Short-term stock uptrend in effect since June 4 losing steam

NYSE volume rose about 9% on losses

Magnifying glass, market prices Magnifying glass, market prices

Market Snapshot for session ending 7-9-12

 

Last

Day Change

%Change

S&P 500 Index

1352.46

-2.22

-.16%

Dow Jones Industrials

12736.29

-36.21

-.28%

NASDAQ Composite

2931.77

-5.56

-.19%

Value Line Arithmetic Index

2894.07

-14.64

-.50%

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

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

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

Market Overview – What We Know:

  • Marginal losses surfaced in major indexes Monday.
  • NYSE trading volume rose about 9% Monday, but was still sub par. Average Price per Share rose 52 cents to $58.28.
  • Short-term trend remains positive, as measured by S&P 500, but margin for error on downside is diminishing. Selling below lower edge of 10-Day Price Channel (1327.31--through Tuesday) would suggest end of uptrend begun after June 4 lows (1266.67). Coincident uptrend line from June 4 lows was last plotted at 1327.00.
  • Larger Intermediate Cycle trend remains negative, despite recent upside thrusts by index pricing. Sustained buying above upper edge of 10-Week Price Channel (1358.88—S&P 500 through July 13) would be required to reverse intermediate trend to positive.
  • Daily MAAD was negative Monday by 6 to 14 and remains below uptrend line stretching back to June 4 indicator low. Daily MAAD Ratio was last plotted at .82 in moderately “Oversold” territory.
  • Daily CPFL was negative Monday by 1.36 to 1.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract have recently moved in synch with index pricing, but remains weaker than S&P 500 on relative basis.

Market Overview – What We Think:

  • Short-term uptrend initiated after June 4 lows is looking increasingly vulnerable with index pricing, as measured by S&P 500, moving back toward lower edge of 10-Day Price Channel and defined uptrend line in effect since June 4 near 1327.00.
  • With index prices continuing to hover within range of upper edge of 10-Week Price Channels and decision point for possible positive reversal of Intermediate Cycle, status of intermediate trend remains uncertain. 
  • But selling initiated last week may have tipped balance in favor of negative resolution of not only Minor Cycle, but also of larger and still negative intermediate trend.
  • If so, short-term gains since June 4 low could prove to be no more than reflex rally within context of still negative Intermediate Cycle.
  • Last Friday’s downside break below rising trend line in MAAD could be further evidence strength since June 4 lows will prove to be nothing but failed rebound in Intermediate Cycle negative.
  • Status of Intermediate Cycle will ultimately determine outcome of larger and more important Major Cycle trend that has been underway since March 2009, but which has had weaker statistical underpinnings than long-term rallies over the past decade and since March 2000 price highs.

Click charts to enlarge

cumulative, volume, s&p

cumulative, volume, emini

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

7/9

7/10

7/11

7/12

7/13

7/13

7/31

S&P 500 Index

SELL
1321.91

SELL
1327.31

SELL
1333.75

SELL
1339.76

SELL
1342.75

BUY
1358.88

SELL
1205.40

Dow Jones Industrials

SELL
12542.00

SELL
12580.83

SELL
12627.02

SELL
12672.52

SELL
12688.93

BUY
12841.05

SELL
11616.99

NASDAQ Composite

SELL
2857.26

SELL
2868.68

SELL
2882.93

SELL
2898.25

SELL
2905.98

BUY
2947.47

SELL
2553.42

Value Line Index

SELL
2784.00

SELL
2804.48

SELL
2824.75

SELL
2845.83

SELL
2859.83

BUY
2918.50

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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