Stock indexes better May 2011 highs; indicators drag feet

Intermediate Cycle uptrend has been re-asserted

Market Snapshot for session ending 3-13-12:

 

Last

Day Change

%Change

S&P 500 Index

1395.95

+24.86

+1.81%

Dow Jones Industrials

13177.68

+217.97

+1.68%

NASDAQ Composite

3039.88

+56.22

+1.88%

Value Line Arithmetic Index

3064.63

+61.67

+2.05%

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

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

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

Market Overview – What We Know:

  • Major indexes rallied to best levels since October lows Tuesday.
  • Intermediate Cycle uptrend has been re-asserted.
  • Total Volume on NYSE rose Tuesday by over 40% with average share price increasing from $60.62 from $57.84.
  • Strength above 1378.04--S&P 500 negated possible Key Reversal Day price pattern created on February 29.
  • Cumulative Volume in both S&P 500 and S&P Emini futures contract rallied to best levels Tuesday since October lows, but remains below plot levels of May 2011.
  • Daily Most Actives (MAAD) was decidedly positive Tuesday by 18 to 2 with Daily MAAD rallying to new short to intermediate-term high. Daily MAAD Ratio remains near “Neutral.” Weekly MAAD Ratio remains “Overbought.”
  • CPFL was positive Tuesday by 5.01 to 1, but neither Daily nor Weekly CPFL has been able to rally above defined downtrend line stretching back to 2011 highs let alone actual 2011 indicator highs.

Market Overview – What We Think:

  • Elimination of possible Key Reversal Day pattern Tuesday that was put in place in S&P 500 and Dow 30 on February 29 is indication eventual market reversal will likely come at higher level. 
  • Fact that short-term Momentum did not confirm strength by indexes to new highs is indication market’s weak internal dynamics persist or that, despite gains, market could be losing its upward momentum.
  • Market is also “Overbought” on both Minor and Intermediate Cycles based on price. But more esoteric indicator like Daily MAAD Ratio that relies on Smart Money inputs was last near “Neutral.” Daily MAAD Ratio had dipped into “Oversold” territory just before current near-term rally to new highs to suggest market could get more “Overbought” on further price gains. Weekly MAAD Ratio remains “Overbought.”
  • Despite strength in S&P 500 and S&P Emini and even strength to new intermediate-term highs in Cumulative Volume, CV in neither issue is anywhere near exceeding plot highs of May 2011.
Index Daily / Weekly / Monthly Stops Weekly Monthly
 

3/12

3/13

3/14

3/15

3/16

3/16

3/31

S&P 500 Index

SELL1372.40

SELL1371.12

SELL1368.31

SELL1368.17

SELL1369.04

SELL1286.13

SELL1189.77

Dow Jones Industrials

SELL13012.25

SELL13002.83

SELL12975.90

SELL12965.59

SELL12962.10

SELL12401.55

SELL11271.99

NASDAQ Composite

BUY2954.73

BUY2945.86

BUY2941.30

BUY2941.48

BUY2946.38

SELL2722.39

SELL2517.37

Value Line Index

BUY3028.52

BUY3014.17

BUY2999.85

BUY2994.22

BUY2996.13

SELL2800.70

SELL2612.10

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.

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