Stock market's bull run destined to end -- but when?

Weekly Review: MAAD, CPFL indicator analysis

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

10/8

10/9

10/10

10/11

10/12

10/12

10/31

S&P 500 Index

SELL 1441.45

SELL 1440.22

SELL 1439.85

SELL 1441.42

SELL 1444.02

SELL 1381.36

SELL 1269.05

Dow Jones Industrials

SELL 13447.58

SELL 13438.41

SELL 13433.52

SELL 13440.95

SELL 13461.90

SELL 12922.28

SELL 12141.09

NASDAQ Composite

BUY 3154.74

BUY 3148.72

BUY 3145.51

BUY 3145.17

BUY 3148.64

SELL 2981.27

SELL 2716.62

Value Line Index

BUY 3094.98

BUY 3089.77

BUY 3086.35

BUY 3085.97

BUY 3091.64

SELL 2903.25

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.

The fact both of those negative divergences are converging in the current time frame while our other key indicators like CPFL, Momentum, and Cumulative Volume (CV) have also failed to confirm on the upside makes us wonder if this market is well into a market cycle similar to that of the California Gold Rush when many of the “49ers” returned home poorer than when they left.

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD was marginally higher last week, but the indicator is not poised to make a new Minor Cycle high even though the S&P 500 may be. More importantly, the daily indicator is nowhere near major resistance put in place back on March 20. That divergence is significant considering the fact the broad market, as measured by the S&P 500, was able to make marginal new highs in the move since June over the past month. In fact, Daily MAAD has only recovered 33% of its losses since March.

Weekly MAAD also makes us wonder how much more staying power this market may have. While index prices have been working gradually higher since the June lows, the fact remains that the S&P 500 has only gained 6.6% since May 2011. Weekly MAAD peaked the week ending April 29, 2011 and has yet to revisit that level. Clearly, one of two things will happen – either prices get in line with MAAD on both cycles, or MAAD must demonstrate renewed strength. Of the two possibilities, we suspect the latter will not occur.

daily, cumulative volume, s&p

weekly, maad, s&p

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