Stock market must keep climbing past last week’s highs

Old highs are not enough

Stock ticker, data, table Stock ticker, data, table

Market Snapshot for session ending 09-11-12

 

Last

Day Change

%Change

S&P 500 Index

1433.56

+4.48

+.31%

Dow Jones Industrials

13323.36

+69.07

+.52%

NASDAQ Composite

3104.52

+.50

+.02%

Value Line Arithmetic Index

3072.90

+13.56

+.44%

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:

  • Modest gains on increasing activity characterized trading in major indexes Tuesday.
  • Trading volume on rose nearly 8% and Average Price per Share gained 42 cents to $61.29. 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 (1401.05 through Wednesday) 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 positive Tuesday with 14 issues higher and 6 lower. Daily MAAD remains below its July 3 peak despite higher S&P 500 prices subsequent to that peak. Daily MAAD Ratio was last at “Neutral” (1.11).
  • Daily CPFL was negative by 2.46 to 1 Tuesday while Daily CPFL Ratio was last moderately “Overbought” (1.63). 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 to confirm cash.

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, emini, volume

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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