Stock market's intermediate cycle gains negative momentum

MAAD, CPFL indicator review

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


Market Snapshot for session ending 10-23-12
 

Last

Day Change

%Change

S&P 500 Index

1413.11

-20.70

-1.44%

Dow Jones Industrials

13102.53

-243.35

-1.82%

NASDAQ Composite

2990.46

-26.49

-.88%

Value Line Arithmetic Index

3016.30

-25.42

-.84%

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:

  • Further selling on short-term trend Tuesday caused more red ink across board in major indexes.
  • NYSE trading volume rose nearly 6% and Average Price per Share declined 67 cents to $60.51.
  • Weakness in Dow Jones Industrials and NASDAQ Composite indexes suggests new Intermediate Cycle negative. While S&P 500 and Value Line index have yet to follow suit below similar levels, it won’t take much more selling to get two on board.
  • Intermediate Cycle remains positive in S&P 500 until lower edge of 10-Week Price Channel (1405.79 through October 26).
  • Daily MAAD was negative Tuesday with 4 issues higher and 16 lower. Indicator hit new short-term low Tuesday and was last at lowest level since August 3 when S&P was quoted near 1390. Daily MAAD Ratio remains “Oversold (.76).
  • Daily CPFL was negative Tuesday by 2.09 to 1 with Daily CPFL Ratio still toward “Oversold” (.57).
  • Cumulative Volume (CV) in S&P 500 and S&P Emini has declined below defined uptrend line in effect since June lows to suggest 4 ½-month-old rally is over.

Market Overview – What We Think:

  • As we stated in “Conclusion” of our October 21 Weekly Market Summary, we believe Intermediate Cycle uptrend begun June 4 is over. September 14 intraday highs (1454.71—S&P 500) should remain intact for foreseeable future.
  • Given fact pricing in all of major indexes has moved within range of lower edges of 10-Week Price Channels (105.79—S&P 500) and has even broken below those points in Dow 30 and NASDAQ Composite, as near-term “Oversold” conditions persist, we wouldn’t be surprised to see near-term bounce develop soon.
  • We also suspect that if a near-term pop does occur, it will be short-lived and will produce no more than “Neutral” readings near-term. Such conditions could then precede setup for resumption of larger intermediate negative.
  • How current short to intermediate-term drama plays out will determine staying power of Major Cycle trend which is challenged in terms of “Overbought” conditions and lack of indicator underpinnings.

cumulative, volume, s&p

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

10/22

10/23

10/24

10/25

10/26

10/26

10/31

S&P 500 Index

BUY 1448.75

BUY 1449.34

BUY 1451.06

BUY 1452.98

BUY 1453.67

SELL 1405.79

SELL 1269.05

Dow Jones Industrials

BUY 13498.98

BUY 13503.62

BUY 13509.42

BUY 13519.67

BUY 13522.17

SELL 13110.81

SELL 12141.09

NASDAQ Composite

BUY 3094.23

BUY 3092.77

BUY 3093.55

BUY 3093.08

BUY 3086.99

BUY 3116.21

SELL 2716.62

Value Line Index

BUY 3069.93

BUY 3070.54

BUY 3075.74

BUY 3081.45

BUY 3084.05

SELL 2972.27

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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