Market fades, volume shrinks, resistance highs remain

NYSE trading volume was subnormal

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

Market Snapshot for session ending 08-20-12:

 

Last

Day Change

%Change

S&P 500 Index

1418.13

-.03

-.00%

Dow Jones Industrials

13271.64

-3.56

-.03%

NASDAQ Composite

3076.21

-.37

-.01%

Value Line Arithmetic Index

2999.41

-8.29

-.28%

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:

  • More stalling short of March/April resistance highs (1422.38—S&P 500) characterized major index price action Monday.
  • NYSE trading volume was subnormal again and declined more than 18% relative to Friday’s levels. Average Price per Share was down 14 cents to $56.68. Highest recent AP/S was $61.48 hit back on March 15.
  • Short-term trend remains positive until lower edge of 10-Day Price Channel (1393.29 through Tuesday) while Intermediate Cycle would require weakness below lower edge of 10-Week Price Channel (1319.82 through August 24) to turn negative.
  • Short-term Momentum was last positive in S&P 500, but has confirmed none of new highs made over past several sessions. While Intermediate Cycle Momentum remains positive, even if S&P 500 rallies above April high (1422.38), Momentum would likely not confirm strength.
  • Our proprietary Trading Oscillators remain positive, but “Overbought,” on both Minor and Intermediate Cycles.
  • Daily MAAD was negative by 8 to 10 Monday, and MAAD Daily Ratio was moderately “Overbought” at 1.51. Daily MAAD continues to hold well below peak made July 3.
  • CPFL was negative Monday by 1.05 to 1 and Daily and Weekly CPFL Ratios continue to move toward “Overbought.”
  • Despite strength in S&P 500 Emini last week above March resistance high, Cumulative Volume (CV) did not confirm price action. Or in Cash S&P CV.

Market Overview – What We Think:

  • It remains to be seen if S&P 500 will be able to overcome resistance high (1422.38) put in place April 2 to re-assert major advance begun in March 2009.
  • Noticeable and negative divergence by Daily MAAD in face of market strength since MAAD peaked July 3 is indication Smart Money has recently been exiting this market on strength. Unless negative disparity is erased, odds will continue to increase that short-term high, and possibly Intermediate peak, are imminent.
  • If market fails short of March/April highs (1422.38--S&P 500), turns negative on Minor Cycle, and then threatens reversal of Intermediate Cycle positive, long-term uptrend stretching back to March 2009 lows would almost immediately become an issue since trendline is now approximately coincident with June lows (1266.74—S&P 500). In other words, if June lows are fractured on renewed selling, odds would be good major advance since March 2009 would be finished.
  • If recent rally is legitimate and has more room to go on upside, we continue to wonder where’s indicator corroboration? We cannot remember instance where market powered higher on long term indefinitely without confirmation from key indicators.

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

8/20

8/21

8/22

8/23

8/24

8/24

8/31

S&P 500 Index

SELL
1390.38

SELL
1393.29

SELL
1396.03

SELL
1398.68

SELL
1402.34

SELL
1319.82

SELL
1229.29

Dow Jones Industrials

SELL
13068.82

SELL
13089.43

SELL
13106.86

SELL
13122.28

SELL
13149.03

SELL
12480.73

SELL
11829.11

NASDAQ Composite

SELL
2985.64

SELL
2993.24

SEL
L
3000.16

SELL
3008.96

SELL
3020.27

SELL
2835.67

SELL
2616.71

Value Line Index

SELL
2907.90

SELL
2916.18

SELL
2923.56

SELL
2932.91

SELL
2945.71

SELL
2972.55

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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