Price action, negative indicators push market to edge

Weekly Review: Stock market needs recovery to re-ignite bull

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

Market Snapshot:

 

Last

Week Chg

Week %Chg

S&P 500 Index

1335.02

-7.82

-.58%

Dow Jones Industrials

12640.78

-126.39

-.98%

NASDAQ Composite

2892.42

+19.62

+.68%

Value Line Arithmetic Index

2820.43

+6.85

+.24%

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

The 30 point loss in the S&P 500 index last Thursday, with a coincident decline of more than 250 points in the Dow Jones Industrial Average, could prove to be the defining moment of the short-term advance that followed the June 4 Minor Cycle lows (1266.74—S&P 500). We say that not only because index pricing faded sharply after reaching our upside measured move target (1360—S&P 500) twice last week, as calculated from that same June 4 bottom, but because it also underscored apparent weakness on the larger Intermediate Cycle which may still take center stage in the weeks just ahead. In other words, there are once again bearish rumblings in the wings.

If the Minor Cycle trend turns negative as defined by a drop below the lower edge of the 10-Day Price Channel in the S&P 500 (1316.12 through Monday) as short-term Momentum and our Trading Oscillators dip into negative territory, we would look for a break below that near-term support point at the June 4 low (1266.74—S&P 500). But also, if that level is fractured, there are larger issues that could come into play. Not only would index pricing be back below 200-Day Moving Averages, but in the case of the S&P 500 a three-year-old uptrend line stretching back to the March 2009 lows could be at risk. If the S&P sinks below 1225 the next point of major support in the index would not come into focus until 1074.77 at the October 2011 lows. But even if support might be found at that major level, the damage to the uptrend stretching back to March 2009 would already be a fact.

Market Overview – What We Know:

  • Major indexes closed mixed last week, but overall market tone was negative even though NASDAQ Composite and Value Line index eked out small gains.
  • Short-term trend remains positive, but threatened on downside, while larger Intermediate Cycle remains negative.
  • Weekly trading volume rose by nearly 5% and Average Price per Share declined 2 cents to $56.71.
  • To suggest short-term negative, S&P 500 must decline below lower edge of 10-Day Price Channel (1316.12—through Monday).
  • To suggest reversal of Intermediate Cycle negative to positive, S&P 500 pricing must rally above upper edge of 10-Week Price Channel (1379.34 through week of June 29).
  • Minor Cycle, as measured by MAAD Daily Ratio remains in “Overbought” territory and was last plotted at 1.64 last Friday. Weekly MAAD Ratio was last plotted toward “Oversold” at .80 for week ending June 22.
  • Daily MAAD was negative last Friday with 16 issues positive, 2 negative, and 2 unchanged. Weekly MAAD registered 11 issues higher and 9 lower.
  • Daily CPFL was negative Friday by 1.73 to 1. Weekly CPFL was negative by 4.06 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.

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