Stock index bull, bear battle continues on low volume

Market Snapshot for session ending 3-1-12:

 

Last

Day Change

%Change

S&P 500 Index

1374.09

+8.40

+.62%

Dow Jones Industrials

12980.30

+28.22

+.22%

NASDAQ Composite

2988.97

+22.08

+.74%

Value Line Arithmetic Index

3017.06

+16.59

+.55%

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 Thursday, but none surpassed intraday and new short to intermediate-term highs reached Wednesday.
  • Possible Key Reversal characteristics (Open was above previous day’s close; day’s high was above previous day’s high; and day’s close was below yesterday’s low) made Wednesday in S&P 500 and Dow 30 remain intact so long as neither index makes a new high (1378.04—S&P 500, 13055.75—Dow 30).
  • All indexes remain within range of upside measured move targets as calculated from October 2011 lows and via potential “Ascending Wedge” price patterns.
  • Most Actives Advance Decline Line (MAAD) was positive Thursday by 14 to 5, but did not exceed new short to intermediate high hit Tuesday.
  • Daily MAAD Ratio was last moving toward moderately “Overbought” territory while MAAD Weekly Ratio was near “Overbought.”
  • Weakness below lower edge of 10-Day Price Channel (1353.00 / S&P 500 --Friday) would suggest beginning of end of Minor Cycle trend in effect since December low (1202.37 / S&P 500).
Index Daily / Weekly / Monthly Stops Weekly Monthly
2/27 2/28 2/29 3/1 3/2 3/2 3/31

S&P 500
Index

SELL
1343.90

SELL
1346.82

SELL
1348.89

SELL
1350.02

SELL
1353.00

SELL
1258.05

SELL
1189.77

Dow Jones
Industrials

SELL
12805.38

SELL
12828.20

SELL
12846.55

SELL
12856.65

SELL
12877.92

SELL
12180.17

SELL
11271.99

NASDAQ
Composite

SELL
2912.99

SELL
2918.17

SELL
2921.70

SELL
2923.20

SELL
2930.67

SELL
2641.75

SELL
2517.37

Value Line
Index

SELL
2996.66

SELL
3000.79

SELL
3002.56

SELL
3002.05

SELL
3008.47

SELL
2706.66

SELL
2612.10

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

Market Overview – What We Think:

  • If possible Key Reversal Day Wednesday implies the same results as those produced October 11, 2007 at the exact top of market and prior to second worst decline in stock market history, very least we could expect from this point forward is a short-term decline.
  • Such smaller cycle weakness would then determine staying power of larger Intermediate Cycle that has been underway since October lows. If Intermediate Cycle began to weaken, downward pressure could be exerted on larger major trend that continues to exhibit neutral readings.
  • Fact that Weekly MAAD has not mimicked strength of Daily MAAD is bearish since both cycles must be in synch ultimately to confirm positive longer-term move.
  • And fact that CPFL continues to exhibit lackluster performance is not a vote of confidence for bullish case.

Click charts to enlarge

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