Market posts another up day, but volume drops

Market Snapshot for session ending 8-15-11:

 

Last

Net Change

%Change

S&P 500 Index

1204.49

+25.67

+2.18%

Dow Jones Industrials Average

11482.90

+213.88

+1.90%

NASDAQ Composite Index

2555.20

+47.22

+1.88%

Value Line Arithmetic Index

2638.28

+67.65

+2.63%

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:

  • Reflex rally from last week’s lows (1101.54—S&P 500) is losing upside steam as measured by net Volume. Activity in S&P has diminished 54% since low with volume in S&P Emini lower by 68%.
  • Index prices have moved back into vicinity of statistical resistance and 10-Day Price Channels that will range at the upper edge from 1259 down to 1202 as the week progresses.
  • CPFL dipped to another new short-term low Monday as options players continue to buy puts on a net Dollar Value basis, despite market gains.
  • MAAD improved via Daily data Monday via both its A/D Line and the Daily MAAD Ratio which has begun to move upward from deeply “Oversold” levels.
  • Monday’s 213.88 gain in the Dow Jones 30 was accompanied by NYSE volume that was positive by 25 to 1. NASDAQ volume was positive by 9 to 1.

Market Overview – What We Think:

  • While the odds are good last Tuesday’s intraday low in the S&P (1101.54) was the bottom of the short-term decline that began after the July 7 highs, given faltering net volume since, a possible move back toward the recent lows in the sessions just ahead is possible.
  • Once a “test” of the lows is completed, the staying power of the larger Intermediate and Major Cycles will then be determined. Both trends have been seriously challenged over the past few weeks with net deterioration underscored by heavy downside activity.
  • Cumulative Volume in the S&P Emini below its March 2009 plot low is not a good sign for the broad market on the longer term.
  • Odds remain than any short-term rally will not better H&S Neckline resistance (1255-S&P 500)
  • Given the extent of price damage and price/volume damage over the past several days, we suspect 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

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

8-11-11

19

1

8-11-11

99447

182240

8-12-11

12

8

8-12-11

38879

74166

8-15-11

20

0

8-15-11

47561

81328

*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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