First, there is Major Cycle Momentum that has been hovering just above neutral for months, despite net gains in pricing. In other words, that same long-term Momentum has confirmed none of the strength since October.
Daily S & P 500 Index with Cumulative Volume
Weekly S & P 500 Index with Cumulative Volume
Second, while Minor Cycle “Overbought” conditions have been largely eliminated and are currently beginning to reflect some new statistical vulnerability, Intermediate Cycle readings remain “Overbought,” or nearly so, and vulnerable. Clearly, the market is not in the same advantageous buying zone it reflected last October. Until those overheated levels are eliminated, a higher degree of risk persists.
Third, volume on the New York Stock exchange remains toward 10 year lows. And Cumulative Volume (CV) as applied to the S&P 500, S&P Emini, Dow 30, and the NASDAQ Composite has continued to perform poorly relative to the 2011 index price highs. That variance means that the volume that has propelled prices higher since the March 2009 lows and since last October has not been of the same quality as the activity that drove prices higher in earlier strong rallies. That lack implies weak hands have been the prime movers.
Daily S & P 500 Emini Futures contract with Cumulative Volume
Weekly S & P 500 Emini Futures contract with Cumulative Volume
Fourth, as an extension of the volume considerations, our Most Actives Advance Decline Line (MAAD) was able to marginally better its 2011 highs on a cumulative Daily basis, but the Weekly MAAD series has yet to follow suit and, on a comparative basis, remains at levels when the S&P 500 was about 100 points below current levels. It’s true that the MAAD Weekly Ratio has erased a large part of recent “Overbought” conditions and was last near “Neutral,” but “Neutral” is not “Oversold” and may not mean the market is necessarily in a zone of longer-term opportunity. Which leaves Daily MAAD Ratio stats. That latter series has moved upward from the opposite direction at “Oversold” and was also at “Neutral.” But “Neutral” in a new bear trend, or a trend working toward a bearish resolution, can be the same thing as “Overbought” in a bull phase.