Market sinks Monday on more volume, as near-term trend waffles

Volume rising on weakness, contracting on strength

Financial price chart, analysis Financial price chart, analysis

Market Snapshot for session ending 6-11-12:

 

Last

Day Change

%Change

S&P 500 Index

1308.93

-16.73

-1.26%

Dow Jones Industrials

12411.23

-142.97

-1.14%

NASDAQ Composite

2809.73

-48.68

-1.70%

Value Line Arithmetic Index

2752.96

-58.41

-2.08%

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

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

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

Market Overview – What We Know:

  • Sharp losses surfaced in major indexes Monday, but cash S&P 500 did not reveal entire picture. From just after open on Sunday night until Monday evening at about same time, S&P 500 Emini futures contract sank 40.50 points from Sunday night high.
  • Action of S&P replicated in broad market was evidence of sellers waiting “just above market” to sell.
  • But despite losses, it remains to be seen if Monday’s price action could prove to be part of basing action on Minor Cycle.
  • In fact, while S&P 500 was last holding just below upper edge of 10-Day Price Channel (1309.77 through Tuesday), index was also above the lower edge of same channel (1290.07 through Tuesday) to suggest there is a somewhat positive bias to market.
  • To suggest reversal of larger Intermediate Cycle to positive, S&P 500 must rally above 1401.48 through June 15.
  • Trading volume on NYSE rose by nearly 7% Monday to mimic recent volume trend of increasing on market weakness while contracting on strength.
  • Average Price per share on NYSE declined Monday by 38 cents to $55.74.
  • Daily MAAD was net negative Monday with 1 issue higher and 19 lower. Daily MAAD Ratio was last just below “Neutral” at .86.
  • Daily CPFL was negative by 3.04 to 1.

Market Overview – What We Think:

  • Monday’s weakness in broad market could prove to be basing action on Minor Cycle prior to some additional rebounding, but as we have mentioned recently, it wouldn’t take much more net buying to push short-term statistics back above “Neutral” to “Overbought.” If they even get that far.
  • History continues to suggest that short-term “Neutral” readings in this kind of market can be good enough to cause prices to put in place a near-term high.
  • If we are correct larger Intermediate Cycle still holds sway over this market, then any near-term price improvement should be viewed with skepticism.
  • At this juncture, we do not think March/April highs (1422.38—S&P 500) will be seriously threatened even if short-term trend experiences further buying.
  • We think any strength will merely serve to eliminate recent deep negatives more than providing a sustainable rally on larger cycles.
  • Outside best we could see within current intermediate negative context would be strength toward 1400 and upper edge of 10-Week Price Channel in S&P 500.
  • In event larger Intermediate Cycle resumes downward course, there could be weakness in S&P 500 toward 1283-1213 if “normal” 40% to 60% pullback develops as calculated from April S&P 500 high at 1422.38.

Click charts to enlarge

stock, market, cumulative volume, s&p

stock, index, cumulative, volume, emini

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

6/11

6/12

6/13

6/14

6/15

6/15

6/30

S&P 500 Index

BUY
1315.52

BUY
1309.77

BUY
1309.55

BUY
1312.10

BUY
1313.92

BUY
1401.48

SELL
1185.81

Dow Jones Industrials

BUY
12447.51

BUY
12385.59

BUY
12378.81

BUY
12400.51

BUY
12421.16

BUY
13197.24

SELL
11413.64

NASDAQ Composite

BUY
2832.22

BUY
2821.14

BUY
2822.70

BUY
2829.91

BUY
2834.49

BUY
3062.05

SELL
2501.62

Value Line Index

BUY
2805.44

BUY
2791.02

BUY
2790.16

BUY
2796.93

BUY
2798.34

BUY
3038.05

SELL
2551.83

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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