Stock selling Wednesday amplifies short-term negative tone

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 10-10-12
 

Last

Day Change

%Change

S&P 500 Index

1432.56

-8.92

-.62%

Dow Jones Industrials

13344.97

-128.56

-.95%

NASDAQ Composite

3051.78

-13.23

-.43%

Value Line Arithmetic Index

3031.00

-15.53

-.51%

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:

  • More selling developed in major indexes Wednesday as further confirmation of new negativity on Minor Cycle developed.
  • NYSE trading volume declined 3.5% and Average Price per Share sank 71 cents to 61.29.
  • 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 negative Wednesday with 4 issues higher, 15 lower, and 1 unchanged. Indicator was last positioned right at rising uptrend line of shallow MAAD advance in effect since June low. Daily MAAD Ratio remains “Neutral” to slightly “Oversold” (.85).
  • Daily CPFL was negative by 2.4 to 1 Wednesday with Daily CPFL Ratio toward“ Oversold” (.77).
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini remains weaker than index pricing on both Daily and Weekly trends.

Market Overview – What We Think:

  • Renewed selling Wednesday in all indexes on heels of Tuesday’s sharp losses in NASDAQ Composite appears to have paved way for possible topping action of Intermediate Cycle rally underway since early June.
  • In wake of market weakness, nothing but strength in S&P 500 back above September 14 intraday high (1474.51) would re-assert intermediate-term advance.
  • On downside, S&P 500 must sell below rising uptrend line (last near 1420) 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 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.
  • In background it’s important to keep in mind fact market is entering time of year that has proven to be historically vulnerable -- think 1929, 1987, and 2007.

volume, s&p, cumulative

cumulative, volume, emini

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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