Stock market dawdles, decides little via Monday’s price action

Major indexes closed mixed Monday on negative tone

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

Market Snapshot for session ending 08-27-12

 

Last

Day Change

%Change

S&P 500 Index

1410.44

-.69

-.05%

Dow Jones Industrials

13124.67

-33.29

-.25%

NASDAQ Composite

3073.19

+3.40

+.11%

Value Line Arithmetic Index

2971.37

-3.95

-.13%

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

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

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

Market Overview – What We Know:

  • Major indexes closed mixed Monday on negative tone.
  • NYSE trading volume was down about 2% compared to Friday, but Average Price per Share rose 3 cents to $59.60. Highest recent AP/S was $61.48 on March 15.
  • To reflect more positive trend on Minor Cycle, S&P 500 would need to rise above upper edge of 10-Day Price Channel (1415.56 through Tuesday).
  • Intermediate Cycle remains positive and would require weakness below lower edge of 10-Week Price Channel (1323.49 through August 31) to turn negative.
  • Short-term Momentum in S&P 500 remains fractionally positive toward “Neutral” while our proprietary Trading Oscillators on Minor Cycle remain positive, but were last moving lower from “Overbought” levels. Intermediate Cycle remains toward “Overbought.”.
  • MAAD was slightly positive Monday by 10 to 9 (I unchanged issue) with MAAD Daily Ratio toward “Neutral” and Daily MAAD continuing to hold below peak made July 3. Weekly MAAD Ratio was last moderately “Overbought” at 1.29.
  • CPFL was negative Monday by 2.42 to 1 on very light OEX 100 options volume and continues to hold below resistance put in place back on April 9. Daily and Weekly CPFL Ratios remain toward moderately “Overbought” levels.
  • Cumulative Volume (CV) failed to confirm strength in S&P 500 and S&P Emini to best levels since June 4 last week.

Market Overview – What We Think:

  • Last Tuesday’s price reversal may have signaled an end to rally in effect since June 4 lows. While Key Reversal Day was signaled in only Dow Jones Industrial Average, all major indexes were negative on week.
  • 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, equities on net basis. With disparities in place, odds will continue to suggest short to intermediate-term highs could be imminent, if they have not already been reached via last week’s highs.
  • 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 dilemma.

 cumulative, volume, s&p

cumulative, volume, emini

Index

Daily / Weekly / Monthly Stops                                     

Weekly

Monthly

                     8/27        8/28      8/29       8/30        8/31       8/31        8/31

S&P 500 Index

BUY 1412.55

BUY 1415.56

BUY 1416.30

BUY 1416.34

BUY 1416.24

SELL 1323.49

SELL 1229.29

Dow Jones Industrials

BUY 13240.29

BUY 13259.07

BUY 13252.91

BUY 13240.58

BUY 13229.52

SELL 12502.13

SELL 11829.11

NASDAQ Composite

SELL 3029.04

SELL 3036.25

SELL 3041.47

SELL 3044.31

SELL 3045.87

SELL 2840.56

SELL 2616.71

Value Line Index

SELL 2954.59

SELL 2963.05

SELL 2967.45

SELL 2967.73

SELL 2966.70

SELL 2973.41

SELL 2649.82

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