In abyss, ‘oversold’ market looking for support

Market Snapshot for session ending 8-8-11:

 

Last

Net Change

%Change

S&P 500

1119.46

-79.92

-6.66%

Dow Jones Industrials

10809.85

-634.76

-5.55%

NASDAQ Composite

2357.69

-174.71

-6.90%

Value Line Arithmetic

2407.20

-215.79

--8.23%


Minor Cycle
(Short-term trend lasting days to a few weeks)


Intermediate Cycle
(Medium trend lasting weeks to several months)


Major Cycle
(Long-term trend lasting several months to years)

Negative

Negative

Neutral / Negative

Market Overview – What We Know:

  • Major indexes in vicinity of downside measured moves from peak of Head and Shoulders Tops (May 2) to "Necklines":
    • S&P 500: 1133 (hit and surpassed).
    • S&P 500 Emini: 1118 (hit and surpassed).
    • Dow Industrials: 10532.
    • NASDAQ Composite: 2297.
    • Value Line Index: 2525 (hit and surpassed).
  • Major support is visible at June-August 2010 consolidation (1130-1010—S&P).
  • Record volume pushes Cumulative Volume in S&P Emini to new low and well below March 2009 level.
  • All indexes sell below Monthly (Major Cycle) Price Channels to suggest continuing jeopardy to long-term trend in effect since March 2009.
  • Despite losses, Major Cycle Momentum and Trading Oscillators remain positive, but fading.
  • In a matter of days selling has eliminated gains of nearly a year.
  • CPFL, MAAD hit new short-term lows.

Market Overview – What We Think:

  • August 2010 consolidation levels, and deeply oversold conditions, a reflex rally is likely and soon.
  • When rally develops we would look for triple digit up day and back toward H&S Neckline resistance (1255-S&P).
  • Any rally will probably fade on deteriorating volume.
  • Considering extent of losses over past several sessions and ongoing deterioration of indicators, we must consider possibility that strength since March 2009 will prove to be no more than a bear market rally.
  • Nothing but new highs in prices and the indicators will now save this bull market.

Click charts to enlarge

We are 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.

The definitions of the indicators along with links to the original stories provide helpful background. Also, Robert describes these indicators in a recent I-Trade show presentation available online.

Click charts to enlarge

MAAD data for past 30 days*       CPFL data for past 30 Days

Date

NYSE Adv

NYSE Dec

Date

OEX Call $Volume

OEX Put $Volume

6-27-11

16

3

6-27-11

27558

34959

6-28-11

14

6

6-28-11

36851

34376

6-29-11

16

4

6-29-11

108969

71000

6-30-11

15

5

6-30-11

54196

28399

7-1-11

18

1

7-1-11

100149

51993

7-4-11

Holiday

 

7-4-11

Holiday

 

7-5-11

8

12

7-5-11

58532

18215

7-6-11

6

13

7-6-11

68574

16147

7-7-11

18

1

7-7-11

196066

42730

7-8-11

4

16

7-8-11

49479

31316

7-11-11

1

19

7-11-11

61484

121450

7-12-11

5

15

7-12-11

30530

98038

7-13-11

14

6

7-13-11

25452

90215

7-14-11

3

17

7-14-11

57503

73908

7-15-11

8

10

7-15-11

122830

41278

7-18-11

0

19

7-18-11

32600

70051

7-19-11

18

2

7-19-11

81963

36469

7-20-11

12

8

7-20-11

48958

36029

7-21-11

14

6

7-21-11

81985

37458

7-22-11

6

14

7-22-11

26566

23969

7-25-11

5

15

7-25-11

60431

29726

7-26-11

13

7

7-26-11

12740

29994

7-27-11

3

17

7-27-11

25922

98893

7-28-11

5

14

7-28-11

31161

42272

7-29-11

5

14

7-29-11

39764

73156

8-1-11

8

12

8-1-11

67404

100232

8-2-11

0

20

8-2-11

44027

98237

8-3-11

17

4

8-3-11

112076

111221

8-4-11

0

20

8-4-11

104998

400116

8-5-11

8

12

8-5-11

72140

258219

8-8-11

0

20

8-8-11

71137

673757

*Note: Unchanged issues are not counted.

Robert McCurtain is a technical analyst, market timer and private investor based in New York City. If you would like to read more about how the CPFL is constructed, read a Futures article on the concept. This will take you to the MAAD article. Robert can be reached at traderbob@nyc.rr.com.

Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome