Stocks makes small gains Tuesday on low volume

Market Snapshot for session ending 8-30-11:

 

Last

Net Change

%Change

S&P 500 Index

1212.92

+2.84

+.23%

Dow Jones Industrials Average

11559.95

+20.70

+.18%

NASDAQ Composite Index

2576.11

+13.99

+.55%

Value Line Arithmetic Index

2668.28

+11.27

+.42%

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

Intermediate Cycle
(Medium trend lasting weeks to several months)
Neutral / Negative

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

Market Overview – What We Know:

  • Major indexes advance again Tuesday, but early session gains fade by about 1/3 as profit-taking sets in.
  • Trading volume picks up marginally
  • S&P 500 remains above first resistance at 1208.47 and just shy of possible upside measured move target and “C” leg objective of A-B-C retracement move to 1228.02.
  • Strength in S&P 500 above Price Channel and first resistance signals confirmation of reversal of short-term trend to positive.
  • Yet again, strength in S&P was not confirmed by Cumulative Volume which has yet to break above mid-August resistance.
  • Daily MAAD data was neutral with 9 NYSE issues positive and 9 negative. Two were unchanged.
  • Daily CPFL continued its losing streak for the 19th session with Put Dollar Volume exceeding Call Dollar Volume by 1.40 to 1. New short-term low was created.
  • Short-term Momentum in S&P 500 remains moderately “Overbought” just above Neutral with Neutral readings also evident in both of our proprietary Trading Oscillators.
  • First significant resistance holds at Head and Shoulders Neckline (1255) in S&P 500.

Market Overview – What We Think:

  • S&P 500 could be working on “C” leg of A-B-C countertrend retracement rally which could allow bellwether to work back toward Head and Shoulders Neckline resistance at 1255 if first objective to measured move at 1228.02 is exceeded.
  • Fact that short-term Momentum and proprietary Trading Oscillators have returned to Neutral and better is indication market continues to unravel deeply “Oversold” conditions created during recent sharp decline.
  • We continue to suspect any buying that develops will do so within context of still negative Intermediate Cycle and still challenged long-term uptrend.
  • As expected, trading volume remains lackluster. This action is consistent with bear move retracement.
  • So long as market sentiment as measured by such indicators as CPFL remains poor, we think any strength that develops could prove to be no more than weak bargain hunting/short-covering.

Click charts to enlarge

We are also 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

7-20-11

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

8-17-11

12

8

8-17-11

43194

65757

8-18-11

1

19

8-18-11

57314

307820

8-19-11

2

18

8-19-11

83277

180689

8-22-11

11

9

8-22-11

75476

97419

8-23-11

19

1

8-23-11

47698

53693

8-24-11

14

6

8-24-11

40691

56428

8-25-11

7

13

8-25-11

42278

91822

8-26-11

16

4

8-26-11

38924

56319

8-29-11

20

0

8-29-11

75779

81438

8-30-11

9

9

8-30-11

46659

65396

*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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