Stock market's bull run destined to end -- but when?

Stock index, chart, technical analysis

The stock market, as measured by the major indexes, ambled modestly higher last week and the short-term cycle took on a more positive tone. The Dow Jones Industrial Average eked out a new Intermediate Cycle high (13661.87) and its best level since the week ending December 28, 2007. The S&P 500 also perked upward on the Minor Cycle, but did not exceed its intermediate-term high (1474.51) made back on September 14. And while the NASDAQ Composite and the Value Line index also posted gains last week, neither index has yet to signal a positive turn on the Minor Cycle.

The intermediate uptrend that has been underway since the June 4 lows is occurring during a period of the year that has been vulnerable on occasion, especially five years ago when the S&P 500 reached a Major Cycle high October 11, 2007 (1576.09). That high was followed by the second worst decline (nearly 58%) in stock market history and the bear market lows of March 2009 that were followed by a 119% rally in the S&P 500 through last Friday.

Market Overview – What We Know:

• Major indexes posted modest gains last week as “neutral” to “Oversold” near-term conditions provided some opportunity on upside.
• Dow Jones Industrial Average rallied to new Intermediate Cycle high (13661.87), but performance was solo since S&P 500, NASDAQ Composite, and Value Line index have yet to follow suit, even though S&P did become more positive on Minor Cycle with break above upper edge of 10-Day Price Channel.
• NYSE trading volume sank last week by 10%, but Average Price per Share rose 91 cents to $62.11.
• Intermediate Cycle remains positive in all cycles and S&P 500 would have to sink below lower edge of 10-Week Price Channel (1381.86) to suggest negative reversal.
• To indicate Minor Cycle negative, S&P 500 must decline below lower edge of 10-Day Price Channel (1441.45 through Monday).
• Weekly MAAD was positive with 15 issues higher and 5 lower. Weekly MAAD Ratio was last moderately “Overbought” at 1.31. Daily MAAD remains well below March 20 high. Daily MAAD Ratio was last higher toward “Neutral” at .86.
• CPFL on both Daily and Weekly cycles was flat last week with Daily CPFL Ratio near “Neutral’ (.94) and Weekly CPFL Ratio still “Overbought” (2.35). Indicator is nowhere close to major resistance made week of February 25, 2011.
• Cumulative Volume (CV) in both S&P 500 and S&P Emini remains weaker than index pricing on both Daily and Weekly trends.

But it is the statistical nature of this market in which we are most interested, and concerned, since it is on that front that the advance from March 2009 has encompassed two distinct, indicator time frames. From March 2009 until the spring of 2011 the S&P 500 rallied 106% and our key indicators kept in synch with pricing to that point. But since the price highs of May 2011, and for the better part of the past 18 months, while the S&P 500 has rallied 6.6%, no indicator has confirmed that strength.