Market up Thursday, but afternoon selling could be game changer

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 12-20-12

 

Last

Day Change

%Change

S&P 500 Index

1443.69

+7.87

+.55%

Dow Jones Industrials

13311.72

+59.75

+.45%

NASDAQ Composite

3050.38

+6.02

+.20%

Value Line Arithmetic Index

3187.25

+16.23

+.51%

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:

  • Major indexes recouped some of Wednesday losses Thursday, but S&P 500 remained below Tuesday’s short-term high (1448.00).
  • Market volume declined 11%.
  • In after hours trading S&P Emini declined as much as 50 points until 8:18 pm (EST) before recovering about one half of those losses.
  • If overnight losses persist into Friday’s trading, short-term trend could be substantially jeopardized. Minor Cycle remains positive until S&P 500 declines below lower edge of 10-Day Price Channel (1414.35 through Friday).
  • S&P 500 continues to flirt with upper edge of 10-Week Price Channel (1437.85 through December 21), as short-term trend looks progressively vulnerable.
  • Daily MAAD rallied to new short-term high Thursday with 15 issues positive and 4 negative. One was unchanged. Daily MAAD Ratio remains “Overbought” at 1.87. Indicator continues to hold below major resistance put in place back on March 20.
  • Daily CPFL was sharply positive Thursday by 6.38 to 1 with Daily CPFL Ratio moderately “Overbought” (1.77).

Market Overview – What We Think:

  • While the financial press will no doubt attribute failed Congressional, Fiscal Cliff talks for Thursday night’s sharp selloff in futures, truth is short-term advance that began on November 16 has become increasingly vulnerable.
  • If it turns out Tuesday’s highs (1448.00—S&P 500) were the highs of the rally, what is significant is that S&P, Dow 30, and NASDAQ Composite failed to better September highs (1474.51—S&P 500), despite new all-time high in Value Line index. History will tell which index was more prescient in terms of resumption of long-term bull that began in March 2009.
  • Even if S&P had bettered its September highs, index would be nowhere near bettering October 2007 peak at 1576.09.
  • And while Daily MAAD made another new short-term high Thursday, indicator must continue upward and must better March 20 resistance peak to suggest resumption of long-term bull.

cumulative, volume, s&p

stock, cumulative volume

 

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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