Market Overview – What We Know:

• Major indexes suffered marginal losses Thursday on marginally somewhat higher trading volume.
• Short and intermediate-term cycles remain positive, but “Overbought.”
• Short-term Momentum in S&P 500 has failed to confirm any of strength in index since December 19 lows and could flip into negative territory with relative ease.
• Cumulative Volume (CV) in S&P 500 has been trending with index lately, but has not recovered as much of loss since May highs as has index. S&P Emini CV has yet to break above late October resistance.
• Key statistical resistance in S&P holds at upper edge of 10-Month Price Channel at 1336.70 and point that must contain strength if long-term trend is to remain negatively charged.
• Daily MAAD fell back Thursday and was last 27 issues from equaling plot high made March 3, 2011. Weekly MAAD remains weaker than daily series.
• Daily CPFL was positive Thursday by 1.02 to 1, but remains substantially below February 2011 indicator highs and has confirmed none of strength since October lows.

Index	Daily/Weekly/Monthly Stops					Weekly	Monthly
	1/23	1/24	1/25	1/26	1/27	1/27	1/31
S&P 500 Index	SELL 1277.29	SELL 1280.47	SELL 1283.20	SELL 1288.45	SELL 1293.17	SELL 1201.03	BUY 1336.70
Dow Jones Industrials	SELL 12345.56	SELL 12364.08	SELL 12384.26	SELL 12420.29	SELL 12462.60	SELL 11637.37	BUY 12500.72
NASDAQ Composite	SELL 2675.00	SELL 2686.12	SELL 2696.76	SELL 2714.37	SELL 2729.01	SELL 2539.02	BUY 2829.75
Value Line Index	SELL 2750.85	SELL 2761.93	SELL 2771.73	SELL 2789.39	SELL 2806.96	SELL 2570.73	BUY 3054.65

Market Overview – What We Think:

• Major resistance and short-term “Overbought” readings may finally be taking hold in S&P 500.
• To suggest Minor Cycle negative, however, S&P must first decline below lower edge of 10-Day Price Channel (1293.17—Friday).  
• With short-term trend in “Overbought” territory, time is running out on this rally.
• When 10-day Price Channel is inevitably broken, extent to which selling then develops will determine staying power of larger Intermediate Cycle which currently remains positive until lower edge of 10-Week Price Channel (1201.03) is fractured on downside.
• If major resistance is overcome and new highs follow, it wouldn’t be first time a sharp downside break (May-October) was followed by movement to a new high. Think July 2007 (1555.10--S&P 500), a brief correction, and then a short-term rally to a new high in October 2007 high (1576.09). Then followed second worst bear in stock market history.

Click charts to enlarge

Next page: Indicator review

We are also updating the daily chart of both the Call/Put Dollar Value Flow Line (CPFL) and Most Actives Advance/Decline Line (MAAD) indicators every day and providing the most recent raw data so you can begin to plot the indicators on your own (see below). The weekly equity index indicator summary provides longer-term commentary based on these indicators.

If you would like to read more about how the CPFL is constructed, read a Futures article on the concept. This link will take you to the MAAD article.