Stock market slipping after failing to better April highs

Negative bias sets in

Market Snapshot for session ending 7-24-12

 

Last

Day Change

%Change

S&P 500 Index

1338.31

-12.21

-.90%

Dow Jones Industrials

12617.32

-104.14

-.82%

NASDAQ Composite

2862.99

-27.15

-.94%

Value Line Arithmetic Index

2788.21

-40.01

-1.41%

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

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:

  • Selling spilled over into Tuesday with all of major indexes finishing not far from day’s lows.
  • NYSE trading volume rose more than 8% Tuesday and Average Price per Share lost 45 cents to $58.10.
  • Short-term trend in S&P 500 is tipping over into negative territory. Intermediate Cycle is under negative threat. Selling below 1306.76 in S&P 500 would suggest negative resolution of Intermediate Cycle.
  • Short-term Momentum and one of our two, key short-term Trading Oscillators in bellwether S&P 500 was last negative with second oscillator nearly negative.
  • Uptrend line near 1340 in S&P 500 was fractionally breached on downside Tuesday via intraday trading and then with close below that level (1338.31).
  • Daily MAAD was negative Tuesday by 3 17. On more ominous note, MAAD has moved below July 12 support point when S&P hit intraday low at 1325.41 and even though S&P has yet to sink break below that level. Indicator continues to substantially underperform broad market since making near-term peak on July 3. MAAD subsequently failed to confirm new short-term high in S&P on July 19. Variance suggests Smart Money remains skeptical of market. Key indicator support rests at June 4 low.
  • Daily CPFL was positive Tuesday by 1.02 to 1 and remains locked between resistance created in April and support made last December.
  • CV in S&P 500 and S&P Emini have broken below uptrend lines in effect since June 4 lows to suggest that trend may over.

Market Overview – What We Think:

  • Follow-on selling Tuesday in wake of Monday’s losses, movement toward short-term negativity by several of our indicators, and downside break below uptrend line (1340—S&P 500) in effect since June 4 lows, suggests near-term trend may be reversing back to negative.
  • If short-term negative progresses, action would put June 4 lows (1266.74—S&P 500) in crosshairs since bottom edge of 10-Week Price Channels (1306.76—S&P 500) would already have been penetrated on downside to suggest new Intermediate Cycle negativity if June lows are hit.
  • Upside failure at this time with all of major indexes having failed to better late March/early April highs could create longer-term problems for market since break below June lows could then threaten primary uptrend line (1240—S&P 500) stretching back to March 2009 major bottom.
  • Additional fact Daily MAAD has “liked” none of advance since July 3 and remains much weaker than S&P is indication market underpinnings remain poor, as measured by Smart Money.
  • Simply put, market may be closing in on number of critical support points.

Click charts to enlarge

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

7/23

7/24

7/25

7/26

7/27

7/27

7/31

S&P 500 Index

SELL 
1340.90

SELL 
1340.81

SELL 
1343.45

SELL 
1348.40

SELL 
1351.56

SELL 
1306.76

SELL 
1205.40

Dow Jones Industrials

SELL 
12630.30

SELL 
12624.32

SELL 
12640.99

SELL 
12683.92

SELL 
12711.70

SELL 
12407.09

SELL 
11616.99

NASDAQ Composite

SELL 
2887.90

SELL 
2882.21

SELL 
2883.18

SELL 
2893.98

SELL 
2899.95

SELL 
2812.04

SELL 
2553.42

Value Line Index

SELL 
2856.02

SELL 
2850.81

SELL 
2851.19

SELL 
2857.50

SELL 
2858.89

SELL 
2768.16

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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