Market near key resistance: 'Do or die’ on negative trend

Resumption of short-term weakness would determine staying power

Market Snapshot for session ending 3-8-12:

 

Last

Day Change

%Change

S&P 500 Index

1365.91

+13.28

+.98%

Dow Jones Industrials

12907.94

+70.60

+.55%

NASDAQ Composite

2970.42

+34.73

+1.18%

Value Line Arithmetic Index

2982.24

+38.84

+1.32%

Minor Cycle (Short-term trend lasting days to a few weeks) Negative / Neutral

Intermediate Cycle (Medium trend lasting weeks to several months) Positive / Neutral

Major Cycle (Long-term trend lasting several months to years) Positive / Neutral

Market Overview – What We Know:

  • Major indexes extended gains Thursday in wake of recent losses, but none has been able to overcome statistical resistance at upper edge of 10-Day Price Channels (1372.49 / S&P 500 and 2983.64 / NASDAQ Composite).
  • To re-assert Intermediate Cycle advance begun after October lows, S&P 500 would need to exceed February 29 intraday high at 1378.04 with NASDAQ Composite moving above 3000.11.
  • Trading volume was off slightly in S&P 500 Thursday and up a bit in NASDAQ.
  • Recent negativity and subsequent return move developed after major indexes moved within range of upside measured move targets as calculated from October 2011 lows.
  • Most Actives Advance Decline Line (MAAD) was positive Thursday by 15 to 5, but indicator has yet to overcome February 8 short-term peak. Daily MAAD Ratio was last toward “Oversold” territory while Weekly MAAD has yet to better actual 2011 high.
  • CPFL was positive Thursday by 1.40 to 1, but indicator remains below downtrend line stretching back to February 2011 indicator highs.
  • Cumulative Volume in S&P 500 and S&P Emini futures contract has recovered about 50% of losses since Monday’s highs, but is nowhere near 2011 highs.

Market Overview – What We Think:

  • Strength since Monday’s lows still looks/feels like short-covering rally, but movement back above upper edge of defined 10-Day Price Channel (1372.49—S&P 500) would jeopardize short-term negative trend and set market up for serious challenge to February 29 intraday high at 1378.04—S&P 500.
  • Strength in S&P back above February 29 high would not only negate possible Key Reversal Day formed during that session, but it would likely re-assert Intermediate Cycle uptrend initiated after October lows.
  • If, however, index Price Channels and recent highs hold, case could be made that recent highs (1378.04—S&P 500) could prove to be best levels market will see for some time to come. 
  • In addition, fact that last such KRD pattern occurred at beginning of second worst stock market decline in history is cause for concern since development of new pattern implies negative potential. 
  • Resumption of short-term weakness would determine staying power of larger intermediate trend that has been underway since October lows. And weakness in Intermediate Cycle would exert pressure on larger major trend that continues to exhibit neutral readings.
ndex Daily/Weekly/Monthly Stops Weekly Monthly
 

3/5

3/6

3/7

3/8

3/9

3/9

3/31

S&P 500 Index

SELL 1354.08

SELL 1356.84

SELL 1358.80

SELL 1360.72

SELL 1362.28

SELL 1270.16

SELL 1189.77

Dow Jones Industrials

SELL 12884.94

SELL 12902.19

SELL 12912.44

SELL 12922.52

SELL 12929.39

SELL 12283.19

SELL 11271.99

NASDAQ Composite

SELL 2932.51

SELL 2939.71

SELL 2945.08

SELL 2951.86

SELL 2956.29

SELL 2675.83

SELL 2517.37

Value Line Index

BUY 3039.97

BUY 3042.13

BUY 3044.05

BUY 3042.95

BUY 3038.91

SELL 2747.77

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.

Click charts to enlarge

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus