Stock market tests last Friday’s low and recovers

Volume on NYSE rose 2% Wednesday

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

Market Snapshot for session ending 5-23-12:

 

Last

Day Change

%Change

S&P 500 Index

1318.86

+2.23

+.17%

Dow Jones Industrials

12496.15

-6.65

-.05%

NASDAQ Composite

2850.12

+11.03

+.39%

Value Line Arithmetic Index

2811.83

+13.65

+.49%

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

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

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

Market Overview – What We Know:

  • Major indexes closed mixed again Wednesday with marginally positive bias.
  • Volume on NYSE rose 2% Wednesday and Average Price per share sank 1 cent to 56.16. Highest recent average price occurred March 15 at $61.48.
  • Short-term trend remains negative until upper edge of 10-Day Price Channels are penetrated (1350.69—S&P 500 through Thursday).
  • Daily MAAD was positive Wednesday with 12 issues higher and 7 lower. Indicator continues to hold above last Friday’s low. Daily MAAD Ratio rose slightly to .50 from .45 and remains “Oversold.”
  • CPFL Ratio was marginally negative Wednesday by 1.36 to 1 and indicator remains in short to intermediate term negative trend.
  • Cumulative Volume (CV) in both S&P 500 cash index and S&P 500 Emini futures remains above last Friday’s lows, but is still in negative short-term trend.

Market Overview – What We Think:

  • Wednesday’s early session price weakness and subsequent recovery could prove to be “test” of last Friday’s possible short-term low (1291.98—S&P 500) following net weakness after April 22 short-term high (1422.38).
  • If May 18 low was bottom of Minor Cycle decline within context of lingering Intermediate Cycle negative, any Minor Cycle retracement of recent losses should prove to be short-lived. Strength would probably do little more than erase “Oversold” readings prior to resetting market for another down leg on Intermediate Cycle.
  • Best guess on how far entire intermediate negative could ultimately carry would be 1283-1213 if “normal” 40% to 60% pullback develops.
  • Since majority of our key indicators did not confirm market strength into recent highs, more selling could ultimately bring market pricing into line with negative indicator divergences.

Click charts to enlarge

stock index, cumulative volume, chart

s&p, emini, cumulative volume

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

5/21

5/22

5/23

5/24

5/25

5/25

5/31

S&P 500 Index

BUY1370.35

BUY1363.88

BUY1358.10

BUY1350.69

BUY1342.10

BUY1401.19

SELL1175.98

Dow Jones Industrials

BUY12984.98

BUY12927.50

BUY12874.05

BUY12810.48

BUY12737.61

BUY13167.28

SELL11273.01

NASDAQ Composite

BUY2965.47

BUY2954.38

BUY2943.05

BUY2928.08

BUY2907.01

BUY3069.29

SELL2485.38

Value Line Index

BUY2944.34

BUY2929.45

BUY2916.88

BUY2899.51

BUY2876.41

BUY3061.08

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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