Stock indexes weaken further as Tuesday mimics Wednesday

Daily MAAD declined to another short-term low

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

Market Snapshot for session ending 5-9-12:

 

Last

Day Change

%Change

S&P 500 Index

1354.58

-9.14

-.67%

Dow Jones Industrials

12835.06

-97.02

-.75%

NASDAQ Composite

2934.71

-11.56

-.39%

Value Line Arithmetic Index

2909.53

-13.96

-.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:

  • Following through on Tuesday’s losses, major indexes lost about the same amount of ground on Wednesday.
  • Short-term trend remains negative, albeit “Oversold.”
  • All of major indexes were last plotted below lower edges of 10-Week Price Channels to suggest “official” end of Intermediate Cycle advance began last October 4 and beginning of new intermediate-term decline.
  • NYSE exchange trading volume was higher by nearly 4% Wednesday.
  • Daily MAAD declined to another short-term low Wednesday with 8 winners and 12 losers. Smart Money apparently remains skeptical of market following peak in Daily MAAD back on March 20. Daily MAAD Ratio remains negative and “Oversold” (last at .61).
  • Average Price per Share declined 25 cents to $57.32 Wednesday. Highest recent average price level occurred March 15 at $61.48.
  • Daily CPFL was negative Wednesday by 1.08 to 1. Indicator remains below April 9 short-term high and well below major high put in place February 2011.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract declined to new short-term lows Wednesday.

Market Overview – What We Think:

  • Recent weakness in major indexes and broad market with confirming negativity by such indicators as Daily MAAD are good indication uptrend since last October has ended.
  • Question now is how far weakness will carry and what will be implications for larger Major Cycle that has been hovering near “Neutral” for months?
  • Weakness underscores trend toward new Intermediate Cycle negative.
  • How quickly short-term “Oversold” conditions begin to take hold within context of intermediate-term weakness will determine where first rebound will occur.
  • Until Intermediate Cycle also becomes “Oversold” market could remain vulnerable to renewed selling pressures.
  • Given ongoing “reluctance” of majority of our key indicators to confirm recent strength to new highs, presumption is strong selling could be stronger than many believe.
  • Three indicators, MAAD, CPFL, and CV that measure Smart Money bias, sentiment, and the power of buying continue to indicate market underpinnings remain weak and that price action could adjust accordingly.

Click charts to enlarge

stock index, chart, technical analysis, cumulative volume

stock index, weekly, cumulative volume

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

5/7

5/8

5/9

5/10

5/11

5/11

5/31

S&P 500 Index

BUY1394.36

BUY1398.63

BUY1400.69

BUY1402.05

BUY1401.07

SELL1369.70

SELL1175.98

Dow Jones Industrials

SELL13042.98

SELL13074.37

SELL13104.35

SELL13128.33

SELL13119.36

SELL12918.39

SELL11273.01

NASDAQ Composite

BUY3039.96

BUY3048.72

BUY3052.54

BUY3056.05

BUY3048.61

BUY3057.13

SELL2485.38

Value Line Index

BUY3014.53

BUY3024.81

BUY3028.13

BUY3030.40

BUY3024.39

BUY3077.34

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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