Market sinks, volume rises, near-term trend damaged

Short-term trend positive, but only marginally so

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

Market Snapshot for session ending 6-21-12:

 

Last

Day Change

%Change

S&P 500 Index

1325.51

-30.17

-2.23%

Dow Jones Industrials

12573.57

-250.81

-1.96%

NASDAQ Composite

2859.09

-71.36

-2.44%

Value Line Arithmetic Index

2793.99

-72.23

-2.52%

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:

  • Major indexes suffered sharp losses Wednesday on increasing NYSE trading volume that rose nearly 16%.
  • Short-term trend remains positive, but only marginally so after Thursday’s selling. Next larger Intermediate Cycle is negative.
  • But to suggest new short-term negative, S&P 500 would have to drop below lower edge of 10-Day Price Channel at 1310.13 (through Friday).
  • To indicate 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 1.70 Thursday. Weekly MAAD Ratio was last plotted at .66 for week ending June 15.
  • Daily MAAD was negative Thursday with 2 issues positive and 18 negative.
  • Daily CPFL was negative Thursday by 4.82 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 tapping our short-term upside measured move target at 1360 on Tuesday and Wednesday, Thursday’s sharp losses in face of near-term “Overbought” stats could be hint short-term rally begun after June 4 lows (1266.74—S&P 500) is over.
  • It remains to be seen if that 1360 level in S&P 500 will be seriously challenged again, or if any strength could prove to be mere rebounding toward Tuesday’s high at 1363.46—S&P 500 as a short-term top is completed.
  • Within negative intermediate context, we will continue to view any near-term price improvement with skepticism. 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

stock, index, chart, cumulative, volume

stock index, chart, cumulative volume

 

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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