Market at new near-term high, fades in face of overbought

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 12-3-12
 

Last

Day Change

%Change

S&P 500 Index

1409.46

-6.72

-.47%

Dow Jones Industrials

12965.60

-59.98

-.46%

NASDAQ Composite

3002.19

-8.04

-.27%

Value Line Arithmetic Index

3062.69

-10.12

-.33%

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:

  • Despite intraday strength to new short-term highs (1416.34--S&P 500), major indexes faded into close Monday to record net losses.
  • Market volume compared to Friday’s levels was lower by just under 3%.
  • S&P 500 would need to sell below lower edge of 10-Day Price Channel (1380.87 through Tuesday) to suggest reversal of near-term trend to negative.
  • Intermediate cycle remains positive until S&P 500 rallies above upper edge of 10-Week Price Channel (1453.21 through December 7).
  • Daily MAAD was negative Monday by 5 to 14 and Daily MAAD Ratio remained “Overbought” at 2.08, toward the highest short-term levels in months.
  • Daily CPFL was positive Monday by 1.18 to 1. Daily CPFL Ratio was moderately “Overbought” at 1.33.
  • Cumulative Volume in both S&P 500 and S&P Emini continue to under perform S&P pricing.

Market Overview – What We Think:

  • While short-term trend remains positive, continuing low volume as reflected in Cumulative Volume numbers and elimination of recently “Oversold” short-term stats could soon result in near-term top.
  • We suspect short-term strength will not cause larger Intermediate Cycle to reverse to positive with gains above upper edge of 10-Week Price Channel (1456.37—S&P 500).
  • “Neutral” to “Overbought” conditions within context of Intermediate Cycle negative would be suggestive of Minor Cycle high.
  • Ultimately, extent to which September/October highs (1474.51—S&P 500) might be seriously challenged could determine whether or not current strength is merely brief upside feint in Intermediate Cycle negative, or something more positive.
  • How current price action plays out relative to September highs will determine status of Major Cycle uptrend in effect since March 2009.

cumulative, sp

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.

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