Stock indexes spike higher on low volume

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 11-19-12
 

Last

Day Change

%Change

S&P 500 Index

1386.89

+27.01

+1.99%

Dow Jones Industrials

12795.96

+207.65

+1.65%

NASDAQ Composite

2916.06

+62.93

+2.21%

Value Line Arithmetic Index

2970.48

+58.54

+2.01%

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

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:

  • Sharp gains Monday in face of deeply “Oversold” near-term conditions propelled major indexes upward from last Friday’s new short-term lows (1343.35—S&P 500). And market remains “Oversold,” despite Monday’s gains.
  • But with Thanksgiving holiday looming, total market trading volume diminished nearly 19%.
  • Minor Cycle remains negative until S&P rises above upper edge of 10-Day Price Channel (1405.20 through Tuesday).
  • To reverse Intermediate Cycle to positive S&P 500 would need to rally above upper edge of 10-Week Price Channel (1459.02 through November 23). 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 posted 19 advances and one loss Monday and Daily MAAD Ratio remains “Oversold” (.89) while rising toward “Neutral.”
  • Daily CPFL was positive Monday by 1.84 to 1 with Daily CPFL Ratio still deeply “Oversold” (.49).

Market Overview – What We Think:

  • While major indexes posted sharp gains Monday, fact that strength developed in front of major holiday on diminishing volume makes rally somewhat suspect.
  • In addition, none of major indexes was able to overcome upper edges of 10-Day Price Channels to suggest Minor Cycle reversal to positive.
  • Nonetheless, it’s possible last Friday’s intraday low (1343.35) in S&P 500 could prove to be bottom of short-term decline begun after September 14 S&P high (1474.51). After some further backing and filling a small base could develop from which to launch some further rebounding.
  • At this point, however, we suspect any strength that develops will prove to be of minor duration and will not cause the larger Intermediate Cycle to reverse to positive.
  • If a short-term reversal to positive occurs, how Daily MAAD and near-term “Oversold” conditions respond will be key to longevity of rally. Given that, we suspect “Neutral” to “Overbought” conditions will develop quickly and that price movement will only retrace a portion of recent decline.
  • How any short-term rally plays out within context of negative intermediate-term trend could determine staying power of Major Cycle trend which is challenged in terms of “Overbought” conditions and lack of solid indicator underpinnings.

volume, cumulative, sp

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

11/19

11/20

11/21

11/22

11/23

11/23

11/30

S&P 500 Index

BUY 1410.10

BUY 1405.20

BUY 1399.24

BUY 1390.43

BUY 1383.11

BUY 1459.02

SELL 1277.32

Dow Jones Industrials

BUY 13073.11

BUY 13031.05

BUY 12975.34

BUY 12890.89

BUY 12819.33

BUY 13562.15

SELL 12198.68

NASDAQ Composite

BUY 2970.42

BUY 2956.56

BUY 2942.71

BUY 2922.41

BUY 2905.85

BUY 3148.06

SELL 2738.24

Value Line Index

BUY 3035.84

BUY 3024.93

BUY 3011.91

BUY 2989.92

BUY 2971..09

BUY 3108.02

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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