As stock market rises, timing of top remains elusive

Minor and intermediate cycles remain overbought

Market Snapshot for session ending 3-15-12:

 

Last

Day Change

%Change

S&P 500 Index

1402.60

+8.32

+60%

Dow Jones Industrials

13252.76

+58.66

+.44%

NASDAQ Composite

3056.37

+15.64

+.51%

Value Line Arithmetic Index

3074.81

+30.83

+1.01%

Minor Cycle (Short-term trend lasting days to a few weeks) 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 rally to new short to intermediate-term highs Thursday.
  • Short and Intermediate-term trends remain positive.
  • Total Volume on NYSE diminished Thursday by just over 1%, and for second session in row, while average NYSE share price rose to $61.48 from $61.01.
  • Based on price, both Minor and Intermediate Cycles remain “Overbought.”
  • Cumulative Volume in S&P 500 and S&P Emini futures contract both rallied to new short to intermediate-term highs Thursday, but neither series is close has been able to overcome 2011 highs.
  • Daily Most Actives (MAAD) was positive Thursday by ratio of 9 to 1 with Daily MAAD rallying to new short to intermediate-term high. Daily MAAD Ratio at 1.40 was up from “Neutral.” Weekly MAAD Ratio remains “Overbought.”
  • CPFL was positive Wednesday by 2.27 to 1 on Dollar Value basis and hit new short-term high with Daily CPFL last threatening to break above defined downtrend line stretching back to late February 2011 highs. But neither Daily nor Weekly CPFL is anywhere near overcoming major resistance at actual 2011 indicator highs.

Market Overview – What We Think:

  • Resumption of short to intermediate term strength in major indexes over past week has simply re-asserted uptrend initially begun after October 2011 lows.
  • While we had presumed possible Key Reversal Day created in S&P and Dow 30 on February 29 might have proven to be top of five month old rally, recent buying to new highs has eliminated that suspicion.
  • As we look for new evidence of at least an interim top, failure of Momentum on both short and intermediate cycles could be sign strength will not last. Fact that market is “Overbought” is helpful, but such measurements are not definitive since “Overbought” readings can stay that way. It is reversals of those conditions that count, not the extreme conditions themselves.
  • There is also lingering lack of confirmation in Cumulative Volume in both S&P 500 and S&P Emini in that both series remain well below 2011 indicator plot highs. While such divergent evidence has not stemmed tide of advance since October, it is nonetheless suggestion volume underpinnings of market are not as strong this time around as during previous rallies.
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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