Market Overview – What We Think:
- That major indexes have rallied to new highs is positive to extent higher prices have occurred, so re-asserting longer-term uptrends. Negation of May 22 KRD day, new highs in Daily MAAD, and resumption of Intermediate Cycle advance underscored that outlook.
- But in face of yet another series of “Overbought” conditions on Minor, Intermediate, and Major Cycles in conjunction with failed upside Cumulative Volume (CV) in S&P, S&P Emini, and Dow 30, failed short-term Momentum, and price vulnerability as measured by our volatility indicator, ability of market to continue short-term advance on at least Minor Cycle is suspect.
- How short-term trend ultimately plays out relative to larger Intermediate Cycle will ultimately determine staying power of Major Cycle rally begun in March 2009, a trend that is now long in tooth toward 54 months, as measured by any historical market standard.
Inevitably all trends come to an end. Admittedly, we have been looking for meaningful topping action since the intermediate highs back in May 2011 when all of our longer-term indicators peaked and then failed in the months following the move to new highs with the broad market. And in recent months, while some, like our Weekly Call/Put Dollar Value Flow Line (CPFL) and long-term Momentum have failed to move above those 2011 highs, others like out Most Actives Advance/Decline Line (MAAD) broke above intermediate and then long-term trend lines early this year and again in the spring. In fact, the latter is now above a long-term trend line stretching back to 1999 when MAAD peaked prior to the 2000 market highs.
Daily S & P 500 with Cumulative Volume (CV)
Weekly S & P 500 with Cumulative Volume (CV)