But on the cloudy end, and as we’ve pointed out often and persistently for months, NONE of our key indicators has confirmed market strength to the same extent as have index prices. Momentum on all cycles including Minor, Intermediate, and Major has not underscored new short to intermediate-term highs made over the past several weeks. Our Call/Put Dollar Value Flow Line (CPFL) has been in a gradually rising uptrend since December 2011, but has yet to better resistance created at the ending of February 2011 and just prior to the spring 2011 index price highs. Our Most Actives Advance/Decline Line (MAAD) on the Weekly Cycle recently broke above resistance made in March and September 2012, but like CPFL has yet to move above resistance made in 2011. While the indicator has moved back to and “tapped” a long-term downtrend line stretching back to the pre-2000 bull market price highs, it is still nowhere near its 2007 peak to suggest that MAAD strength since the March 2009 lows has been less enthusiastic than during previous uptrends.
There is also the fact that with the overall decline in market volume over the past decade, Cumulative Volume has also deteriorated. While index pricing has created new short to intermediate-term highs in the S&P 500, Dow Jones Industrials, and the NASDAQ Composite, CV has not confirmed that movement to the same extent in any index.
Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)
Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)
Because it will be the short-term trend that will turn lower first when this market does ultimately roll over, we continue to closely monitor the Minor Cycle. One thing that is especially noticeable is that short-term Momentum peaked back on January 17 and has yet to revisit the same upside extremes. Since Momentum can peak out about one-half way through an extant move, a short-term peak on the Minor Cycle soon would be timely. There is also the fact that short-term Momentum could turn negative with relative ease since it is so close to “Neutral” (or zero) levels in ALL of the major indexes. This latter tendency has also been underscore lately with movement by the Daily MAAD Ratio back toward “Neutral” and could quickly flip to negative.