Short-term stock market trend on shaky ground

Because the MAAD Daily Ratio has already dipped back into "Oversold" territory after just a week of lateral activity, we suspect that if the broad market does enter into a consolidation over the next few weeks, MAAD will simply get more "Oversold" in preparation for a rebound in prices.

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McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL rallied to new highs for the move last week while demonstrating renewed strength on Friday with a bias on the upside of nearly 9 to 1 on the Call Dollar Volume side of the equation. Since the indicator has a very good record of predicting future market movement, it is currently suggesting that while the short-term trend could prove to be vulnerable, such potential would likely develop within the framework of an Intermediate-term uptrend that has yet to play itself out.

To change our outlook to a more bearish stance via CPFL, we would need to see the indicator begin to demonstrate negative tendencies in the face of market strength. Such action has not developed since the third quarter of 2007.

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The major market indexes including the S&P 500 Index, the NASDAQ Composite, and the Value Line Index gave up marginal ground last week while the Dow Jones Industrial Average posted a small gain. While the old adage that "quality is the last to go" could apply to current market action in that the Dow was up while the others were down last week, the variance was on such a small scale as to suggest merely a small anomaly.

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