Stock market works through short-term oversold condition

NYSE trading volume declined nearly 4% Tuesday

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

Market Snapshot for session ending 4-24-12:

 

Last

Day Change

%Change

S&P 500 Index

1371.97

+5.03

+.37%

Dow Jones Industrials

13001.56

+74.37

+.58%

NASDAQ Composite

2961.60

-8.85

-.30%

Value Line Arithmetic Index

2954.75

+14.17

+.48%

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:

  • Major indexes, excepting NASDAQ, posted marginal gains Tuesday as short-term “Oversold” conditions continued to correct higher.
  • MAAD Daily ratio was last plotted at .90. Readings toward 1.00 and “Neutral” would be good enough to suggest point for further near-term vulnerability.
  • Selling below lower edge of 10-Week Price Channel at 1351.61—S&P 500 (through 4/27) would be first such weakness below weekly price channel since last fall.
  • NYSE trading volume declined nearly 4% Tuesday while price of average share on NYSE rose 66 cents to $57.60. 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 positive Tuesday by 14 to 6 after fracturing support low hit on March 6 last Friday.
  • Daily CPFL was positive Tuesday by 1.64 to 1, but remains below April 9 short-term high. Both Daily and Weekly CPFL remain substantially below indicator resistance high put in place February 2011.

Market Overview – What We Think:

  • Until April 10 intraday low at 1357.38 is terminated on downside and near-term “Oversold” conditions are eliminated, we cannot rule out possibility further rebounding could develop.
  • Big question remains 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 rebounding will fade this side of April 2 highs and that April 10 lows (1357.38 / S&P 500) will 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.

Click charts to enlarge

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

stock market, emini, s&p, cumulative volume

 

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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