Stock market on verge of re-asserting intermediate negative trend

NYSE trading volume rose 12% Tuesday

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

Market Snapshot for session ending 7-10-12:

 

Last

Day Change

%Change

S&P 500 Index

1341.47

-10.99

-.81%

Dow Jones Industrials

12653.12

-83.17

-.65%

NASDAQ Composite

2902.33

-29.44

-1.00%

Value Line Arithmetic Index

2863.18

-30.89

-1.07%

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

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

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

Market Overview – What We Know:

  • Renewed selling and modest losses in major indexes Tuesday pushed uptrend in effect since June 4 lows closer to edge of negative reversal.
  • NYSE trading volume rose 12% Tuesday and Average Price per Share sank 18 cents to $58.09.
  • Short-term trend remains positive, but only by a hair. Selling below lower edge of 10-Day Price Channel at 1333.75—S&P 500 (through Wednesday) with coincident break below uptrend line in effect since June 4, would suggest new Minor Cycle negative.
  • 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 Tuesday by 1 to 19 and remains below uptrend line stretching back to June 4 indicator low. In fact, Daily MAAD was last plotted at level equivalent to S&P 500 price of about 1325.
  • Daily CPFL was negative Tuesday by 3.19 to 1.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract was last on verge of breaking below uptrends created after June 4 lows. CV in both remains generally weaker than S&P 500 prices.

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, back toward lower edge of 10-Day Price Channel and defined uptrend line in effect since June 4 lows (1266.74—S&P 500).
  • Selling initiated last week may have tipped balance in favor of negative resolution of Minor and Intermediate Cycles and short-term gains since June 4 low could prove to be no more than reflex rally within context of still negative intermediate trend.
  • Downside break below Price Channel and uptrend line would suggest end of Minor Cycle positive and re-assertion of larger Intermediate Cycle negative. June lows would then become critically important to staying power of market. Until then status of intermediate trend remains uncertain. 
  • 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 short-term rebound, given fact Daily MAAD looks much weaker than broad market.
  • 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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