S&P 500 inches higher, bearish Intermediate Cycle losing luster

Activity on NYSE declined by 33% relative to last Friday

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

Market Snapshot for session ending 7-2-12:

 

Last

Day Change

%Change

S&P 500 Index

1365.51

+3.35

+.25%

Dow Jones Industrials

12871.39

-8.69

-.07%

NASDAQ Composite

2951.23

+16.18

+.55%

Value Line Arithmetic Index

2914.58

+20.05

+.69%

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

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

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

Market Overview – What We Know:

  • Mixed pricing was evident in major indexes Monday on diminished trading volume.
  • Activity on NYSE declined by 33% relative to last Friday, while Average Price per Share rose 32 cents to $58.58.
  • Short-term trend is positive. Next larger Intermediate Cycle is under threat from positive pricing. Movement above 1368.93—S&P 500 could end negative market bias in effect for past two months if price action is confirmed by intermediate Momentum, our Trading Oscillators, and Weekly MAAD Ratio.
  • Daily MAAD Ratio was higher to 1.17 Monday. Weekly MAAD Ratio was last at .81.
  • At June 4 low, Daily MAAD Ratio was deeply “Oversold, (.71), which means if market is entering new short-term rally phase, MAAD Daily Ratio is beginning rally from a much higher level and could reach “Overbought” territory sooner.
  • Daily MAAD was positive Monday with 14 issues up and 6 down. But indicator has yet to better resistance high created June 20.
  • Daily CPFL was positive Monday by 1.08 to 1.
  • Cumulative Volume (CV) in both S&P 500 and S&P 500 Emini futures contract have moved to new short-term highs with S&P pricing. Each remains weaker than S&P on relative basis.

Market Overview – What We Think:

  • With prices inching higher in S&P 500, decision could soon be made on viability of lingering Intermediate Cycle negative initiated after April 2 high (1422.38). To suggest positive upside reversal, S&P 500 would need to rise above upper edge of 10-Week Price Channel (1368.93).
  • Depending on how quickly short-term “Overbought” conditions develop, Intermediate Cycle will remain viable. Currently, odds are rapidly diminishing that negative intermediate trend will persist.
  • If intermediate trend is reversed to positive, then significant issue becomes relationship of new pricing to those late March/early April highs. Buying above those levels would re-assert long-term uptrend initiated March 2009, while a failure would also have longer-term ramifications.

Click charts to enlarge

cumulative, volume, s&p

cumulative, volume, emini

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

7/2

7/3

7/4

7/5

7/6

7/6

7/31

S&P 500 Index

SELL 1376.81

SELL 1324.21

SELL 1323.44

SELL 1321.14

SELL 1321.91

BUY 1368.93

SELL 1205.40

Dow Jones Industrials

SELL 12596.80

SELL 12573.63

SELL 12564.41

SELL 12538.74

SELL 12542.00

BUY 12929.41

SELL 11616.99

NASDAQ Composite

SELL 2858.41

SELL 2855.48

SELL 2857.13

SELL 2850.25

SELL 2857.26

BUY 2973.98

SELL 2553.42

Value Line Index

SELL 2792.40

SELL 2787.27

SELL 2786.35

SELL 2784.00

SELL 2788.16

BUY 2945.71

SELL 2598.64

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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