Stock market quiet Thursday, but intermediate trend still in play

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 10-11-12
 

Last

Day Change

%Change

S&P 500 Index

1432.84

+.27

+.02%

Dow Jones Industrials

13326.39

-18.57

-.14%

NASDAQ Composite

3049.41

-2.36

-.06%

Value Line Arithmetic Index

3046.67

+15.67

-.52%

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

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

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

Market Overview – What We Know:

  • Small changes characterized pricing Thursday when S&P 500 closed within range of rising uptrend line (1422) stretching back to June 4 low (1266.74).
  • While some “Oversold” conditions are already surfacing (MAAD and CPFL), it remains to be seen if those readings are premature or prescient relative to a short-term low.
  • NYSE trading volume rose 9% Thursday and Average Price per Share added 17 cents to 61.46.
  • Intermediate Cycle remains positive on all cycles and S&P 500 must sink below lower edge of 10-Week Price Channel (1381.86 through October 12) to suggest negative reversal.
  • Daily MAAD was positive Thursday with 12 issues higher, 7 lower, and 1 unchanged. Indicator was last positioned slightly above rising uptrend line of shallow MAAD advance in effect since June low. Daily MAAD Ratio was last toward “Oversold” territory (.78).
  • Daily CPFL was sharply negative Thursday by 4.1 to 1 with Daily CPFL Ratio toward “Oversold” (.63).
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini remains weaker than index pricing on both Daily and Weekly cycles.

Market Overview – What We Think:

  • Thursday’s hesitation in index pricing on heels of several days of selling took some of pressure off of near-term, but larger Intermediate Cycle remains the issue since it remains to be seen if recent highs (1474.51—S&P 500) will be overcome anytime soon.
  • Failure in current environment would mean Intermediate Cycle rally underway since early June may have seen its best levels.
  • To prove point on downside, S&P 500 must sell below rising uptrend line (last near 1422) with follow through weakness below lower edge of 10-Week Price Channel (1381.36 through 10-12). Selling below latter point would almost certainly terminate four-month-old-plus rally while suggesting new Intermediate Cycle negative trend.
  • Indicators such as Daily Most Actives Advance/Decline Line (MAAD) continue to suggest market has gotten ahead of itself even though Daily Ratios on both are suggesting near-term “Oversold” conditions. Fact is, in early stages of larger cycle decline “Oversold” near-term readings on next smaller cycles are not necessarily so.
  • In background it’s important to keep in mind fact market is into a time of year that has proven to be historically vulnerable -- think 1929, 1987, and 2007.

cumulative, volume, sp

emini, cumulative, volume

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.

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