Market stalls Monday, fades some of last week's gains

Trading volume faded nearly 10% Monday

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

Market Snapshot for session ending 09-10-12

 

Last

Day Change

%Change

S&P 500 Index

1429.08

-8.64

-.61%

Dow Jones Industrials

13254.29

-52.34

-.39%

NASDAQ Composite

3104.02

-32.39

-1.03%

Value Line Arithmetic Index

3059.33

-10.78

-.35%

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:

  • Small losses surfaced in major indexes Monday.
  • Trading volume on NYSE faded nearly 10% Monday, but Average Price per Share rose 36 cents to $60.87. AVP remains below its best level ($61.48) made back on March 15.
  • Short-term trend remains positive and S&P 500 would need to sell below lower edge of 10-Day Price Channel (1401.37 through Tuesday) to suggest new Minor Cycle negative.
  • Intermediate trend remains positive until lower edge of 10-Week Price Channel (1344.26 through September 14).
  • Daily MAAD was negative Monday with 4 issues higher and 16 lower and remains below its July 3 peak despite higher S&P 500 prices subsequent to that peak. Daily MAAD Ratio was last at “Neutral” (1.03).
  • Daily CPFL was negative by 3.40 to 1 Monday while Daily CPFL Ratio was last moderately “Overbought” (1.24). CPFL series has been unable to overcome first resistance at April 2012 resistance highs.
  • Cumulative Volume (CV) in S&P 500 rallied above August and April highs last week, but CV in S&P Emini failed.

Market Overview – What We Think:

  • While last week’s gains pushed S&P 500 and NASDAQ Composite index above March/April highs, failure of Dow 30, Value Line index, and all of our key indicators to confirm leaves pall over market that has persisted since spring of 2011.
  • In fact, with S&P 500 only having gained 4.9% since May 2011 high (1370.58), we continue to wonder if market risk in face of indicator deterioration is worth longer-term exposure.
  • From long-term perspective, nothing but strength above October 2007 S&P 500 high (1576.09) would give this market a bullish imprimatur equal to market strength experienced from 1994 through mid-1999 when prices and indicators were in synch. 
  • Since 2000 longer-term rallies by market have become increasingly labored relative to indicator performance.
  • Without strong follow through on upside by indexes with indicator confirmation, we must regard last week’s gains with suspicion, especially considering fact market is entering time of year that has proven to be historically vulnerable -- think 1929, 1987, and 2007.
  • Ongoing negative divergence by MAAD on both Daily and Weekly cycles reflects fact Smart Money has been looking askance at equities on both trends for some time. Current negative MAAD divergence is largest we have seen since October 2007.

cumulative, volume, s&p

cumulative, volume, emini

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

9/10

9/11

9/12

9/13

9/14

9/14

9/30

S&P 500 Index

SELL
1402.83

SELL
1401.37

SELL
1401.05

SELL
1401.36

SELL
1406.77

SELL
1344.26

SELL
1256.02

Dow Jones Industrials

SELL
13055.15

SELL
13035.17

SELL
13027.36

SELL
13027.39

SELL
13068.99

SELL
12680.65

SELL
12029.08

NASDAQ Composite

SELL
3053.55

SELL
3050.95

SELL
3052.75

SELL
3055.71

SELL
3069.09

SELL
2879.61

SELL
2685.41

Value Line Index

SELL
2962.80

SELL
2959.50

SELL
2961.79

SELL
2965.54

SELL
2980.54

SELL
2819.41

SELL
2702.37

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