Market stalled below major resistance after week of lateral action

Short-term trend remains positive

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

Market Snapshot for session ending 08-09-12

 

Last

Day Change

%Change

S&P 500 Index

1402.80

+.58

+.04%

Dow Jones Industrials

13165.19

-10.44

-.08%

NASDAQ Composite

3018.64

+.7.39

+.25%

Value Line Arithmetic Index

2953.91

+9.42

+.32%

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:

  • In trading Thursday, Major indexes again closed mixed and within range of even.
  • In overnight trading S&P 500 Emini futures contract sank about 5 points after moving to new short-term high (1403.75) Thursday. S&P 500, Dow 30, and NASDAQ Composite hit short-term highs August 7 with Value Line index to new minor high Thursday.
  • Trading volume on NYSE was down about 10% and Average Price per Share declined 28 cents to $59.05.
  • Short-term trend, as measured by S&P 500, remains positive and would need to sink below lower edge of 10-Day Price Channel (1362.16 through Friday) to suggest reversal of Minor Cycle to negative.
  • Intermediate Cycle was last positive and must sink below lower edge of 10-Week Price Channel (1311.00--S&P 500 through August 10) to create Intermediate Cycle negative.
  • Our short and Intermediate-term Trading Oscillators remain “Overbought.”
  • Daily MAAD has refused to confirm little of market rally after peaking back on July 3. But indicator was positive Thursday by 13 to 7 with MAAD Daily Ratio moderately “Overbought” at 1.43.
  • Daily CPFL was positive Thursday by 1.84 to 1 with Daily CPFL Ratio toward “Overbought” territory at 1.78.

Market Overview – What We Think:

  • Decision point for stock market as measured by bellwether S&P 500 remains at April 2 major resistance high (1422.38). Strength above that level would suggest resumption of uptrend begun in March 2009. Failure to better that level could have long-term negative consequences.
  • With NASDAQ Composite and Value Line index still substantially lagging S&P and Dow 30, strength in “bluer” issues should be viewed with skepticism. In addition, most of our key indicators, especially MAAD, continue to lag pricing, an indication index pricing may have gotten ahead of itself.
  • Lingering negative divergence by Daily MAAD is ongoing suggestion Smart Money has been doing more selling into strength over past several weeks than buying.
  • If recent rally is legitimate and for real, then where’s indicator corroboration? We simply cannot remember an instance where market powered higher indefinitely without confirmation from key indicators.


cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

8/6

8/7

8/8

8/9

8/10

8/10

8/31

S&P 500 Index

SELL
1352.16

SELL
1358.18

SELL
1360.53

SELL
1360.21

SELL
1362.16

SELL
1311.00

SELL
1229.29

Dow Jones Industrials

SELL
12769.22

SELL
12817.03

SELL
12848.22

SELL
12844.52

SELL
12862.09

SELL
12434.30

SELL
11829.11

NASDAQ Composite

SELL
2890.35

SELL
2899.00

SELL
2902.69

SELL
2901.21

SELL
2910.85

SELL
2823.64

SELL
2616.71

Value Line Index

SELL
2826.91

SELL
2833.92

SELL
2834.52

SELL
2829.53

SELL
2828.84

SELL
2776.03

SELL
2649.82

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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