Market trends positive, but questions linger

In sum, the trend is still positive. The brief downdraft culminating in the January 28 intraday lows was justification for some lightening of long positions, but the bulk of the trade from December, let alone from the July lows, remains in place. It is inevitable that trade will be terminated, however, since no trend lasts indefinitely.

Index Daily Stops Weekly Monthly
2/14 2/15 2/16 2/17 2/18 2/18 2/18

S&P

Last
1329.15

SELL
1295.94

SELL
1300.32

SELL
1303.86

SELL
1306.41

SELL
1309.44

SELL
1234.60

SELL
1054.96

Dow 30

Last
12273.26

SELL
11973.23

SELL
12010.28

SELL
12049.67

SELL
12079.27

SELL
12109.79

SELL
11400.84

SELL
9977.84

NASDAQ

Last
2809.44

SELL
2731.41

SELL
2741.31

SELL
2750.61

SELL
2755.39

SELL
2762.64

SELL
2615.08

SELL
2145.96

Val. Line

Last
3021.29

SELL
2920.63

SELL
2932.48

SELL
2943.03

SELL
2950.76

SELL
2960.40

SELL
2798.66

SELL
2241.20

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

McCurtain Most Actives Advance/Decline Line (MAAD)

MAAD on both the Daily and Weekly cycles rallied to new highs for the move and the best levels since March 2009 last week. Daily data peaked early in the week, but was unable to better Tuesday’s new high in the following sessions. Nonetheless, MAAD remains in synch with the broad market on the upside despite the fact that the indicator, relative to index prices, has recovered less than one half of the losses it incurred during the 2007/2008 bear market. But so long as MAAD continues to underscore market strength, we can only presume that Smart Money remains committed to the rally even though not to the extent it was committed in previous uptrends.

To suggest a reversal of the currently positive tone in MAAD, we would need to see a small decline in market prices with coincident weakness in MAAD. An ensuing rally in the indexes could lead to new highs in index pricing, but MAAD would fail to confirm that strength. Then a negative divergence would be in effect and could ultimately lead to a market decline of significance.

Click charts to enlarge

McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL data on both the Daily and Weekly cycles rallied to new highs last week and, as with MAAD, to the best levels since the longer-term uptrend began in March 2009. MAAD has been consistently making new highs for the move since the session ending October 19 on the daily trend and for the week ending October 22 on the Weekly Cycle.

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