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

Are strong gains fleeting?

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

cumulative, emini, volume

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

weekly, cumulative, volume, emini

When disparities between index pricing and indicators persist over a period of time, not only must an investor become much more aware of pricing weakness when it develops, he must become increasingly reluctant to remain as fully engaged as during previous periods when index pricing and the indicators were fully in synch. When the market reached deeply oversold levels in March 2009 on all cycles (Daily, Weekly, and Monthly) and prices began moving sharply higher, all of our key indicators kept in step with pricing. In other words, from the March 2009 low in the S&P 500 (666.79) until the peak in May 2011 (1370.58), the S&P 500 gained nearly 116%. Since then it has added another 10% relative to that 2009 low or the 4.9% we calculated from the 2011 high. Simply put, is it worth it to remain fully invested when a wide array of indicators is suggesting market underpinnings have grown progressively weaker?

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

9/10

9/11

9/12

9/13

9/14

9/14

9/30

S&P 500 Index

SELL 1402.83

SELL 1401.37

SELL 1401.05

SELL 1401.36

SELL 1406.77

SELL 1344.26

SELL 1256.02

Dow Jones Industrials

SELL 13055.15

SELL 13035.17

SELL 13027.36

SELL 13027.39

SELL 13068.99

SELL 12680.65

SELL 12029.08

NASDAQ Composite

SELL 3053.55

SELL 3050.95

SELL 3052.75

SELL 3055.71

SELL 3069.09

SELL 2879.61

SELL 2685.41

Value Line Index

SELL 2962.80

SELL 2959.50

SELL 2961.79

SELL 2965.54

SELL 2980.54

SELL 2819.41

SELL 2702.37

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.

Will this market continue higher in the sessions and weeks ahead? Maybe. But keep in mind that we are rapidly approaching that period of the year, the fall, when some big time bear traps have been laid for the unwary and complacent. Keep in mind 1929, 1987, and 2007. The S&P 500 remains nearly 9% below its October 2007 high (1576.09), a critical resistance point for this market and a lid all of our indicators reached 1 ½ years ago. And since then? The S&P has rallied in only the single digits.

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