S&P 500 fading toward uptrend line since June lows

NYSE trading volume rose about 6% Wednesday

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

Market Snapshot for session ending 09-05-12

 

Last

Day Change

%Change

S&P 500 Index

1403.44

-1.49

-.11%

Dow Jones Industrials

13047.48

+11.53

+.09%

NASDAQ Composite

3069.26

-5.79

-.19%

Value Line Arithmetic Index

2983.64

-4.02

-.13%

Minor Cycle (Short-term trend lasting days to a few weeks) 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:

  • Of major indexes we follow, only Dow Jones Industrial Average was up slightly Wednesday.
  • NYSE trading volume rose about 6% Wednesday and Average Price per Share was up 37 cents to $59.74.
  • Short-term trend remains negative. S&P 500 must rally above upper edge of 10-Day Price Channel (1414.48 through Thursday) to suggest positive reversal.
  • Intermediate Cycle remains positive and needs weakness below lower edge of 10-Week Price Channel (1331.11 through September 7) to turn negative.
  • Short-term Momentum in S&P 500 has moved back into negative territory and both of our Trading Oscillators remain negative. Intermediate Cycle remains positive, but “Overbought.”.
  • MAAD was marginally negative Wednesday with 8 issues positive and 10 negative (2 unchanged). MAAD Daily Ratio was last holding toward “Oversold” territory (.85). Daily MAAD remains below its July 3 high despite higher S&P 500 prices into August 21 peak (1426.68).
  • Daily CPFL was positive Wednesday by 3.14 to 1. Daily CPFL Ratio was toward “Oversold” at .90. Indicator continues to hold below April resistance highs.
  • Cumulative Volume (CV) in both S&P 500 and S&P 500 Emini futures contract remains below indicator highs made back in April, despite higher S&P 500 prices.

Market Overview – What We Think:

  • August 21 high in S&P 500 (1426.68) was likely short-term high, but it remains to be seen if that peak will prove to be best level of Intermediate Cycle uptrend in effect since June 4 lows (1266.74—S&P 500).
  • Problem for shorts and sellers is that each time market has backed off over past two weeks, buyers have been eager to run prices back up. Because our short-term indicators have begun to exhibit “Oversold” characteristics, we cannot rule out possibility market is tracing out “bull flag” patterns in positive Intermediate Cycle uptrend. Nothing but serious price breakdown would reassert negative market tone.
  • With market entering that time of year that has proven to be historically vulnerable, think 1929, 1987, and 2007, recent highs could prove to be important decision points.
  • Ongoing negative divergence by MAAD reflects fact Smart Money has been looking askance at equities on both short and long term trends. Current negative MAAD divergence is largest we have seen since October 2007.
  • Resumption of negativity on Minor Cycle could threaten reversal of Intermediate Cycle positive and then long-term uptrend stretching back to March 2009 lows. Latter would almost immediately become an issue if Intermediate Cycle turns negative since long-term trendline is now approximately coincident with June lows (1266.74—S&P 500). In other words, if June lows are fractured odds would be good major advance since March 2009 is over.

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

9/3

9/4

9/5

9/6

9/7

9/7

9/30

S&P 500 Index

BUY 1416.49

BUY 1416.10

BUY 1415.70

BUY 1414.48

BUY 1413.94

SELL 1331.11

SELL 1256.02

Dow Jones Industrials

BUY 13219.18

BUY 13204.12

BUY 13189.98

BUY 13168.81

BUY 13159.88

SELL 12566.91

SELL 12029.08

NASDAQ Composite

BUY 3078.14

BUY 3080.45

BUY 3082.61

BUY 3082.67

BUY 3081.99

SELL 2853.56

SELL 2685.41

Value Line Index

BUY 2994.24

BUY 2992.89

BUY 2992.64

BUY 2990.88

BUY 2988.60

SELL 2799.47

SELL 2702.37

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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