Stock market softens Monday; short-term trend still iffy

Trading volume on NYSE shrank nearly 12%

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


Market Snapshot for session ending 7-16-12



Day Change


S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Arithmetic Index




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

  • Major indexes pulled back slightly Monday and left Minor Cycle trend negative and still in doubt.
  • Trading volume on NYSE shrank nearly 12% and Average Price per Share declined 37 cents to $58.61.
  • Strength at end of last week was threatening to turn Minor Cycle positive (above upper edge of 10-Day Price Channel at 1361.45—S&P through Tuesday) while challenging upper edges of 10-Week Price Channels (1353.07—S&P 500 through 7/20 already fractured).
  • Short-term Trading Oscillators remain somewhat vulnerable, however, even though MAAD Daily Ratio was “oversold” at .75 Monday. MAAD Weekly Ratio was last at .85.
  • Daily MAAD was negative Monday by 8 to 12 and was last plotted at level equivalent to S&P 500 price of about 1320. Indicator continues to suggest Smart Money is not as enthused about index prices as indexes would suggest.
  • Daily CPFL was positive Monday by 1.04 to 1.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract has been moving in synch with index prices lately, but both remain generally weaker than S&P 500 price on larger cycles.

Market Overview – What We Think:

  • Minor and Intermediate Cycles remain uncertain. Lacking decisive strength above April 2 short and intermediate high at 1422.38—S&P 500, all trends will remain in limbo, except to extent Minor and Intermediate Cycles continue to operate below April 2 high. If that level is breached on upside, however, long-term trend initiated in March 2009 would be re-asserted.
  • If follow through strength does not develop, we would look for weakness back below uptrend lines (toward 1340—S&P 500) stretching back to June lows. Such action would confirm fact that 58% retracement of losses from early April to early June is over and that recent highs (1374.81—S&P 500) will not be exceeded any time soon.
  • Poor showing of Daily and Weekly MAAD continues to linger in back of our technical mind as indication underpinnings of this market remain weak. But decision on that score must come with price breakdown.
  • Status of short and intermediate cycles will ultimately determine outcome of larger and more important Major Cycle trend that has been underway since March 2009. That trend, however, has had weaker statistical underpinnings than other long-term rallies over past decade-plus.

Click charts to enlarge

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly  Monthly 
   7/16 7/17  7/18  7/19  7/20  7/20  7/31 

S&P 500 Index

BUY 1359.79

BUY 1361.45

BUY 1359.62

BUY 1356.73

BUY 1356.70

SELL 1306.52

SELL 1205.40

Dow Jones Industrials

BUY 12838.02

BUY 12846.12

BUY 12787.84

BUY 12820.76

BUY 12783.24

SELL 12402.59

SELL 11616.99

NASDAQ Composite

BUY 2942.27

BUY 2948.08

BUY 2943.55

BUY 2932.91

BUY 2929.11

SELL 2812.99

SELL 2553.42

Value Line Index

BUY 2908.36

BUY 2914.77

BUY 2911.62

BUY 2903.79

BUY 2900.54

SELL 2773.33

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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