S&P 500 at intermediate high, but big picture uptrend tepid

Are strong gains fleeting?

Stock index, chart, technical analysis Stock index, chart, technical analysis

Market Snapshot:

 

Last

Week Chg

Week %Chg

S&P 500 Index

1437.92

+31.34

+2.22%

Dow Jones Industrials

13306.64

+215.80

+1.64%

NASDAQ Composite

3136.42

+69.45

+2.22%

Value Line Arithmetic Index

3070.11

+97.09

+3.27%

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

Bulls –1; Bears – 0.

That tally was definitely the score last week in the wake of a sharp rally in the major averages last Thursday that propelled the venerable Dow Jones Industrials higher by 244.52 points with the S&P 500 adding 28.68, the NASDAQ Composite 66.54, and the Value Line index 92.31. On the week, all of the major indexes were positive, but only the S&P 500 and the NASDAQ surpassed their late March/April resistance highs. The Dow 30 needs another .2% and the Value Line index must add 1.5% even though the latter was the biggest gainer on the week at3.27%.

Market Overview – What We Know:

  • Major indexes posted strong gains last week with most of strength posted during last Thursday’s rally.
  • Post holiday volume with one less trading day resulted in drop in NYSE trading volume of nearly 2%, but Average Price per Share rose $1.70 to $60.51. AVP remains below its best level at $61.48 made back on March 15.
  • Following nearly two weeks of activity that found buyers just below market as each short-term pull back developed, short-term “Oversold” conditions in Daily MAAD and CPFL Ratios were preliminary to and coincident with strength. Both have since moved back to moderately “Overbought” (MAAD at 1.27) and “Overbought” (CPFL at 2.14) levels, however.
  • S&P 500 and NASDAQ Composite bettered March/April highs last week, but Dow 30 and Value Line index did not.
  • Last Thursday’s strength caused short-term Momentum and our proprietary Trading Oscillators to flip back into positive territory. S&P 500 would now have to decline below lower edge of 10-Day Price Channel (1402.83 through Monday) to suggest near-term reversal to negative.
  • Intermediate Cycle remains positive and needs weakness below lower edge of 10-Week Price Channel (1344.26 through September 14) to turn negative.
  • MAAD was positive last week with 17 issues higher and 2 lower. Weekly MAAD Ratio was last moderately “Overbought” at 1.28. Daily MAAD remains below its July 3 peak despite higher S&P 500 prices to underscore negative divergence.
  • Weekly CPFL was positive last week by 6.38 to 1, but neither the Daily nor the Weekly CPFL series has been able to overcome first resistance at the April 2012 resistance highs.
  • Cumulative Volume (CV) in S&P 500 rallied above August and April highs in cash S&P last week, but only above August CV high in S&P Emini.

So what’s not to like about a resumption of the Intermediate Cycle rally began after the June lows (1266.74—S&P 500) from a purely practical point-of-view? Nothing. In fact, on a net basis that has been the case since the March 2009 lows (666.79—S&P 500). Nobody but a complete idiot would regard a 116% gain in the S&P over a 3 ½ year period as anything but a welcome gift following the 2007/2008 debacle. In fact, as of last Friday the S&P had recovered all but 8.8%, or 138.17 points, of that 2007/2008 bear market. Thus, the “Bulls – 1; Bears – 0” scorecard includes not just the short to intermediate-term gain since the June lows, it also encompasses the bull trend since March 2009.

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