S&P, Nasdaq poised to hit best bids since October lows

Follow-through action on Tuesday key

Market Snapshot for session ending 3-12-12:

 

Last

Day Change

%Change

S&P 500 Index

1371.09

+.22

+.02%

Dow Jones Industrials

12959.71

+37.71

+.29%

NASDAQ Composite

2983.66

-4.68

-.16%

Value Line Arithmetic Index

3002.96

-8.44

-.28%

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

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 were mixed Monday, but small gain in S&P 500 plus further gains Monday evening in S&P Emini could result in strength to new high in S&P 500 Tuesday (above 1378.04).
  • Similar action was developing in NASDAQ Composite. Dow Industrials and Value Line index were lagging as of Monday’s close.
  • Trading volume in S&P 500 shrank nearly 15% Monday, despite small gains.
  • Strength above 1378.04—S&P 500 would negate possible Key Reversal Day price pattern created on February 29 in S&P 500 and Dow 30. 
  • Cumulative Volume in S&P 500 and S&P Emini futures contract has recovered about 60% and 40% of cumulative losses, respectively, from 2011 highs and remains much weaker than S&P 500 cash pricing.
  • Daily Most Actives (MAAD) was marginally negative Monday by 8 to 12 with Daily MAAD Ratio continuing to hold near “Neutral.” Weekly MAAD Ratio remains “Overbought.”
  • CPFL was negative Monday by 1.34 to 1. Neither Daily nor Weekly CPFL series is anywhere near bettering its 2011 CPFL highs.

Market Overview – What We Think:

  • Buying back above S&P 500 intraday high of 1378.04 created February 29 would negate potential Key Reversal Day while re-asserting Intermediate Cycle uptrend.
  • Fact that Cumulative Volume doesn’t look as if it’s inclined to confirm new strength is bearish, but with prices threatening to make new highs, price takes precedence as it has since October lows.
  • We had anticipated that strength since March 6 lows (1340.03—S&P 500) could prove to be no more than short-covering rally after creation of short to intermediate-term high on February 29, but that scenario is fading fast.
  • Fact is, so long as larger Intermediate Cycle remains intact, market could remain responsive to more buying. Underscoring that tendency, MAAD Daily Ratio corrected nicely from “Overbought” conditions back on January 12 down to “Oversold/Neutral” where indicator currently holds. That tone as reflected by Smart Money on short-term is bullish.
Index Daily / Weekly / Monthly Stops Weekly Monthly
 

3/12

3/13

3/14

3/15

3/16

3/16

3/31

S&P 500 Index

SELL1372.40

SELL1371.12

SELL1368.31

SELL1368.17

SELL1369.04

SELL1286.13

SELL1189.77

Dow Jones Industrials

SELL13012.25

SELL13002.83

SELL12975.90

SELL12965.59

SELL12962.10

SELL12401.55

SELL11271.99

NASDAQ Composite

BUY2954.73

BUY2945.86

BUY2941.30

BUY2941.48

BUY2946.38

SELL2722.39

SELL2517.37

Value Line Index

BUY3028.52

BUY3014.17

BUY2999.85

BUY2994.22

BUY2996.13

SELL2800.70

SELL2612.10

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.

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