked by the 2011 highs.

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