Market makes small gains Thursday, remains oversold

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 10-25-12
 

Last

Day Change

%Change

S&P 500 Index

1412.97

+4.22

+.30%

Dow Jones Industrials

13103.68

+26.34

+.20%

NASDAQ Composite

2986.11

+4.42

+.15%

Value Line Arithmetic Index

3013.75

+11.04

+.37%

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:

  • Major indexes were slightly positive Thursday, but short-term trend remains negative, albeit “Oversold.”
  • NYSE trading volume rose 7% Thursday and Average Price per Share declined 15 cents to $60.34.
  • In wake of recent weakness in Dow Jones Industrials and NASDAQ Composite indexes below 10-Week Price Channels, S&P 500 and Value Line index are also nearing similar levels (1405.79—S&P 500, 2972.70—Value Line index).
  • Daily MAAD dipped to new short-term low Wednesday and lowest level since August 2. There was slight recovery Thursday with 11 issues positive and 8 negative. Daily MAAD Ratio remains negative in “Oversold” territory (.76).
  • Daily CPFL was negative Thursday by 1.75 to 1 with Daily CPFL Ratio holding negative and “Oversold” (.58).
  • 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 in early June is over. September 14 intraday highs (1454.71—S&P 500) should remain unchallenged for foreseeable future.
  • While 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, in face of near-term “Oversold” conditions, we could see short-term bounce develop soon.
  • But we also suspect any near-term pop would be short-lived and would produce no more than “Neutral” short-term readings. Such conditions should precede setup for resumption of larger intermediate negative.
  • How new intermediate-term negative plays out could determine staying power of Major Cycle trend which is challenged in terms of “Overbought” conditions and lack of solid indicator underpinnings.

cumulative, volume

emini, cumulative, volume

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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