Stock market erodes lower, remains short-term oversold

MAAD, CPFL indicator review

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


Market Snapshot for session ending 11-15-12

 

Last

Day Change

%Change

S&P 500 Index

1353.33

-2.16

-.16%

Dow Jones Industrials

12542.38

-28.57

-.23%

NASDAQ Composite

2836.93

-9.87

-.35%

Value Line Arithmetic Index

2893.19

-11.96

-.41%

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

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

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

Market Overview – What We Know:

  • Major indexes sold marginally lower Thursday as selling pressures persisted, albeit at somewhat diminished pace. Composite market volume was up slightly.
  • Flirting with new short-term low Wednesday, Daily MAAD improved slightly Thursday, but nonetheless remained within range of June 4 low when S&P 500 hit 1266.74.
  • Minor Cycle remains negative until S&P rises above upper edge of 10-Day Price Channel (1455.44 through Friday).
  • Wednesday’s selling put S&P 500 below uptrend line stretching back to June low and trailing 200-Day Moving Average.
  • To reverse Intermediate Cycle to positive S&P 500 would need to rally above upper edge of 10-Week Price Channel (1455.44 through November 16). Major resistance and point to overcome to re-assert long-term uptrend in S&P 500 remains at 1474.51 created September 14.
  • Daily MAAD recorded 11 issues positive and 9 negative Thursday. Daily MAAD Ratio remains “Oversold” (.66).
  • Daily CPFL was negative Thursday by 1.76 to 1 with Daily CPFL Ratio deeply  “Oversold” (.41).

Market Overview – What We Think:

  • If there is an ominous chart out there right now, it’s our Daily MAAD indicator that has not only been prescient in terms of market direction since the September 14 S&P high (1474.51), but its breaking of the June 4 short and intermediate-term low Wednesday is certainly not an indication of market health, considering the fact Daily MAAD is now at a level equivalent to an S&P price of about 1260.
  • It’s a good bet with prices near-term “Oversold” and closing in on the Major Cycle uptrend line (1315) stretching back to March 2009, some bargain-hunting will probably develop.
  • But problem is that if market does not rally as “Oversold” conditions correct back toward Neutral,” pricing could be setting up for another downdraft within context of  new Intermediate Cycle negative. Selling in face of apparently “Oversold” readings simply underscores historical evidence that “Oversold” early in larger cycle decline (intermediate in this case) may not be all it seems.
  • 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.

stock, cumulative volume

stock, cumulative volume

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

11/12

11/13

11/14

11/15

11/16

11/16

11/30

S&P 500 Index

BUY 1425.15

BUY 1426.02

BUY 1426.39

BUY 1421.98

BUY 1416.37

BUY 1455.44

SELL 1277.32

Dow Jones Industrials

BUY 13221.73

BUY 13226.90

BUY 13225.35

BUY 13181.24

BUY 13127.39

BUY 13537.24

SELL 12198.68

NASDAQ Composite

BUY 3012.17

BUY 3013.64

BUY 3007.39

BUY 2996.81

BUY 2983.88

BUY 3151.29

SELL 2738.24

Value Line Index

BUY 3045.07

BUY 3054.52

BUY 3062.10

BUY 3056.69

BUY 3047.34

BUY 3101.01

SELL 2734.45

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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