S&P, Dow, Nasdaq fading toward short-term sell level

The Value Line index is technically already in negative territory

Market Snapshot for session ending 3-5-12:

 

Last

Day Change

%Change

S&P 500 Index

1364.33

-5.30

-.39%

Dow Jones Industrials

12962.81

-14.76

-.11%

NASDAQ Composite

2950.48

-25.70

-.86%

Value Line Arithmetic Index

2974.42

-11.36

-.38%

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

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

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

Market Overview – What We Know:

  • S&P 500, Dow Jones Industrials, and NASDAQ Composite moved step closer to turning Minor Cycle negative Monday via small losses. Value Line index is already negative on Minor Cycle.
  • Negativity has developed after all major indexes moved within range of upside measured move targets as calculated from October 2011 lows and via potential “Ascending Wedge” price patterns.
  • Selling in S&P 500 below lower edge of 10-Day Price Channel (1356.84 – Tuesday) would suggest end of Minor Cycle advance in effect since mid December.
  • Most Actives Advance Decline Line (MAAD) was negative Monday by 4 to 16, but Daily MAAD remains above its March 2011 highs. Weekly MAAD has yet to exceed 2011 highs. Daily MAAD Ratio was last at “Neutral.”
  • CPFL was positive Monday by 1.71 to 1, despite small index losses. Indicator has yet to overcome downtrend stretching back to February 2011, let alone highs made in February 2011.
Index Daily/Weekly/Monthly Stops Weekly Monthly
 

3/5

3/6

3/7

3/8

3/9

3/9

3/31

S&P 500 Index

SELL 1354.08

SELL 1356.84

SELL 1358.80

SELL 1360.72

SELL 1362.28

SELL 1270.16

SELL 1189.77

Dow Jones Industrials

SELL 12884.94

SELL 12902.19

SELL 12912.44

SELL 12922.52

SELL 12929.39

SELL 12283.19

SELL 11271.99

NASDAQ Composite

SELL 2932.51

SELL 2939.71

SELL 2945.08

SELL 2951.86

SELL 2956.29

SELL 2675.83

SELL 2517.37

Value Line Index

BUY 3039.97

BUY 3042.13

BUY 3044.05

BUY 3042.95

BUY 3038.91

SELL 2747.77

SELL 2612.10

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

Market Overview – What We Think:

  • With possible Key Reversal Day last Wednesday still unresolved in terms of implications for market, fact that last such KRD pattern occurred at the beginning of second worst stock market decline in history is a cause for concern because the development of that pattern implies the potential for larger cycle negativity.
  • If KRD is correct that market has seen an important high, very least we could expect from this point forward is short-term decline.
  • Minor Cycle weakness would then determine staying power of larger intermediate trend that has been underway since October lows. Weakness in Intermediate Cycle would exert pressure on larger major trend that continues to exhibit neutral readings.
  • Fact that Weekly MAAD has not mimicked strength of Daily MAAD is bearish sign since both cycles must be in synch ultimately to confirm positive longer-term move.
  • And fact that CPFL continues to exhibit lackluster performance is not a vote of confidence for bullish cause.

Click charts to enlarge

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