Stock market drama may be close to resolution point

Weekly Review: MAAD, CPFL indicator analysis

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

10/15

10/16

10/17

10/18

10/19

10/19

10/31

S&P 500 Index

BUY 1458.43

BUY 1458.41

BUY 1456.09

BUY 1454.00

BUY 1451.03

SELL 1392.40

SELL 1269.05

Dow Jones Industrials

BUY 13582.96

BUY 13587.40

BUY 13571.71

BUY 13546.89

BUY 13518.85

SELL 12999.01

SELL 12141.09

NASDAQ Composite

BUY 3144.21

BUY 3137.59

BUY 3125.59

BUY 3115.61

BUY 3103.83

SELL 3009.09

SELL 2716.62

Value Line Index

BUY 3092.26

BUY 3091.36

BUY 3084.62

BUY 3081.00

BUY 3075.50

SELL 2935.99

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.

As in the denouement of a Greek tragedy, we suspect that in retrospect the justifications for the lingering negative divergences in our key indicators since the 2011 highs will become clear. The advantage of these indicators is that we are able to look forward to future possibilities for the stock market. As the current drama plays out, we suspect the outcome could be unfortunate for those investors who do not see the final acts coming. The unfavorable divergences that have been unfolding could prove to be not only historically prescient but also, like our play, dramatic in terms of the price damage they may be predicting. In other words, the stock market may be about to enter acts four and five – falling action and denouement. And whether or not the viewer achieves catharsis and/or pleasure while viewing this drama will depend on whether or not he’s long or short.

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD fractured by inches a rising uptrend line stretching back to the June low last week to suggest that weak index pricing since September 14 could prove to be something more than merely a near-term pullback within the context of a lingering Intermediate Cycle positive. To prove the point we would need to see renewed weakness in the major indexes with coincident downside follow-through in Daily and Weekly MAAD.

What is disturbing about the performance of Daily MAAD over the past few weeks, let alone since the March 20 indicator plot high, is that Daily MAAD is resting in the lower 25% of its respective range even though the S&P 500 and the other major indexes remain relatively close to their 2012 highs. Put another way, renewed selling in the broad market could result in further weakness in MAAD below those June support lows to suggest Smart Money continues to view this market with extreme skepticism. The question would then become how much longer index pricing could resist selling pressures that could get it in line with MAAD, a potentially troubling development.

daily, maad

weekly, maad

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