Stock market action shows signs of counter-trend rally

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 11-26-12
 

Last

Day Change

%Change

S&P 500 Index

1406.29

-2.86

-.20%

Dow Jones Industrials

12967.37

-42.30

-.33%

NASDAQ Composite

2976.78

+9.92

+.33%

Value Line Arithmetic Index

3028.89

+1.90

+.06%

Minor Cycle (Short-term trend lasting days to a few weeks) Positive / 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:

  • Major indexes closed mixed Monday with “bluer” chips down marginally with more speculative issues up a bit.
  • Market volume rose 101% compared to last Friday’s truncated, low volume session, but remained nearly 50% below normal levels.
  • Short-term trend is positive and would need to sell below lower edge of 10-Day Price Channels (1361.33—S&P 500) to suggest more negative market tone.
  • To reverse Intermediate Cycle to positive S&P 500 would need to rally above upper edge of 10-Week Price Channel (1456.37 through November 30). 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 10 advances and 9 losses Tuesday with 1 unchanged. Daily MAAD Ratio was into “Overbought” territory at 1.70.
  • Daily CPFL was positive Monday by 2.55 to 1. Daily CPFL Ratio was moving higher, but remains “Oversold” at .74.

Market Overview – What We Think:

  • While short-term trend has reversed to positive, but continuing low volume, and elimination of recently “Oversold” short-term stats could lead to short-term top sooner than later.
  • We suspect any further strength will prove to be unsustainable longer-term and will not cause the larger Intermediate Cycle to reverse to positive.
  • Updraft in Daily MAAD Ratio is yet another indication strength since November 16 could prove to be nothing but failed reflex rally.
  • “Neutral” to “Overbought” conditions in our key indicators ought to develop relatively quickly and price movement should only retrace a portion of decline since mid-September.
  • Ultimately, extent to which September/October highs (1474.51—S&P 500) are seriously challenged will determine whether or not strength is merely a brief upside feint in Intermediate Cycle negative, or if it will develop into full-fledged intermediate reversal to positive.
  • How price movement plays out will determine status of Major Cycle uptrend in effect since March 2009.

volume, daily

emini, cumulative, volume

Index

Daily / Weekly / Monthly Stops

Weekly

Monthly

 

11/26

11/27

11/28

11/29

11/30

11/30

11/30

S&P 500 Index

SELL 1364.20

SELL 1361.33

SELL 1362.46

SELL 1366.02

SELL 1370.46

BUY 1456.37

SELL 1277.32

Dow Jones Industrials

SELL 12660.35

SELL 12629.03

SELL 12626.01

SELL 12645.95

SELL 12676.05

BUY 13540.25

SELL 12198.68

NASDAQ Composite

SELL 2865.38

SELL 2863.38

SELL 2865.20

SELL 2872.11

SELL 2884.42

BUY 3126.60

SELL 2738.24

Value Line Index

SELL 2929.34

SELL 2920.87

SELL 2922.64

SELL 2929.26

SELL 2939.54

BUY 3101.06

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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