S&P recoups 50% of losses since September, but overbought in near term

Weekly Review: MAAD, CPFL indicator analysis

Market Overview – What We Think:

  • Short-term rally in market indexes since November 16 S&P intraday low (1343.35) has eliminated much of near-term “Oversold” conditions with near-term “Overbought” levels now prevailing. Extremely “Overbought” level (2.61) in Daily MAAD Ratio is a sign short-term trend could prove to be no more than reflex rally in negative Intermediate Cycle.
  • 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 on Intermediate Cycle negative, or if it will develop into full-fledged intermediate reversal to positive. How strength develops, or not, will affect staying power of Major Cycle uptrend in effect since March 2009.
  • In face of indicator non-confirmations that have prevailed since mid-2011, we continue to wonder how much longer this market will be able to shake off internal, indicator negativity.

Daily S & P 500 with Cumulative Volume (CV)

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Weekly S & P 500 with Cumulative Volume (CV)

cumulative, sp, weekly

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

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Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

weekly, cumulative, emini 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

12/3

12/4

12/5

12/6

12/7

12/7

12/31

S&P 500 Index

SELL 1375.86

SELL 1380.87

SELL 1383.22

SELL 1389.02

SELL 1395.42

BUY 1453.21

SELL 1293.26

Dow Jones Industrials

SELL 12717.97

SELL 12751.24

SELL 12764.24

SELL 12812.68

SELL 12858.38

BUY 13502.38

SELL 12313.37

NASDAQ Composite

SELL 2897.91

SELL 2912.72

SELL 2920.96

SELL 2939.12

SELL 2955.11

BUY 3108.58

SELL 2772.87

Value Line Index

SELL 2952.92

SELL 2967.85

SELL 2976.35

SELL 2993.76

SELL 3011.31

BUY 3099.61

SELL 2758.13

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.

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD has recovered about three quarters of its losses since the indicator bottom on November 14, as compared to an S&P 500 rebound of just over 50%. But with Daily MAAD strength has come a short-term “Overbought” condition (2.61) not seen in many months and the fact the indicator has not surpassed mid-September resistance and is nowhere near surmounting major resistance made back on March 20.

While weekly MAAD is “bullish” to the extent the Weekly MAAD Ratio has dipped into “Oversold” territory (.80), the last deeply “Oversold” level on the Intermediate Cycle was in October 2011 when the Weekly MAAD Ratio hit .45 nearly 50% below the current “Oversold” level.

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