Market off Wednesday; S&P can't better 2011 high

Market Snapshot for session ending 2-22-12:

 

Last

Day Change

%Change

S&P 500 Index

1357.66

-4.55

-.33%

Dow Jones Industrials

12938.67

-27.02

-.21%

NASDAQ Composite

2933.17

-15.40

-.52%

Value Line Arithmetic Index

3008.37

-18.60

-.61%

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:

  • Selling pressures in major index prices Wednesday moved prices marginally lower. But short-term trends remain intact in all
  • Most Actives Advance Decline Line (MAAD) suffered further weakness Wednesday with 2 issues higher and 18 lower to cause indicator to move within 3 issues of its February 15 short-term low. Daily MAAD was last 20 issues from equaling its February 8 and new short-term high.
  • Trading volume in S&P 500 declined about 3% Wednesday.
  • Short and Intermediate-term trends remain “Overbought” based on S&P 500, but Daily MAAD Ratio has moved lower from “Overbought” and was last dipping toward “Oversold” levels.
  • Weakness below lower edge of 10-Day Price Channel (1340.57 / S&P 500 --Thursday) would suggest beginning of end of Minor Cycle trend in effect since December low (1202.37 / S&P 500).
  • 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. CPFL was negative Wednesday by 1.87 to 1. 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:

  • While it’s a bit too soon to suggest beginning of the end of Minor Cycle uptrend in effect since December 10 low (1202.37 / S&P 500), ongoing inability of bellwether to overcome major resistance at May 2, 2011 high (1370.58 / S&P 500) is further evidence this market is having problems.
  • But 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 become problematic.
  • First sign of such a reversal would come with a break below edge of 10-Day Price Channel (1340.57--Thursday) and would then imply developing threat to larger Intermediate Cycle that is also “Overbought” and which remains positive until lower edge of 10-Week Price Channel (1243.18 / S&P 500).
  • 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 strength on longer term.
  • Ultimate status of Intermediate to Major Cycles will likely be determined once short-term advance ends and bias of indicators relative to pricing is demonstrated.

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