Market recovers Monday’s losses; minor trend is a bit more positive

Major indexes recovered most of Monday’s losses

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Market Snapshot for session ending 6-12-12:

 

Last

Day Change

%Change

S&P 500 Index

1324.18

+15.24

+1.17%

Dow Jones Industrials

12573.80

+162.56

+1.31%

NASDAQ Composite

2843.07

+33.34

+1.19%

Value Line Arithmetic Index

2788.85

+35.89

+1.30%

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

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:

  • Major indexes recovered most of Monday’s losses Tuesday.
  • Trading volume shrank on strength by 2%. That tendency has plagued market recently—less volume on rallies, more on weakness.
  • Average Price per share on NYSE rose Tuesday by 43 cents to $56.17. Highest recent AP/S occurred back on March 15 at $61.48.
  • Short-term trend has taken on marginally positive tone with all of major indexes we follow now holding above lower edge of 10-Day Price Channels (1288.75—S&P 500 through Wednesday).
  • To suggest reversal of larger Intermediate Cycle to positive, S&P 500 must rally above 1401.48 through June 15.
  • Daily MAAD was net positive Tuesday with 17 issues higher and 1 negative. Daily MAAD Ratio was last plotted at “Neutral” at .99.
  • Daily CPFL was positive by 1.078 to 1.
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini futures contract has remained in step since June 4 low (1266.74—S&P 500), but continues to look unhealthy on longer-term cycle.

Market Overview – What We Think:

  • On heels of Monday’s weakness with subsequent recovery on Tuesday, short-term trend has taken on more positive tone that could be played out with further gains over next several sessions.
  • But with Trading Oscillators, MAAD Daily Ratio, and short-term Momentum already back to “Neutral”-plus, odds do not favor a sustained rally on the Minor Cycle even though history continues to suggest that short-term “Neutral” readings in this kind of market could 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 and think any strength will merely serve to eliminate recent deep negatives more than providing a sustainable rally.
  • 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

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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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