Stock selloff loses steam

Market Snapshot for session ending 8-10-11:

 

Last

Net Change

%Change

S&P 500 Index

1120.76

-51.77

-4.42%

Dow Jones Industrials Average

10719.94

-519.83

-4.62%

NASDAQ Composite Index

2381.05

-101.47

-4.09%

Value Line Arithmetic Index

2435.13

-115.02

-4.51%

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:

  • While index prices as measured by the bellwether S&P 500 Index sold lower Wednesday to within range of Monday’s closing levels, downside volume, new lows, and Put Dollar Volume were substantially less than on Monday.
  • MAAD and CPFL dipped to new short-term lows for the move Wednesday.
  • Over the past 10 days MAAD has registered 62 stocks up and 137 down to underscore the net negative bias of Smart Money.
  • Wednesday’s Up/Down Volume was 16 to 1 negative on NYSE; 12 to 1 negative on the NASDAQ; and 1 to 1 on the AMEX.
  • Power of Wednesday’s down move was less than the power of Monday’s decline as measured by Up/Down Volume ratios.
  • Minor Cycle remains deeply “Oversold” across the board for the major indexes.
  • S&P Emini futures contract volume diminished somewhat Wednesday, but remained at record high levels.

Market Overview – What We Think:

  • Wednesday’s selling back toward Monday’s closing lows may have appeared as if downtrend was resuming, but we suspect lessening of downside volume, new lows, diminishing put dollar volume, and deeply “oversold” short-term indicators could be an indication Minor Cycle could be close to a bottom.
  • That major indexes have reached into vicinity of Head and Shoulders downside target zones that coincide with major support could also be an indication this stage of the decline is over.
  • Once a countertrend, or reflex, rally develops, however, the extent of that rally relative to the breakdown levels from the Head and Shoulders Tops (1255—S&P) will likely determine next stage of market action.
  • Given the extent of actual price damage and price/volume damage over the past several days, we do not think market price action could be disappointing for some time.

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

6-29-11

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

8-9-11

19

1

8-9-11

78912

329885

8-10-11

0

20

8-10-11

64575

242026

*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.

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