Market Overview – What We Think:
- Minor Cycle continues to look vulnerable while losing upside Momentum, a fact that could soon result in downside break of trailing 10-Day Price Channel in S&P 500 and reversal of short-term uptrend begun after December 28 price lows.
- In addition, we suspect marker ascent is unsustainable in face of “Overbought” conditions and Momentum that could turn negative on Minor Cycle with relative ease.
- In spite of bullish price bias since November lows, uptrend initiated in March 2009 is mature. In fact, upside “measured move” targets calculated on variety of cycles suggest S&P, Dow 30, NASDAQ, and VAY could be within range of making long-term highs.
- So long as pricing and indicators are not in synch on upside as they were from March 2009 until May 2011, lingering doubts will persist about long-term viability of uptrend and we will continue to wonder how much longer this market will be able to shake off unfavorable indicator divergences.
Similar logic can be applied to the stock market. Prices have been in an intermediate-term uptrend since the lows made last November 16. Following a short-term pullback, index prices have been moving higher since a short-term low within the context of that intermediate positive since December 28. Those two favorable uptrends operating within the framework of a still positive Major Cycle advance begun after March 2009 are the “sunny day” part of the equation.
Daily S & P 500 with Cumulative Volume (CV)
Weekly S & P 500 with Cumulative Volume (CV)