S&P 500 within inches of May 2011 high, fades

Market Snapshot for session ending 2-21-12:

 

Last

Day Change

%Change

S&P 500 Index

1362.21

+.98

+.07%

Dow Jones Industrials

12965.69

+15.81

+.12%

NASDAQ Composite

2948.57

-3.21

-.11%

Value Line Arithmetic Index

3026.97

-12.68

-.42%

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:

  • S&P 500 was up slightly Tuesday and came within 2.82 points of equaling its May 2, 2011 high. Index nonetheless pulled back from intraday high and was last 8.37 points from that peak.
  • Both Dow Jones Industrial average and NASDAQ Composite made new highs Tuesday and remain above May 2011 price highs.
  • Most Actives Advance Decline Line (MAAD) remains below new short-term high made February 8.
  • Trading volume declined Tuesday in S&P 500 by nearly 12%.
  • Short and Intermediate-term trends remain “Overbought” based on S&P 500, but MAAD Daily Ratio has moved lower from “Overbought” to “Neutral.”
  • Weakness below lower edge of 10-Day Price Channel (1339.80--Wednesday) would suggest beginning of end of Minor Cycle trend in effect since December low (1202.37).
  • Short-term Momentum in S&P 500 remains marginally positive, but could easily turn negative.
  • Cumulative Volume (CV) in S&P 500 made new short-term high Tuesday, but S&P Emini peaked last Thursday and has yet to better that level again. Both remain well below 2011 highs.
  • Daily CPFL made new short-term high Friday after breaking above late October resistance last Tuesday, but was fractionally negative yesterday. Indicator remains substantially below February 25, 2011 plot high.
Index Daily / Weekly / Monthly Stops Weekly Monthly
2/20 2/21 2/22 2/23 2/24 2/24 2/29

S&P 500
Index

SELL
1336.76

SELL
1338.59

SELL
1339.80

SELL
1340.57

SELL
1343.90

SELL
1243.18

SELL
1218.82

Dow Jones
Industrials

SELL
12773.12

SELL
12782.31

SELL
12781.45

SELL
12783.11

SELL
12805.38

SELL
12051.50

SELL
11481.71

NASDAQ
Composite

SELL
2890.33

SELL
2897.21

SELL
2901.98

SELL
2905.44

SELL
2912.99

SELL
2606.98

SELL
2572.57

Value Line
Index

SELL
2980.45

SELL
2984.42

SELL
2986.33

SELL
2987.80

SELL
2996.66

SELL
2664.65

SELL
2708.65

Market Overview – What We Think:

  • Short-term pullback must soon develop or our suggestion market has been tracing out A-B-C rally via a bearish “ascending wedge” chart pattern since October lows could be invalidated.
  • So long as prices do not break below edge of 10-Day Price Channel (1339.80--Wednesday) short-term advance will remain intact.
  • Ongoing failure of Cumulative Volume (CV) in S&P 500 and S&P Emini relative to underlying S&P 500 underscores our belief rally since October lows lacks internal “fortitude” necessary to sustain this rally on longer term.
  • To prove point, we would need to see a healthy decline on Minor Cycle that could threaten larger Intermediate Cycle that currently remains positive until 1243.18 at bottom of 10-Week Price Channel.
  • Ultimate status of Intermediate to Major Cycles will likely be determined once short-term advance ends and bias of indicators relative to pricing is re-assessed.

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