Market Snapshot for session ending 7-30-12

Market Overview – What We Know:

• Unable to follow through on Friday’s gains, major indexes posted small losses Monday.
• NYSE trading volume shrank 28% compared to Friday’s activity and Average Price per Share lost 13 cents to $59.06.
• Short-term trend nonetheless remains positive with favorable tone to larger Intermediate Cycle.
• To suggest short-term negative S&P 500 would need to sell below lower edge of 10-Day price Channel (1347.06 through Tuesday). Intermediate Cycle remains positive until lower edge of 10-Week price Channel (1304.85 through August 3).
• Short-term Momentum was last moving toward moderately “Overbought” levels along with our proprietary Trading Oscillators and Daily MAAD and CPFL Ratios.
• Daily MAAD was marginally negative Monday by 8 to 11.
• Daily CPFL was negative by 1.24 to 1.
• Cumulative Volume (CV) in S&P 500 and S&P 500 Emini futures contract has remained in relative synch with market since June 4 lows, but remains weaker than prices on long-term trend.

Market Overview – What We Think:

• Failure of major indexes to punch deeper into resistance Monday makes us wonder if that same resistance could become increasingly problematic as short-term “Overbought” conditions develop in sessions just ahead.
• Beyond that looms highs of late March/early April (1422.38—S&P 500) that must be overcome to not only re-assert short to intermediate-term advance, but to also re-assert long-term up[trend begun in March 2009. Failures in either would not bode well for market staying power.
• Lingering negative divergence by Daily MAAD that has confirmed none of market strength since peaking July 3 is ongoing suggestion Smart Money has been doing more selling into strength over past few weeks than buying. While S&P was last holding in excess of 1380, Daily MAAD was positioned at equivalent S&P price of about 1320.
• And while there has been some improvement in CPFL data recently, that indicator still faces major resistance via a plot high made back on April 9. Daily CPFL Ratio was also last toward moderately “Overbought” levels.
• If prices continue to fail on upside, that failure would take on long-term implications since it would suggest market is losing upside steam. All that would be required then would be new short-term negative and downside break to turn Intermediate Cycle negative (below 1304.85—S&P 500).

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.

Next page: Indicator review

We are also updating the daily chart of both the Call/Put Dollar Value Flow Line (CPFL) and Most Actives Advance/Decline Line (MAAD) indicators every day and providing the most recent raw data so you can begin to plot the indicators on your own (see below). The weekly equity index indicator summary provides longer-term commentary based on these indicators.

The definitions of the indicators along with links to the original stories provide helpful background. Also, Robert describes these indicators in a recent I-Trade show presentation available online.

Click charts to enlarge

*Note: Unchanged issues are not counted.