S&P 500 rallies above resistance Wednesday, but acts alone

Trading volume rose nearly 4% Wednesday

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

Market Snapshot for session ending 7-18-12

 

Last

Day Change

%Change

S&P 500 Index

1372.78

+9.11

+.67%

Dow Jones Industrials

12908.70

+103.16

+.81%

NASDAQ Composite

2942.60

+32.56

+1.12%

Value Line Arithmetic Index

2899.15

+22.96

+.80%

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

  • Broad market posted modest gains Wednesday with S&P 500 rallying to new short-term high above July 3 intraday resistance at 1374.81. But S&P action was not confirmed by S&P 500 Emini futures contract, Dow 30, NASDAQ Composite, Value Line index, or Daily MAAD.
  • Nonetheless, status of bellwether S&P above upper edge of 10-Day Price Channel (1359.62) provides market with decidedly more positive flavor.
  • Trading volume on NYSE rose nearly 4% Wednesday, but Average Price per Share sank 45 cents to $59.05.
  • Short-term Trading Oscillators have moved back toward “Overbought” territory, but Daily MAAD Ratio remains “Oversold” at .69.
  • Daily MAAD was positive by 13 to 7. Indicator was last plotted at level equivalent to S&P 500 price of about 1320 and continues to suggest Smart Money remains unenthused.
  • Daily CPFL was positive Wednesday by 2.28 to 1.
  • Cumulative Volume (CV) in S&P 500 broke above July 3 resistance high Wednesday, but action in cash was not confirmed by CV in S&P 500 Emini.

Market Overview -- What We Think:

  • Crosscurrents persist in market. Strength above near-term resistance high (1374.81) in S&P 500 Wednesday without confirming action in S&P 500 Emini, Dow 30, NASDAQ Composite, Value Line index, or Daily MAAD could be decided in favor of S&P, but failure is nonetheless noteworthy divergence.
  • More important, if all indexes get in synch on upside, then late March/early April highs (1422.38—S&P 500) take on new importance since if those levels are exceeded across spectrum, bull trend since March 2009 is reasserted.
  • It remains to be seen if that tone can be sustained, given fact most of our Short-term stats have moved back toward “Overbought” territory with lone exception of Daily MAAD Ratio that remains “Oversold” and in zone of opportunity. Clearly oscillators will give on downside, or Daily MAAD Ratio will play game of catch-up on upside.
  • If follow through strength does not develop, June lows would then become an issue (1266.74—S&P 500).

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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