Stock indexes flirt with new highs, but air remains thin

Market Snapshot for session ending 2-23-12:

 

Last

Day Change

%Change

S&P 500 Index

1363.40

+5.80

+.43%

Dow Jones Industrials

12984.69

+46.02

+.36%

NASDAQ Composite

2956.98

+23.81

+.81%

Value Line Arithmetic Index

3037.21

+28.83

+.96%

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 marginal gains Thursday within range of recent highs.
  • S&P 500 was last 7.12 points from equaling its May 2, 2011 peak. Dow Jones Industrials and NASDAQ Composite index have already surpassed similar levels. Value Line index not.
  • Most Actives Advance Decline Line (MAAD) was positive Thursday by 14 to 6 and remains in consolidation pattern defined by February 8 high that exceeded 2011 peak.
  • More importantly MAAD Daily Ratio has moved back into “Oversold” territory and zone of opportunity, even though price-based Ratios remain “Overbought” on both Minor and Intermediate Cycles.
  • Trading volume in S&P 500 was little changed from Wednesday.
  • Weakness below lower edge of 10-Day Price Channel (1343.90 / S&P 500 --Friday) 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 Thursday, but S&P Emini CV did not and remains just below short-term high made Monday.
  • Daily CPFL was slightly positive Thursday, but indicator remains below new short-term high made last Friday. 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:

  • It’s too soon to suggest end of Minor Cycle uptrend in effect since December 10 low (1202.37 / S&P 500), given proximity of pricing to recent highs and reluctance of major indexes to break lower.
  • 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 Minor Cycle reversal would come with a break below edge of 10-Day Price Channel (1343.90--Friday) and would imply developing threat to larger Intermediate Cycle that is also “Overbought.” Intermediate trend remains positive until lower edge of 10-Week Price Channel (1243.18 / S&P 500).
  • Considering fact that while price-based Ratios remain “Overbought,” Daily MAAD Ratio has corrected from “Overbought” toward “Oversold” and we cannot rule out possibility market has corrected recent excesses “internally” and could be poised for more strength.
  • Status of Intermediate Cycle will be determined once short-term advance ends and bias of indicators relative to pricing is demonstrated.

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