S&P dawdles, while indicators move higher and resolution nears

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 12-10-12
 

Last

Day Change

%Change

S&P 500 Index

1418.55

+.48

+.03%

Dow Jones Industrials

13169.88

+14.75

+.11%

NASDAQ Composite

2986.96

+8.92

+.30%

Value Line Arithmetic Index

3093.90

+12.65

+.41%

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

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

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

Market Overview – What We Know:

  • Major indexes made small gains Monday with Dow Jones Industrials and Value Line index rallying to new short-term highs. S&P 500 and NASDAQ Composite, however, remain below December 3 intraday and short-term highs.
  • Market volume shrank by 3% relative to Friday’s levels.
  • Near-term trend remains positive. S&P 500 would need to sell below lower edge of 10-Day Price Channel (1401.55 through December 11) to suggest reversal of near-term trend to negative.
  • Intermediate Cycle remains positive until S&P 500 moves above upper edge of 10-Week Price Channel (1449.74 through December 14).
  • Daily MAAD continues to work higher, remains stronger than S&P 500, and was last within range of September 14 resistance high. Daily MAAD was positive by 1.50 to 1 Monday with 12 issues positive and 8 negative. Daily MAAD Ratio was last “Overbought” at 1.67.
  • Daily CPFL was negative Monday by 1.38 to 1. Daily CPFL Ratio was holding moderately “Overbought” at 1.30.
  • Cumulative Volume in both S&P 500 and S&P Emini has continued to under perform S&P pricing since November 16 S&P 500 low (1343.35) and has retraced less than 50% of decline since September 14.

Market Overview – What We Think:

  • Solo performances by Dow 30 and Value Line index to new short-term highs Monday, with failure of S&P 500 and NASDAQ Composite to similarly confirm on upside, leaves some doubt as to breadth of market strength.
  • Ongoing upward movement by Daily MAAD is nevertheless giving short-term trend a positive tone, given fact Daily MAAD is within range of breaking above September 14 resistance high when S&P hit 1474.51.
  • To resolve short-term divergences, either MAAD will fail to better September 14 peak, or S&P and NASDAQ Composite will pop to new Minor Cycle highs to get in synch.
  • Strength back above December 3 intraday high at S&P 1423.73 could be followed by move toward upper edge of 10-Week Price Channel (1453.21) and resistance toward 1450 area.
  • While more buying on short-term is possible, continuing low volume as reflected in Cumulative Volume numbers does not bode well for strength morphing into Intermediate Cycle reversal to positive. As a consequence, we continue to suspect short-term strength will not cause larger Intermediate Cycle reversal to positive.

cumulative, volume, sp

cumulative, volume, emini

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

12/10

12/11

12/12

12/13

12/14

12/14

12/31

S&P 500 Index

SELL 1399.52

SELL 1401.55

SELL 1401.80

SELL 1403.07

SELL 1404.89

BUY 1449.74

SELL 1293.26

Dow Jones Industrials

SELL 12889.78

SELL 12908.81

SELL 12918.45

SELL 12939.40

SELL 12968.14

BUY 13465.50

SELL 12313.37

NASDAQ Composite

SELL 2967.92

SELL 2973.92

SELL 2974.04

SELL 2973.67

SELL 2973.63

BUY 3090.05

SELL 2772.87

Value Line Index

SELL 3024.94

SELL 3033.15

SELL 3038.81

SELL 3045.07

SELL 3051.65

BUY 3098.24

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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