Short-term stock market trend positive, but still precarious

Crosscurrents persist in markets

Market Overview – What We Think:

  • Crosscurrents persist in markets. Strength above near-term resistance high (1374.81) in S&P 500 requires that March/April resistance (1422.38—S&P 500) must be overcome in order for long-term uptrend initiated March 2009 to remain viable.
  • Selling below uptrend line (1330—S&P 500), and then lower edge of 10-Week Price Channel (1306.76—S&P 500) would suggest that strength over past six weeks has been nothing but weakly inspired reflex bounce.
  • Fact that Daily MAAD has “Liked” none of advance since July 3 and remains much weaker than S&P is indication movement above July 3 highs (1374.81—S&P) by S&P, S&P Emini, Dow, 30 and NASDAQ could prove to be short-lived strength.
  • Simply put, it remains to be seen if positive short-term tone can be sustained in face of “Overbought” short-term stats, Momentum on verge of turning negative, and with MAAD continuing to underperform.
  • If follow through strength does not develop, June lows would then come sharply back into focus (1266.74—S&P 500).

At the same time, the broad market, as measured by the S&P 500, has moved back into “Overbought” territory on the Minor Cycle while remaining negative on the larger intermediate even though the latter is also modestly “Oversold.” The only variances to those norms are an “Oversold” condition in the MAAD Daily Ratio (.79) and neutrality in the Weekly MAAD Ratio (.96). What we’re getting at here is that even though the Daily MAAD Ratio appears to be “Oversold,” that condition can persist. In terms of its historical ability to also reflect Momentum in pricing, the negative bias in the Daily MAAD ratio could actually be a negative omen when combined with the “Overbought” characteristics of short-term Momentum, Cumulative Volume, CPFL, and our short-term Trading Oscillators.

Daily S & P 500 with Cumulative Volume (CV) 

cumulative, volume, s&p

Weekly S & P 500 with Cumulative Volume (CV)

cumulative, volume, s&p, weekly

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