Stock market fades early gains Wednesday, closes mixed

Short-term trend remains positive

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

Market Snapshot for session ending 6-20-12:

 

Last

Day Change

%Change

S&P 500 Index

1355.69

-2.29

-.17%

Dow Jones Industrials

12824.39

-12.94

-.10%

NASDAQ Composite

2930.45

+.69

+.02%

Value Line Arithmetic Index

2866.22

-3.08

-.11%

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

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

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

Market Overview – What We Know:

  • Major indexes closed mixed Wednesday. Once again, following creation of S&P 500 day high just after 1 pm (1361.56), sellers stepped in and faded S&P nearly 6 points into day’s close.
  • NYSE trading volume diminished by nearly 3% and Average Price per share declined 67 cents to $57.27. Most recent highest AP/S occurred back on March 15 at $61.48.
  • Short-term trend remains positive while next larger Intermediate Cycle is negative.
  • To suggest new short-term negative, S&P 500 would have to drop below lower edge of 10-Day Price Channel at 1304.16 (through Thursday).
  • To suggest a positive reversal of Intermediate Cycle, S&P 500 must rally above upper edge of 10-Week Price Channel at 1392.33 (through June 22).
  • Minor Cycle, as measured by MAAD Daily Ratio and our short-term Trading Oscillators, has moved into “Overbought” territory. Daily MAAD Ratio was at 1.85 Wednesday.
  • Intermediate Cycle stats continue to hold toward “Oversold.” Weekly MAAD Ratio was last plotted at .66 for week ending June 15.
  • Daily MAAD was positive Wednesday with12 issues higher and 8 lower. Daily MAAD was last plotted slightly above downtrend line stretching back to early April.
  • Daily CPFL was negative Wednesday by 2.47 to 1.
  • Cumulative Volume (CV) in S&P 500 and S&P Emini futures contract remains in synch with underlying S&P 500 pricing, but is somewhat weaker on cumulative basis.

Market Overview – What We Think:

  • After S&P 500 reached our upside measured move target at 1360 Tuesday, selling commenced and forced bellwether nearly 5 ½ points lower by the day’s close to just below our upside target at that 1360 level. Same pattern that evolved on Wednesday is indication of potential market vulnerability near-term.
  • While it remains to be seen if that 1360 in S&P will be seriously challenged again, we wonder now in the face of Intermediate Cycle resistance at the upper edge of the S&P’s 10-Week Price Channel (1392.33) and “overbought” short-term stats, if this rally could be close to a termination point.
  • So long as S&P remains below upper edge of 10-Week Price Channel, larger cycle will remain negative.
  • Within that intermediate context, we will continue to view near-term price improvement with skepticism. We do not think March/April highs (1422.38—S&P 500) will be exceeded via rebounding. Nothing but strength back above April 2 high in S&P would suggest resumption of long-term uptrend.
  • 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

cumulative volume, s&p, daily

cumulative, volume, daily, emini


 

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

6/18

6/19

6/20

6/21

6/22

6/22

6/30

S&P 500 Index

BUY
1295.87

BUY
1297.79

BUY
1300.64

BUY
1304.16

BUY
1310.13

BUY
1392.33

SELL
1185.81

Dow Jones Industrials

BUY
12272.97

BUY
12298.39

BUY
12332.19

BUY
12372.94

BUY
12438.35

BUY
13129.00

SELL
11413.64

NASDAQ Composite

BUY
2793.10

BUY
2794.57

BUY
2798.33

BUY
2801.81

BUY
2810.72

BUY
3037.49

SELL
2501.62

Value Line Index

BUY
2743.65

BUY
2742.69

BUY
2743.69

BUY
2747.45

BUY
2755.73

BUY
3012.07

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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