Stock sellers push minor cycle into negative territory

First indication short-term trend is on negative cusp

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

Market Snapshot for session ending 6-25-12:

 

Last

Day Change

%Change

S&P 500 Index

1313.72

-21.30

-1.60%

Dow Jones Industrials

12502.66

-138.13

-1.09%

NASDAQ Composite

2836.16

-56.25

-1.95%

Value Line Arithmetic Index

2770.29

-50.13

-1.78%

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:

  • Further selling in major indexes Monday brought broad market to verge of negative reversal on Minor Cycle trend. Movement by S&P 500 just below its trailing 10-Day Price Channel at 1316.12. Monday is first indication short-term trend is on negative cusp.
  • Trading volume on NYSE, however, was down sharply by 53% as compared to last Friday. Average Price per share declined 57 cents to $56.14.
  • Larger Intermediate Cycle remains negative.
  • 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 modestly “Overbought” at 1.44.
  • Daily MAAD was negative Monday with no issues higher and 20 lower.
  • Daily CPFL was negative Monday by 2.32 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:

  • Odds are good short-term rally begun after June 4 lows (1266.77—S&P 500) is over and that larger Intermediate Cycle is re-asserting itself on downside. Proof of resumption would come with selling below June 4 lows.
  • Modestly “Overbought” readings in our MAAD Daily Ratio and Trading Oscillators suggest there is a short-term statistical “overhang” that could weigh on market in sessions just ahead.
  • If June 4 lows are fractured on downside, larger issues like weakness below 200-Day lines near 1300—S&P 500 and long-term uptrend line near 1225—S&P 500 would take on greater significance. As a consequence, any near-term price improvement should be viewed with skepticism.
  • We do not think March/April highs (1422.38—S&P 500) will be exceeded via rebounding.
  • While some measurements of intermediate trend are currently registering “Oversold,” it’s important to remember OB/OS measurements can be somewhat subjective indication of market “temperature” and can persist.
  • If larger Intermediate Cycle resumes downward course and “normal” correction of advance since last October fully evolves, weakness in S&P 500 toward 1283-1213 could develop.

Click chart to enlarge

cumulative volume, s&p

cumulative volume, emini

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

6/25

6/26

6/27

6/28

6/29

6/29

6/30

S&P 500 Index

SELL
1316.12

SELL
1322.77

SELL
1328.42

SELL
1328.96

SELL
1329.56

BUY
1379.34

SELL
1185.81

Dow Jones Industrials

SELL
12502.01

SELL
12562.44

SELL
12610.72

SELL
12614.37

SELL
12617.79

BUY
13019.48

SELL
11413.64

NASDAQ Composite

SELL
2820.87

SELL
2838.63

SELL
2853.79

SELL
2587.26

SELL
2861.43

BUY
3002.57

SELL
2501.62

Value Line Index

SELL
2764.31

SELL
2776.54

SELL
2791.39

SELL
2793.68

SELL
2796.16

BUY
2973.79

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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