Stock market ends mixed Wednesday with short-term trend iffy

With S&P 500 failing to surpass April 2 peak, downside looms

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

Market Snapshot for session ending 5-2-12:

 

Last

Day Change

%Change

S&P 500 Index

1402.31

-3.50

-.25%

Dow Jones Industrials

13268.57

-10.75

-.08%

NASDAQ Composite

3059.85

+9.41

+.31%

Value Line Arithmetic Index

3029.20

+1.27

+.04%

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

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

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

Market Overview – What We Know:

  • Market, as measured by major indexes, was mixed Tuesday. Dow Jones Industrial average pulled back slightly, but closed toward highest level of move since last October and still above April 2 high (13297.11). Dow 30 remains strongest of major indexes to extent none of others has surpassed April 2 high.
  • With S&P 500 still failing to better April 2 peak (1422.38), it remains to be seen whether or not recent near-term strength will prove to be mere retracement after creation of Intermediate Cycle high, or resumption of larger trend in effect since October.
  • Weakness below support hit April 10 at 1357.38—S&P 500 would have bearish implications.
  • Some of more traditional short-term indicators have moved back toward “Overbought” territory, but Daily MAAD Ratio (.91) remains toward “Neutral” and level that suggests further market potential on upside so long as Daily MAAD Ratio does not become overheated. Daily MAAD was negative Wednesday by 6 to 14 and remains noticeably below March 20 peak even though index pricing looks stronger.
  • Selling below lower edge of 10-Week Price Channel at 1361.46—S&P 500 (through 5/4) would be first such weakness below weekly price channel since last fall.
  • Trading Volume rose slightly Wednesday on NYSE as Average Price per Share faded 63 cents to $57.70. Highest recent average price level occurred March 15 at $61.48.
  • Daily CPFL was strong Wednesday with positive ratio of 1.75 to 1. But indicator remains below April 9 short-term high. Both Daily and Weekly CPFL remain well below indicator resistance high put in place February 2011.

Market Overview – What We Think:

  • Until April 2 intraday high at 1422.38—S&P 500 is surpassed on upside or until April 10 intraday low at 1357.38—S&P 500 is fractured on downside, Intermediate Cycle underway since October low (1074.77—S&P 500) will remain intact.
  • Relative market neutrality is still reflected in MAAD Daily and Weekly Ratios. Bullish resolution would suggest recent weakness was merely setup for further gains.
  • If new highs do not follow in bellwether S&P 500, ongoing failure could ultimately mean Intermediate Cycle top has been put in place and weakness should follow. New highs would merely reassert uptrend in effect since last October.
  • Best guess is that near-term rebounding in S&P 500 will fail this side of April 2 highs and that April 10 lows (1357.38 / S&P 500) will be breached on downside relatively soon.
  • More short-term selling would seriously challenge lower edge of 10-Week Price Channels (1361.46 / S&P 500) while threatening to turn larger Intermediate Cycle negative for first time since last fall.

Click charts to enlarge

s&p, stock index, technical analysis, cumulative volume

stock, index, cumulative volume, emini

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

4/30

5/1

5/2

5/3

5/4

5/4

5/31

S&P 500 Index

SELL1369.66

SELL1369.46

SELL1370.05

SELL1373.16

SELL1377.75

SELL1361.46

SELL1175.98

Dow Jones Industrials

SELL12895.09

SELL12907.44

SELL12928.07

SELL12958.63

SELL13005.43

SELL12880.89

SELL11273.01

NASDAQ Composite

SELL2992.06

SELL2983.66

SELL2986.86

SELL2993.16

SELL3002.14

SELL2964.33

SELL2485.38

Value Line Index

SELL2948.78

SELL2947.60

SELL2949.16

SELL2956.94

SELL2966.86

SELL2984.60

SELL2543.91

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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