Low stock market volume continues to shadow gains

Stock index, chart, technical analysis

Market Overview – What We Know:

• Minor Cycle accrued bit more traction Wednesday when all of major indexes posted gains.
• Market volume was slightly below Tuesday’s levels.
• S&P 500 would need to sell below lower edge of 10-Day Price Channel (1366.02) to suggest reversal of near-term trend to negative.
• Intermediate cycle remains positive until S&P 500 rallies above upper edge of 10-Week Price Channel (1456.37 through November 30).
• Daily MAAD was positive Wednesday by 17 to 1 and Daily MAAD Ratio was last into extremely “Overbought” territory at 1.88.
• Daily CPFL was decidedly negative Wednesday by 1.41 to 1. Daily CPFL Ratio continues to work higher toward “Neutral” and was last at .86.
• Cumulative Volume in both S&P 500 and S&P Emini continue to under perform S&P pricing to suggest lack of upside conviction.

Market Overview – What We Think:

• While short-term trend has reversed to positive, continuing low volume as reflected in Cumulative Volume numbers and elimination of recently “Oversold” short-term stats should presage near-term high.
• We suspect any further strength will prove to be unsustainable longer-term and will not cause larger Intermediate Cycle to reverse to positive with gains above upper edge of 10-Week Price Channel (1456.37—S&P 500).
• “Neutral” to “Overbought” conditions within context of Intermediate Cycle negative would be suggestive of countertrend short-term rally.
• Ultimately, extent to which September/October highs (1474.51—S&P 500) might be seriously challenged could determine whether or not strength is merely brief upside feint in Intermediate Cycle negative, or beginning of new intermediate advance.
• How price action plays out will also determine status of Major Cycle uptrend in effect since March 2009.

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.

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