S&P 500 short-term negative trend gathers momentum

Weakness puts the intermediate cycle at risk

Stock index, chart, technical analysis Stock index, chart, technical analysis

Market Snapshot for session ending 4-23-12:

 

Last

Day Change

%Change

S&P 500 Index

1366.94

-11.59

-.84%

Dow Jones Industrials

12927.17

-102.08

-.78%

NASDAQ Composite

2970.45

-30.00

-1.00%

Value Line Arithmetic Index

2940.57

-39.39

-1.32%

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

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

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

Market Overview – What We Know:

  • Losses Monday in major indexes, as measured by S&P 500, have placed Intermediate Cycle in effect since last October in jeopardy.
  • Selling below lower edge of 10-Week Price Channel at 1351.51—S&P 500 (through 4/27) would be first such weakness below weekly price channel since last fall.
  • NYSE trading volume declined nearly 19% Monday while price of average share on NYSE dropped 73 cents to $56.94. Highest recent average price level occurred March 15 at $61.48.
  • S&P 500 remains locked between recent short-term high at 1422.38 hit on April 2 and reaction low to 1357.38 hit on April 10.
  • Daily MAAD was negative Monday by 19 to 1 and fractured support low hit on March 6. Indicator was last at its lowest level since February 1 when S&P 500 closed at 1324. MAAD Daily Ratio remains “Oversold” and was last plotted at .69.
  • Daily CPFL was positive Monday by 1.32 to 1. Both Daily and Weekly CPFL remain substantially below indicator resistance high put in place in February 2011.

Market Overview – What We Think:

  • As we suggested earlier, “Oversold” short-term conditions do not necessarily mean the market will not succumb to further selling pressures. Monday proved that point. But until April 10 intraday low at 1357.38 is terminated on downside, we cannot rule out possibility Monday’s weakness was merely test of that low.
  • Big question remains, however, whether or not index pricing will be able to better recent highs (1422.38--S&P 500 / April 2). Ongoing failure could ultimately mean Intermediate Cycle high has been put in place and more weakness could follow. New highs would simply reassert uptrend in effect since last October
  • Best guess is that any near-term “return action” will fade this side of April 2 highs and that April 10 lows (1357.38 / S&P 500) will soon be breached on downside.
  • More short-term selling could seriously challenge lower edge of 10-Week Price Channels (1351.61 / S&P 500) while threatening to turn larger Intermediate Cycle negative for first time since last fall.
  • Short-term measure of market’s “Oversold” condition rests with our Daily MAAD Ratio that was last plotted at .72. Any readings toward “Neutral” (at or above 1.00) would be good enough to put statistical cap on near-term price improvement.

Click charts to enlarge

stock, index, cumulative, volume, s&p

stock, index, cumulative, volume, s&p, emini

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

4/23

4/24

4/25

4/26

4/27

4/27

4/30

S&P 500 Index

BUY 
1389.17

BUY 
1388.46

BUY 
1387.93

BUY 
1387.85

BUY 
1387.63

SELL 
1351.61

SELL 
1178.00

Dow Jones Industrials

SELL 
12852.64

SELL 
12853.84

SELL 
12878.48

SELL 
12881.24

SELL 
12898.52

SELL 
12828.63

SELL 
11223.60

NASDAQ Composite

BUY 
3053.99

BUY 
3050.89

BUY 
3047.67

BUY 
3048.45

BUY 
3045.37

SELL 
2930.56

SELL 
2492.41

Value Line Index

BUY 
2999.27

BUY 
2998.48

BUY 
2996.08

BUY 
2996.70

BUY 
2996.99

SELL 
2966.97

SELL 
2564.71

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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