Market bounces upward, but short-term bias is negative

Short-term trend flirts with negative reversal

Bull, Bear, Market data Bull, Bear, Market data

Market Snapshot for session ending 6-26-12:

 

Last

Day Change

%Change

S&P 500 Index

1319.99

+6.27

+.48%

Dow Jones Industrials

12534.67

+32.00

+.26%

NASDAQ Composite

2854.06

+17.90

+.63%

Value Line Arithmetic Index

2780.64

+10.35

+.37%

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:

  • Small upward bounces surfaced in major indexes Tuesday on diminishing NYSE volume. Activity was off about 5% and Average Price per share rose 50 cents to $56.64.
  • Short-term trend, as measured by S&P 500, continues to flirt with negative reversal in that S&P pricing has slightly penetrated lower edge of 10-Day Price Channel (1328.42 through Wednesday) while short-term Momentum and Trading Oscillators have yet to follow suit.
  • 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 was modestly “Overbought” at 1.26 Tuesday. Daily MAAD was near even with 10 issues higher and 9 lower. One was unchanged.
  • Daily CPFL was positive Tuesday by 1.42 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 favor negative resolution of short-term trend, given S&P 500 default break through lower boundary of 10-Day Price Channel and negative bias of short-term Momentum, MAAD Daily Ratio, and Trading Oscillators.
  • To give renewed negative definition to larger Intermediate Cycle, however, S&P must break below June 4 S&P low at 1266.77.
  • If June 4 lows are fractured on downside, bigger problems like weakness below 200-Day lines near 1300—S&P 500 and long-term uptrend line near 1225—S&P 500 would surface.
  • Given tone of market, we think any strength should be viewed with skepticism.
  • Some measurements of intermediate trend are currently registering “Oversold,” but 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 charts to enlarge

cumulative, volume, s&p, daily

cumulative, volume, emini, daily

 

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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