S&P 500 volume failure underscored by long-term trends

Weekly Review: MAAD, CPFL indicator analysis

Daily S & P 500 with Cumulative Volume (CV)

cumulative, volume, daily, sp

Weekly S & P 500 with Cumulative Volume (CV)

cumulative, volume, weekly, sp

Quite simply, it is suggesting that strength since the March 2009 S&P 500 price lows could prove to be nothing but a deteriorating volume, retracement rally following the establishment of a significant high in the fall of 2007. A “test” of the March 2009 low could follow. As the old saying goes, “markets can fall of their own weight, but it takes volume to keep a bull trend moving higher.” We suspect this current market may be no exception to that old rule, given the increasing inability of index prices to significantly exceed, on a relative level, the price highs made in the spring of 2011 when nearly all of our indicators made long-term highs.

Closer to home, the short-term uptrend that began after the November 16 short to intermediate-term lows is looking increasingly tired. Last Wednesday’s intraday high in the S&P 500 at 1438.59 could prove to be the peak for that Minor Cycle rally which could still prove to be nothing but a reflex bounce within the context of a lingering Intermediate Cycle negative. If we are correct in our assessment, we would look for the short-term trend to signal a negative reversal within the next several sessions by declining below the lower edge of its 10-Day Price Channel (1407.21 through Monday) with subsequent negative confirmation from our Trading Oscillators, MAAD, CPFL, and short-term Momentum. What would then become an issue would be whether or not the November 16 lows (1343.35—S&P 500) would be seriously threatened. Selling below those points would not only re-assert negativity, but could bring the 3 1/2-year-old uptrend into view if prices threaten the lower edges of trailing 10-Month Price Channels (1293.26—S&P 500 through December).

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