Market Overview – What We Think:
- Despite price recovery from April 18 lows (1536.03—S&P 500), major indexes are currently stuck between recent new highs and mid-April lows. Resolution in one direction or another will determine staying power of larger Intermediate Cycle that is both mature (nearly six months old) and “Overbought.”
- Simply put, short-term trend will determine longevity of larger intermediate trend and then possibly Major Cycle underway since March 2009.
- To suggest Intermediate Cycle negative S&P 500 must sell below lower edge of 10-Week Price Channel (1521.53 through May 3) with coincident downside negativity in Cumulative Volume (CV), MAAD, and CPFL.
- But until short-term decisively terminates larger Intermediate Cycle, we must regard all near-term negativity as just another pullback in larger intermediate rally underway since November 16, and Major Cycle since March 2009.
- In background, so long as pricing and indicators are not in synch on upside, as they were from March 2009 until May 2011, doubts will persist as to long-term viability of Major Cycle and we will continue to wonder how much longer market will be able to shake off unfavorable indicator divergences.
Bullish considerations aside, the major indexes must still rally above their April 11 highs to re-assert Intermediate and Major Cycle uptrends. They must do that in the face of still “Overbought” readings on the intermediate and long-term trends on market volume that has been diminishing for months and in the face of long-term volatility readings that roughly coincide with conditions evident at intermediate highs reached in April 2010 and May 2011.
Daily S & P 500 with Cumulative Volume (CV)
Weekly S & P 500 with Cumulative Volume (CV)