S&P 500 flirts with bullish shift in Intermediate Cycle

Key metrics must be met

Market Snapshot for session ending 7-5-12:

 

Last

Day Change

%Change

S&P 500 Index

1367.58

-6.44

-.47%

Dow Jones Industrials

12896.67

-47.15

-.36%

NASDAQ Composite

2976.12

+.03

0.00%

Value Line Arithmetic Index

2946.05

-3.71

-.13%

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:

  • Stock market demonstrated negative tone Thursday. Only NASDAQ Composite was able to register fractional gain.
  • NYSE volume rose 46% Thursday compared to Tuesday’s truncated, low activity session just before July 4 holiday. Average Price per Share rose 19 cents to $58.32.
  • Short-term trend remains positive. Next larger Intermediate Cycle continues to toy with positive territory, as measured by upper edge of 10-Week Price Channel in S&P 500 (1368.93 through July 6), but needs positive confirmation from Momentum, our Trading Oscillators, and Weekly MAAD Ratio that remain toward “Oversold.”
  • Daily MAAD Ratio was plotted Thursday at 1.05 toward “Neutral” with 6 issues higher and 14 lower. Daily MAAD made new short-term high Tuesday, but pulled back from that level via Thursday’s net negativity.
  • At June 4 low, Daily MAAD Ratio was deeply “Oversold, (.71), which means if short-term strength continues, MAAD Daily Ratio could reach “Overbought” territory more easily.
  • Daily CPFL was positive Thursday by 1.24 to 1.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract moved to new short-term highs with S&P pricing, but each remains weaker than S&P on relative basis.

Market Overview – What We Think:

  • With prices, as measured by S&P 500, continuing to hover within range of upper edge of 10-Week Price Channel and first decision point for positive reversal of Intermediate Cycle, status of intermediate trend is still in doubt.
  •  With upside confirmation from intermediate Momentum, our Trading Oscillators, and Weekly MAAD Ratio needed for intermediate reversal to positive, we cannot preclude possibility short-term gains since June 4 low could prove to be no more than reflex rally within context of what could still be negative Intermediate Cycle.
  • But until short-term “Overbought” conditions develop, we cannot preclude possibility of further gains on upside on Minor Cycle.
  • If intermediate trend reverses to positive, then next significant issue becomes relationship of new pricing to late March/early April highs (1422.38—S&P 500). Buying above those levels would re-assert long-term uptrend initiated March 2009. Failure could similarly have longer-term implications.

Click charts to enlarge

stock, index, cumulative, volume

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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