Stock market fades; still below Sept. 14 highs

MAAD, CPFL indicator review

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


Market Snapshot for session ending 10-18-12


Day Change


S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Arithmetic Index




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:

  • Small losses surfaced in major indexes Thursday as Minor Cycle remains “iffy,” depending on index. S&P 500 looks the best while NASDAQ Composite looks the worst.
  • NYSE trading volume rose 5% Thursday and Average Price per Share gained 82 cents to $62.98.
  • S&P 500 strength has carried bids in bellwether back above upper edge of 10-Day Price Channel (1456.09) to reflect more positive flavor on Minor Cycle, but until S&P rises above September 14 intraday high (1454.71), index will remain vulnerable on larger Intermediate Cycle.
  • Intermediate Cycle remains positive until lower edge of 10-Week Price Channel (1392.40 through October 19).
  • Daily MAAD was negative Thursday with 7 issues higher and 13 lower. Indicator was holding just above uptrend line in effect since June low. Daily MAAD Ratio was last toward “Oversold (.70).
  • Daily CPFL was negative Thursday by 1.08 to 1 with Daily CPFL Ratio still toward “Oversold” (.71).

Market Overview – What We Think:

  • S&P 500 strength since October 12 low (1425.53) has given short-term trend, within context of still positive Intermediate Cycle, a somewhat 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) could prove to be “return action” in face of developing Intermediate Cycle high. Upside failure in current environment could 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.

volume, cumulative, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly








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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