Market fades Wednesday, but near-term trend still positive

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 12-19-12
 

Last

Day Change

%Change

S&P 500 Index

1435.81

-10.98

-.76%

Dow Jones Industrials

13251.97

-98.99

-.74%

NASDAQ Composite

3044.36

-10.16

-.33%

Value Line Arithmetic Index

3171.02

-3.24

-.10%

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

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

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

Market Overview – What We Know:

  • Market and major indexes succumbed to marginal profit taking Wednesday.
  • Overall market volume sank 5.6% compared to Tuesday’s levels.
  • Short-term trend remains positive and S&P 500 must decline below lower edge of 10-Day Price Channel (1414.29 through Thursday) to suggest reversal of trend to negative.
  • With Wednesday’s pullback, S&P 500 was just below upper edge of 10-Week Price Channel (1437.85). As a consequence, while short-term trend remains favorable, Intermediate Cycle remains uncertain.
  • Daily MAAD rallied to new short-term high Tuesday, but pulled back slightly yesterday with 8 issues positive and 10 negative. Daily MAAD Ratio remains “Overbought” at 1.76. Indicator continues to hold below major resistance put in place back on March 20.
  • Daily CPFL was positive Wednesday by 1.3 to 1 with Daily CPFL Ratio moderately “Overbought” (1.49).

Market Overview – What We Think:

  • New short-term highs in major indexes Tuesday with new all-time high in Value Line index leaves market in dilemma in that S&P 500, Dow 30, and NASDAQ Composite must now confirm Value Line on upside to re-assert Major Cycle advance begun March 2009. S&P must rally above 1474.51 to re-assert long-term uptrend, but move would still not create new all-time high in S&P above October 2007 high at 1576.09.
  • And while Daily MAAD continues to move higher, indicator must continue upward and above March 20 resistance peak to get in synch with index pricing. Is that possible? Maybe. Considering fact Daily MAAD Ratio is already into “Overbought” territory and has already begun to demonstrate upside non-confirmations, short-term trend looks increasingly overdone on upside.
  • But since there is no denying recent market strength, and given proximity of pricing in S&P, Dow, and NASDAQ to September highs in wake of Value Line move to new all-time high, prematurely pulling of sell trigger could be a bad idea.

cumulative, volume, sp

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

12/17

12/18

12/19

12/20

12/21

12/21

12/31

S&P 500 Index

SELL 1407.21

SELL 1409.72

SELL 1413.36

SELL 1414.29

SELL 1414.35

BUY 1437.85

SELL 1293.26

Dow Jones Industrials

SELL 13100.74

SELL 13143.49

SELL 13084.95

SELL 13104.60

SELL 13115.68

BUY 13355.17

SELL 12313.37

NASDAQ Composite

SELL 2973.58

SELL 2979.04

SELL 2984.64

SELL 2984.22

SELL 2980.62

BUY 3053.48

SELL 2772.87

Value Line Index

SELL 3058.63

SELL 3066.86

SELL 3076.33

SELL 3080.07

SELL 3083.10

SELL 2983.83

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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