Stock Market - Technical

SP500: 1154

1. The cyclical bull market which began 3/03 has had two distinct uplegs so far. #1 ran to late 3/04, and #2 ran from 8/04 until late 3/05.

2. The market then entered a 5-6% correction. A counter-trend rally began in mid - April from a significant oversold. The rally did produce very short term buy signals on a number of technical indicators. I have not chosen to play this advance so far. The main reason for staying out has been the mediocre price momentum of the major composites. As a consequence, key intermediate term indicators have yet to turn positive, although the NASDAQ Comp. is getting very close to making the turn. I approach a counter-trend rally with caution. Thus, I have been thinking that I might also consider buying only above key pivot lines such as
DJ 10400 and SPX 1180.

3. It is a critical time for the market on a technical basis. Nine month and twenty week cycle low intervals are imminent. At the same time, recent failure of the market to successfully challenge its 50 day MA and deteriorating intermediate term price momentum suggest the possibibility of a resumption of the correction.

4. Since I do not have to be the first kid on the block to do anything, I am going to wait a bit to see whether the market can develop stronger positive momentum. Click on this link and you will see the weekly SPX is nicely oversold (14 week stochastic) but that MACD is just now basing with no upturn at hand.