Major indexes have eliminated some of short-term overbought

Short-term trend remains positive

Market Snapshot for session ending 3-29-12:

 

Last

Day Change

%Change

S&P 500 Index

1403.28

-2.26

-.16%

Dow Jones Industrials

13145.82

+19.61

+.15%

NASDAQ Composite

3095.36

-9.60

-.31%

Value Line Arithmetic Index

3066.21

-6.03

-.20%

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:

  • Major indexes with exception of Dow 30 were slightly negative Thursday while NYSE trading volume was little changed from Wednesday’s levels.
  • All of major indexes challenged lower edges of 10-Day Price Channels, but recovered from intraday levels and closed not far from day’s highs.
  • As a consequence of price recovery, short-term trend remains positive, but “Overbought.”
  • Selling below lower edge of 10-Day Price Channel (1393.27—S&P 500 / Friday) would be required to end Minor Cycle uptrend. Intermediate Cycle at lower edge of 10-Week Channel would be threatened with weakness below 1313.50 in S&P 500 (through March 30).
  • Price of average share on NYSE declined by 42 cents to $58.26 Thursday. Best recent NYSE average share price was hit March 15 at $61.48 and despite fact S&P 500 rallied to new short to intermediate high March 27.
  • Daily Most Actives (MAAD) was negative Thursday by 5 to 15 while Daily MAAD Ratio last plotted at .89 in “Oversold” territory.
  • Daily CPFL rallied a bit higher Thursday to new short-term high on positive ratio of 1.02 to 1. Both Daily and Weekly series remain substantially below February 2011 highs.

Market Overview – What We Think:

  • Thursday’s price action that saw index bids sink early in session with subsequent recovery into close was not only an indication there is buying just below surface of this market, but that pricing may have been “correcting” short-term excess over past several days.
  • Corrective action is being mirrored in Daily MAAD Ratio that has moved lower from “Overbought” at 2.32 on March 20 to Thursday’s “Oversold” condition at .89. So long as buyers remain eager to pick up “bargains” on weakness, short to intermediate trend will remain viable.
  • Just the same, intermediate Cycle that has been underway since last October 4 is due for pullback. 
  • Possible clue to future market direction may rest in price of average share on NYSE. Despite recent short to intermediate new highs, highest 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.
  • 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.
Click charts to enlarge
 
 

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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