Minor stock market cycle teeters on reversal, but still positive

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 12-26-12
 

Last

Day Change

%Change

S&P 500 Index

1419.83

-6.83

-.48%

Dow Jones Industrials

13114.59

-24.49

-.19%

NASDAQ Composite

2990.15

-22.44

-.74%

Value Line Arithmetic Index

3131.88

-21.83

-.69%

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

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:

  • More small losses developed in major indexes Wednesday in post holiday trading.
  • Market volume rose by 69% relative to Monday’s levels, but was still about 50% below normal levels.
  • Minor Cycle remains positive, but slightly higher 10-Day Price Channel level (1424.46 through Thursday) could suggest Minor Cycle negativity by default if S&P 500 closes unchanged Thursday.
  • S&P 500 continues to flirt with upper edge of 10-Week Price Channel (1430.56 through December 28).
  • Daily MAAD was even Wednesday with 10 issues positive and 10 negative. Daily MAAD Ratio was last toward “Neutral” at 1.13.
  • Daily CPFL was positive Wednesday by 1.45 to 1. Options volume remained low on Dollar Value basis. Daily CPFL Ratio “Overbought” at 2.03.

Market Overview – What We Think:

  • While short-term rally begun back on November 16 remains positive, it has also become increasingly vulnerable.
  • If it turns out December 18 S&P high (1448.00) was the peak of rally, what is also 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 suggesting resumption, or not, of long-term bull that began in March 2009.
  • Even if S&P had bettered September highs, index would be nowhere near overcoming October 2007 peak at 1576.09.
  • And while Daily MAAD made new short-term high last Thursday, indicator must continue upward and must surpass March 20 resistance peak to suggest resumption of long-term bull.

cumulative, volume

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

12/24

12/25

12/26

12/27

12/28

12/28

12/31

S&P 500 Index

SELL 1414.70

HOL

SELL 1421.86

SELL 1424.46

SELL 1424.70

BUY 1430.56

SELL 1293.26

Dow Jones Industrials

SELL 13127.30

HOL

SELL 13177.99

SELL 13189.96

SELL 13181.14

BUY 13273.10

SELL 12313.37

NASDAQ Composite

SELL 2979.45

HOL

SELL 2998.07

SELL 3006.18

SELL 3005.89

BUY 3029.75

SELL 2772.87

Value Line Index

SELL 3087.04

HOL

SELL 3111.55

SELL 3123.26

SELL 3129.64

SELL 2965.81

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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