Market sinks in earnest Thursday, challenging short-term trend

NYSE trading volume rose 17%

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

Market Snapshot for session ending 08-01-12



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) Positive

Intermediate Cycle (Medium trend lasting weeks to several months) Positive

Major Cycle (Long-term trend lasting several months to years) Neutral / Positive

Market Overview – What We Know:

  • Major indexes stalled again Wednesday and posted small losses at close.
  • NYSE trading volume rose 17% Wednesday as Average Price per Share added 74 cents to $59.67.
  • Short-term trend remains positive, but selling below lower edge of 10-Day Price Channel at 1343.57—S&P 500 (through Thursday) would suggest reversal of Minor Cycle to negative.
  • Intermediate Cycle remains positive until lower edge of 10-Week price Channel (1304.85—S&P 500 through August 3).
  • Short-term Momentum was last toward “Neutral” while our proprietary Trading Oscillators were toward “Overbought.”
  • Daily MAAD was marginally negative Wednesday with 7 issues higher and 13 lower. Daily MAAD Ratio was last back toward “Oversold” territory at .87
  • Daily CPFL was sharply positive Wednesday by 2.68 to 1 while CPFL Daily Ratio was moderately “Overbought” at 1.68.
  • 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.

Market Overview – What We Think:

  • Failure of major indexes to overcome resistance spurred by last Friday’s strength and slightly higher high Monday (1391.74--S&P 500) makes us wonder if that same 
  • “overhead” could become increasingly problematic if it holds.
  • Late March/early April (1422.38—S&P 500) highs must also be exceeded to not only re-assert short to intermediate-term advance, but to also re-assert long-term uptrend begun in March 2009.
  • 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).

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly








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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