Stock market without conviction, but slightly oversold

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 10-02-12
 

Last

Day Change

%Change

S&P 500 Index

1445.75

+1.26

+.09%

Dow Jones Industrials

13482.36

-32.75

-.24%

NASDAQ Composite

3120.04

+6.50

+.21%

Value Line Arithmetic Index

3069.80

+4.52

+.15%

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

Market Overview – What We Know:

  • S&P 500, NASDAQ Composite, and Value Line index posted fractional gains Tuesday while Dow Jones Industrials lost marginal ground.
  • NYSE trading volume declined 11% Tuesday and Average Price per Share rose 14 cents to $61.54.
  • Short-term trend remains negative unless S&P 500 rises above upper edge of trailing 10-Day Price Channel (1459.80 through Wednesday).
  • Intermediate Cycle remains positive until lower edge of 10-Week Price Channel (1374.62 through October 5).
  • MAAD was positive Tuesday with 12 issues higher and 7 lower. Daily indicator was last below July 3 peak while holding well below March 20 high to suggest Smart Money remains skeptical of this market.
  • MAAD Daily Ratio remains in “Oversold” territory at .79.
  • CPFL was decidedly negative Tuesday by 2.33 to 1 and remains below September short to intermediate high. Indicator is nowhere close to major resistance made week of February 25, 2011.
  • CPFL Daily Ratio has moved back toward “Neutral” (1.30) from extremely “Overbought” levels.

Market Overview – What We Think:

  • With Minor Cycle stats now ranging from “Neutral” to “Oversold,” notably in Daily MAAD and CPFL, it remains to be seen whether or not market action over past two weeks will prove to be another corrective phase in Intermediate Cycle advance initiated after June lows, or something else.
  • To resolve issue negatively, S&P 500 must sell below rising uptrend line (last near 1410) with follow through weakness below lower edge of 10-Week Price Channel (1374.62). Weakness below latter point would almost certainly terminate four-month-old rally.
  • In meantime, nothing but strength back above September 14 intraday high (1474.51) would re-assert Intermediate Cycle advance. Between here and there (uptrend/Price Channel and resistance) coin will continue to flip.
  • Indicators such as Daily Most Actives Advance/Decline Line (MAAD) still suggest market has gotten way ahead of itself. Daily MAAD has come nowhere near overcoming March 20 resistance high even though indicator participated, albeit feebly, on upside after June lows. MAAD failure hints Smart Money has only been buying a bit more than it has been selling over past few months.

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

10/1

10/2

10/3

10/4

10/5

10/5

10/31

S&P 500 Index

BUY   1462.89

BUY   1463.55

BUY   1459.80

BUY   1457.58

BUY   1455.04

SELL   1374.62

SELL   1269.05

Dow Jones Industrials

BUY   13598.43

BUY   13609.23

BUY   13589.90

BUY   13576.29

BUY   13557.20

SELL   12887.24

SELL   12141.09

NASDAQ Composite

BUY   3181.78

BUY   3182.68

BUY   3171.87

BUY   3165.52

BUY   3157.91

SELL   2960.06

SELL   2716.62

Value Line Index

BUY   3133.68

BUY   3131.78

BUY   3118.39

BUY   3109.23

BUY   3099.22

SELL   2886.89

SELL   2723.41

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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