Market fades again Wednesday, but Minor Cycle still positive

Stock market still technically bullish despite losses

Market Snapshot for session ending 3-28-12:

 

Last

Day Change

%Change

S&P 500 Index

1405.54

-6.98

-.49%

Dow Jones Industrials

13126.21

-71.52

-.54%

NASDAQ Composite

3104.96

-15.39

-.49%

Value Line Arithmetic Index

3072.24

-21.94

-.71%

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

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:

  • More profit-taking pushed major indexes lower Wednesday, but Minor and Intermediate Cycles remain positive if not “Overbought.”
  • Selling below lower edge of 10-Day Price Channel (1393.44—S&P 500 / Thursday) would be required to end Minor Cycle uptrend. Intermediate Cycle at lower edge of 10-Week Price Channel would be threatened with price weakness below 1313.50 in S&P 500 (through March 30).
  • Trading volume on NYSE rose 12% Wednesday with price of average share on NYSE increasing by 14 cents to $58.68. Best recent NYSE average share price was recorded March 15 at $61.48 and despite fact S&P 500 rallied to new short to intermediate high March 27.
  • Momentum has failed to confirm any of recent strength in any of major indexes to new short and intermediate highs on either Minor or Intermediate Cycles.
  • Daily Most Actives (MAAD) was negative Wednesday by 8 to 11 while Daily MAAD Ratio moved lower toward “Neutral” and was last plotted at 1.15.
  • Daily CPFL rallied slightly higher Wednesday to a new short-term high on positive ratio of 1.08 to 1. But both Daily and Weekly series nonetheless remain substantially below February 2011 highs.

Market Overview – What We Think:

  • Intermediate Cycle that has been underway since last October 4 is no doubt due for some corrective action, but recent short to intermediate-term strength has somewhat nullified lingering “Overbought” conditions on both Minor and Intermediate Cycles.
  • While Momentum on short and intermediate-term cycles keeps suggesting index pricing could be losing upside steam, better clue may rest in price of average share on NYSE. Despite new highs, best recent average price ($61.48) was hit back on March 15. Divergence could be sign fewer and fewer issues have been leading market to new highs.
  • If pricing corrects “Overbought” excesses on near-term without significant price weakness, possibility exists market could be performing “setup” for further gains. Such action, especially in Daily MAAD Ratio, preceded most recent near-term rally.
  • Fact that Cumulative Volume (CV) remains weak, relative to 2011 highs, in S&P 500, Dow 30, and NASDAQ Composite on relative basis underscores fact participation in market over past several months has been abnormal and may be unsustainable.

 

Index

Daily / Weekly / Montly Stops

Weekly

Monthly

 

3/26

3/27

3/28

3/29

3/30

3/30

3/31

S&P 500 Index

SELL1384.06

SELL1388.59

SELL1392.62

SELL1393.44

SELL1393.27

SELL1313.50

SELL1189.77

Dow Jones Industrials

SELL13079.70

SELL13104.35

SELL13120.04

SELL13111.79

SELL13097.57

SELL12596.11

SELL11271.99

NASDAQ Composite

SELL3013.37

SELL3024.94

SELL3037.10

SELL3043.21

SELL3046.31

SELL2807.61

SELL2517.37

Value Line Index

SELL3024.10

SELL3034.78

SELL3043.84

SELL3044.24

SELL3041.66

SELL2886.13

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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