Stock market rallies; short-term trend looks more positive

Stock index, chart, technical analysis

Market Overview – What We Know:

• Short-term “Oversold” conditions took hold Thursday to spur index pricing higher.
• S&P 500 closed toward day’s high (1428.35).
• Minor Cycle remains negative until S&P rises above upper edge of 10-Day Price Channel (1433.67 through Friday).
• NYSE trading volume declined 7% Thursday and Average Price per Share gained 29 cents to $60.74.
• S&P has yet to decisively break below 10-Week Price Channel (1413.38 through November 2) to suggest reversal to Intermediate Cycle negative.
• Daily MAAD was net positive Thursday with 17 issues higher and 3 lower. Daily MAAD Ratio remains “Oversold” (.78).
• Daily CPFL was sharply positive Thursday by 5.25 to 1 with Daily CPFL Ratio rising from “Oversold” territory (.89).

Market Overview – What We Think:

• We continue to believe Intermediate Cycle uptrend begun in early June is over and September 14 intraday highs (1454.71—S&P 500) will not be seriously unchallenged for foreseeable future.
• While pricing in all of major indexes has moved within range of lower edges of 10-Week Price Channels (1413.38—S&P 500) and has even broken below similar points in Dow 30 and NASDAQ Composite to suggest Intermediate Cycle negativity, in face of near-term “Oversold” conditions, we could see further rebounding on short-term trend..
• But we also suspect any near-term pop would be short-lived and would produce no more than “Neutral” short-term readings. Such conditions should precede setup for resumption of larger intermediate-term negative.
• How new intermediate-term negative plays out could determine staying power of Major Cycle trend which is challenged in terms of “Overbought” conditions and lack of solid indicator underpinnings.

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