Market fades Wednesday, but Minor Cycle still tips positive

Trading volume shrank by just over 2%

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

Market Snapshot for session ending 6-13-12:

 

Last

Day Change

%Change

S&P 500 Index

1314.88

-9.30

-.70%

Dow Jones Industrials

12496.38

-77.41

-.62%

NASDAQ Composite

2818.61

-24.46

-.86%

Value Line Arithmetic Index

2754.98

-33.87

-1.21%

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:

  • More selling surfaced in stock market Wednesday and all of major indexes lost ground.
  • Trading volume shrank by just over 2%.
  • Average Price per share declined Wednesday by 36 cents to $55.81. 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 (1291.90—S&P 500 through Thursday).
  • To suggest reversal of larger Intermediate Cycle to positive, S&P 500 must rally above 1401.48 through June 15.
  • Daily MAAD was net negative Wednesday with 8 issues higher and 12 negative. Daily MAAD Ratio was last plotted just above “Neutral” at 1.12.
  • Daily CPFL was negative by 1.57 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:

  • Despite volatility over past few sessions, short-term trend has assumed more positive tone that could be played out with further gains, near-term.
  • 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 since 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

stock, market, technical, analysis, index, indicator

stock index, technical, analysis, cumulative, volume

 

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

BUY1315.52

BUY1309.77

BUY1309.55

BUY1312.10

BUY1313.92

BUY1401.48

SELL1185.81

Dow Jones Industrials

BUY12447.51

BUY12385.59

BUY12378.81

BUY12400.51

BUY12421.16

BUY13197.24

SELL11413.64

NASDAQ Composite

BUY2832.22

BUY2821.14

BUY2822.70

BUY2829.91

BUY2834.49

BUY3062.05

SELL2501.62

Value Line Index

BUY2805.44

BUY2791.02

BUY2790.16

BUY2796.93

BUY2798.34

BUY3038.05

SELL2551.83

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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