Stock market's short-term trend moves closer to reversal

NYSE volume flat

Bull, Bear, Market prices Bull, Bear, Market prices

Market Snapshot for session ending 08-23-12:

 

Last

Day Change

%Change

S&P 500 Index

1402.08

-11.41

-.81%

Dow Jones Industrials

13057.46

-115.29

-.88%

NASDAQ Composite

3053.40

-20.26

-.66%

Value Line Arithmetic Index

2964.93

-24.11

-.81%

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

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 selling in broad market Thursday put short-term in effect since June 4 in further jeopardy.
  • NYSE trading volume declined about 1% Thursday and Average Price per Share declined 50 cents to $59.26. Highest recent AP/S was $61.48 on March 15.
  • Short-term trend remains positive until lower edge of 10-Day Price Channel (1402.34 through Friday), but could signal short-term negative by default Friday if S&P 500 closes unchanged to lower. Intermediate Cycle would require weakness below lower edge of 10-Week Price Channel (1319.82 through August 24) to turn negative. Dow Jones Industrials declined through lower edge of 10-Day Price Channel Thursday to suggest reversal to short-term negative. 
  • Short-term Momentum turned negative Thursday for first time since July 26 after failing to confirm any of new short-term highs in S&P 500 since August 10. 
  • Our Minor Cycle proprietary Trading Oscillators remain positive, but were last fading toward moderately “Overbought” levels. Intermediate Cycle remains toward “Overbought.”.
  • Daily MAAD was negative Thursday by 3 to 16 with MAAD Daily Ratio moderately “Oversold” toward .89. Daily MAAD continues to hold below peak made July 3.
  • CPFL was negative Thursday by 3.27 to 1. Daily and Weekly CPFL Ratios remain 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:

  • Tuesday’s price reversal may have signaled an end to rally in effect since June 4 lows.
  • Ongoing negative divergence by Daily MAAD in face of market strength since MAAD peaked July 3 reflects fact Smart Money has been exiting, if not simply avoiding, market for several weeks. With that disparity in place, odds will continue to suggest short-term high, and possible intermediate peak, are imminent if they have not already been reached via Tuesday’s net losses.
  • If market 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 those 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 could be finished.
  • If recent rally is legitimate and has more room to go on upside, we continue to wonder about indicator corroboration? We cannot remember instance where market powered higher on long term indefinitely without confirmation from key indicators. Tuesday’s reversal may have finally resolved that problem.

cumulative, volume, s&p

cumulative, s&p, emini, volume

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

SELL
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.

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus