Major indexes approaching statistical resistance

Market Snapshot for session ending 8-16-11:

 

Last

Net Change

%Change

S&P 500 Index

1192.76

-11.73

-.97%

Dow Jones Industrials Average

11405.93

-76.97

-.67%

NASDAQ Composite Index

2523.45

-31.75

-1.24%

Value Line Arithmetic Index

2598.79

-39.49

-1.50%


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:

  • Tuesday’s marginal losses in major indexes underscored potential for “test” of last week’s index lows (1101.54—S&P 500).
  • Net volume in market remains low relative to last week’s activity and was last at 35% (S&P Emini) to 50% (S&P Cash) of those higher daily volume totals.
  • As Index prices have risen, net, over the past week, 10-Day Price Channels (see charts) have continued to drop to possible intersection points with prices.
  • Momentum and Minor Cycle Trading Oscillators continue to move back toward neutral levels.
  • Major resistance remains in place at Neckline of recently defined Head and Shoulders Top formations (1255.00-S&P 500).
  • CPFL declined to a new low Tuesday, but the downward bias of the cumulative indicator is abating with Put Dollar Values only slightly higher than Call Dollar Values.
  • MAAD was negative Tuesday, but the indicator remains above the short-term low it made last Wednesday.

Market Overview – What We Think:

  • Short-covering/bargain-hunting appears to be losing upside steam in the face of impending juncture with declining 10-Day Price Channels and statistical resistance on diminishing volume.
  • We suspect more strength from current levels that would require a breach of Price Channels is unlikely. A more likely scenario would call for a “test” of last week’s lows (1101.54—S&P 500).
  • In a “test” of the recent lows, a possible downside target in the S&P 500 would be back toward the lower edge of the 10-Day Price Channel near 1150. That level would also comprise about a 50% correction of the gains since last week’s lows.
  • The fact that Cumulative Volume in the S&P Emini is now below its March 2009 plot low is not a good sign for the broad market on the longer term.

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

7-6-11

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

8-16-11

5

15

8-16-11

45058

46229

*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