Market locked between near-term highs, downside sell levels

Weekly Review: MAAD, CPFL indicator analysis

Stock data, bull, bear Stock data, bull, bear

Market Snapshot:

 

Last

Week Chg

Week %Chg

S&P 500 Index

1440.67

-19.48

-1.33%

Dow Jones Industrials

13437.13

-142.34

-1.04%

NASDAQ Composite

3116.23

-63.73

-2.00%

Value Line Arithmetic Index

3058.03

-61.11

-1.95%

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

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

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

All trends, no matter the cycle length, inevitably come to an end. The Major Cycle bull trend in effect since March 2009 will be terminated. The Intermediate Cycle rally initiated after the June 4 index lows will also end. What remains to be seen is whether those index highs hit September 14 (1454.71—S&P 500) will also prove to be intermediate-term highs.

Fact is, after two weeks of corrective action, our short-term indicators are mixed. Over the past four months since the June lows, we’ve seen similar configurations. Short-term Momentum moves back to, or just below, “Neutral” and our proprietary Trading Oscillators dip into “Oversold” territory. That’s where those indicators are currently. Coincidentally, the MAAD Daily Ratio has corrected rapidly from an “Overbought” (2.06) reading at the September 14 high down to “Oversold” (.63). In addition, each short-term advance since the June 4 S&P 500 low (1266.74) was preceded by an “Oversold” condition in the Daily MAAD Ratio.\

Market Overview – What We Know:

  • Major indexes were net negative last week, as Minor Cycle trend continued to unravel recently “Overbought” conditions.
  • Nonetheless, Intermediate Cycle remains positive until lower edge of 10-Week Price Channel (1374.62 through October 5), as does Major Cycle. Both larger cycles remain historically “Overbought,” however.
  • NYSE trading volume declined nearly 19% last week and Average Price per Share lost 83 cents to $61.20.
  • To suggest Minor Cycle positive, S&P 500 must rally above upper edge of 10-Day Price Channel (1462.89 through Monday).
  • Weekly MAAD was negative again last week with 6 issues positive and 14 negative. Weekly MAAD Ratio at 1.31 was toward moderately “Overbought” levels. Daily MAAD rose above July 3 resistance high on September 14, but remains well below March 20 high. Daily MAAD Ratio was last into “Oversold” territory at .63.
  • CPFL on both Daily and Weekly cycles pulled back last week, but CPFL Ratios in both remain toward “Overbought” levels (1.67 and 2.98, respectively).
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini remains weaker than index pricing on both Daily and Weekly trends.

But the short-term trend operates within the context of the next larger Intermediate Cycle that remains moderately “Overbought” to “Overbought” across the pricing and indicator spectrum. That suggests there could still be more room to go on the downside via short-term weakness, given currently mixed readings. It’s also true that so long as the Intermediate Cycle remains positive, a trend that is still underscored by favorable Major Cycle Momentum, we cannot rule out the chance weakness on the Minor Cycle is simply another pullback prior to further gains. Initial strength above the upper edge of the 10-Day Price Channel in the S&P 500 (1462.89 through October 1) with follow-on strength above the September 14 intraday high (1474.51) would re-assert the Intermediate Cycle uptrend.

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