S&P more positive near-term, but upside obstacles loom

MAAD, CPFL indicator review

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


Market Snapshot for session ending 10-17-12
 

Last

Day Change

%Change

S&P 500 Index

1460.91

+5.99

+.41%

Dow Jones Industrials

13557.00

+5.21

+.04%

NASDAQ Composite

3104.12

+2.94

+.10%

Value Line Arithmetic Index

3105.33

+24.78

+.80%

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

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

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

Market Overview – What We Know:

  • Marginal gains were posted by major indexes Wednesday.
  • NYSE trading volume rose 7%, but Average Price per Share lost 23 cents to $62.16.
  • S&P 500 strength has carried bids in bellwether back above upper edge of 10-Day Price Channel (1456.09) to suggest more positive flavor on Minor Cycle. But that strength was only confirmed by Value Line index above coincident level and not by Dow Jones Industrials or NASDAQ Composite index.
  • Intermediate Cycle remains positive and S&P 500 must sink below lower edge of 10-Week Price Channel (1392.40 through October 19) to indicate negative reversal.
  • Daily MAAD was modestly positive Wednesday with 13 issues higher, 6 lower, and 1 unchanged. Indicator was last back above rising uptrend line of shallow MAAD advance in effect since June low. Daily MAAD Ratio was last toward “Oversold” territory (.82).
  • Daily CPFL was positive Wednesday by 2.35 to 1 with Daily CPFL Ratio still toward “Oversold” (.73).

Market Overview – What We Think:

  • S&P 500 strength over past few sessions has given short-term trend, within context of still positive Intermediate Cycle, a more positive tone. But index faces three near-term obstacles that must be overcome. First it must rise above short-term downtrend line near 1468.00, then resistance high (1470.96) made October 5, and then September 14 intermediate high (1474.51).
  • Any failure short of September 14 peak could mean that strength since October 11 S&P 500 intraday low (1425.53) is mere “return action” in face of developing Intermediate Cycle high. Upside 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, however, S&P 500 must sell below rising uptrend line (last near 1430) 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.

cumulative, volume, s&p

emini, cumulative, volume

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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