Oversold S&P bounces higher at trendline

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 10-15-12:
 

Last

Day Change

%Change

S&P 500 Index

1440.13

+11.54

+.81%

Dow Jones Industrials

13424.23

+95.38

+.72%

NASDAQ Composite

3064.18

+20.06

+.66%

Value Line Arithmetic Index

3050.15

+21.91

+.72%

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

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

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

Market Overview – What We Know:

  • S&P 500 bounced marginally higher Monday from support line in trend stretching back to June 4 low (1266.74). Other major indexes also improved on day.
  • NYSE trading volume shrank by under 1% and Average Price per Share added 43 cents to 61.53.
  • To suggest Minor Cycle positive, S&P 500 must rally above upper edge of 10-Day Price Channel (1458.41 through Tuesday).
  • Intermediate Cycle remains positive on all cycles and S&P 500 must sink below lower edge of 10-Week Price Channel (1392.40 through October 19) to suggest negative reversal.
  • Daily MAAD was positive Monday with 13 issues higher and 7 lower. 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 (.79).
  • Daily CPFL was positive Monday 1.14 to 1 with Daily CPFL Ratio toward “Oversold” (.55).
  • 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:

  • With major indexes, especially S&P 500 and Dow 30, apparently finding minor support at rising uptrend lines stretching back to June lows in face of near-term “Oversold” conditions, it remains to be seen if recent highs (1474.51—S&P 500) will be challenged.
  • Failure in current environment would mean Intermediate Cycle rally underway since early June may have seen its best levels.
  • To prove bearish point on downside, S&P 500 must sell below rising uptrend line (last near 1425) with follow through weakness below lower edge of 10-Week Price Channel (1392.40 through 10-19). Selling below latter point would likely terminate four-month-old-plus rally while suggesting new Intermediate Cycle negative.
  • 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 reflecting near-term “Oversold” conditions. Fact is, in early stages of larger cycle decline “Oversold” Minor Cycle readings on smaller cycles are not necessarily a firm indication of likely market direction.

cumulative, s&p

cumulative, emini

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.

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