Equity indexes rise again Thursday, but volume shrinks -- again

Larger and more important intermediate cycle remains positive

Trading screen, computer, technology, charts, analysis software Trading screen, computer, technology, charts, analysis software

Market Snapshot for session ending 4-12-12:

 

Last

Day Change

%Change

S&P 500 Index

1387.57

+18.86

+1.38%

Dow Jones Industrials

12986.58

+181.19

+1.41%

NASDAQ Composite

3055.55

+39.09

+1.30%

Value Line Arithmetic Index

2997.80

+48.72

+1.65%

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

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:

  • Upward reflex bounce continued Thursday in major indexes following Tuesday’s short-term low (1357.38—S&P 500).
  • Larger and more important Intermediate Cycle remains positive until 1331.26 at lower edge of 10-week Price Channel, but larger trend is “Overbought” and vulnerable.
  • S&P 500 would need to better 1422.38 at April 2 intraday high to create new high for move and best levels since October 2011 lows, but buying above upper edge of 10-Day Price Channel (1412.35 / Friday) would occur first.
  • Selling over past several days has created short-term “Oversold” condition as measured by our Most Actives Daily Ratio (.75 / Thursday). Short-term “Oversold” conditions can persist in early stages of Intermediate Cycle decline, however.
  • Despite increase in average price per share on NYSE Thursday to $58.34 from $57.34 Wednesday, trading volume declined by almost 4%.
  • MAAD was positive Thursday with 18 issues higher and 2 lower.
  • Daily CPFL was sharply negative Wednesday by 1.61 to 1, but on cumulative basis remains below April 9 short-term high. Both Daily and Weekly CPFL remain substantially below resistance at February 2011 CPFL highs.

Market Overview – What We Think:

  • Fact that S&P 500 stalled on downside Wednesday right at uptrend line stretching back to October lows may be good for short-term cycle in face of “Oversold” Minor Cycle stats, but it says little about staying prospects of larger Intermediate trend except that short-term strength could prove to be of limited duration and merely a reactive bounce in larger negative trend.
  • Best guess is that any “return action” over next several sessions will falter this side of April 2 S&P 500 high (1422.38) and that Tuesday’s low (1357.38—S&P 500) will be breached as bias of Intermediate Cycle takes on more negative tone.
  • But since Intermediate Cycle remains positive, we cannot yet rule out possibility bulls will muster enough buying power to keep intermediate trend alive.
  • Recent failure of Weekly MAAD to better 2011 indicator highs, despite strength in major indexes above similar levels, is ongoing suggestion internal strength of market has not been and is not what it should be and that Intermediate Cycle may be in end game.
  • With Cumulative Volume (CV) still weaker than index pricing relative to 2011 highs in S&P 500, Dow 30, and NASDAQ Composite, lack of meaningful participation in market over past several months has been underscored.

Click charts to enlarge

stock, index, technical, analysis, cumulative, volume

stock index, cumulative volume, technical, analysis

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

4/9

4/10

4/11

4/12

4/13

4/13

4/30

S&P 500 Index

BUY1412.52

BUY1414.02

BUY1414.28

BUY1412.35

BUY ---

SELL1331.26

SELL1178.00

Dow Jones Industrials

BUY13216.24

BUY13227.26

BUY13225.58

BUY13203.73

BUY ---

SELL12712.21

SELL11223.60

NASDAQ Composite

BUY3111.14

BUY3115.73

BUY3111.80

BUY3107.41

BUY ---

SELL2864.91

SELL2492.41

Value Line Index

BUY3089.90

BUY3091.07

BUY3085.20

BUY3075.47

BUY ---

SELL2925.91

SELL2564.71

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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