Market Overview – What We Think:
- Minor Cycle uptrend begun after November 16 lows (1343.35—S&P 500) remains intact, despite lack of overall indicator confirmation.
- Strength in Value Line index to new all-time high and S&P 500 to best closing level since December 2007 is encouraging, but is offset by fact Dow 30 and NASDAQ Composite have yet to confirm on upside with similar strength to coincident new highs. In a word, long-term uptrend initiated in March 2009 remains in doubt.
- As a consequence, larger issue remains lack of upside confirmations in index pricing in addition to failure of our key indicators to underscore market gains relative to major resistance points. Failures, until resolved, will continue to highlight notion strength since November 16 lows is only countertrend rally.
- In face of indicator non-confirmations that have prevailed since mid-2011, we continue to wonder how much longer this market will be able to shake off negative indicator divergences.
For example, last week the Value Line index rallied to yet another new all-time closing high (3277.55) with an intra week high at 3280.85. And while the S&P 500 confirmed VAY strength with its best closing level since December 2007, the S&P is still nowhere near its all-time high made in October 2007 (1576.09 intraday on October 11, 2007). In addition, neither the Dow Jones Industrial Average nor the NASDAQ Composite index has been able to better intermediate highs made in late September and early October.
Daily S & P 500 with Cumulative Volume (CV)
Weekly S & P 500 with Cumulative Volume (CV)
Then there are the indicators….