Market powers higher, but indicator confirmation is mixed

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 1-2-13
 

Last

Day Change

%Change

S&P 500 Index

1462.42

+36.23

+2.54%

Dow Jones Industrials

13412.55

+308.14

+2.35%

NASDAQ Composite

3112.26

+92.74

+3.07%

Value Line Arithmetic Index

3246.52

+81.82

+2.59%

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

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

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

Market Overview – What We Know:

  • Major indexes posted strong gains on first day of 2013 Wednesday. Only Value Line index rallied to new all-time high.
  • Market volume increased by 31% compared to previous session with activity moving back toward more normal levels.
  • Short and intermediate-term cycles in S&P 500 have moved back into positive territory. Major Cycle remains positive. To suggest reversal of short-term trend to negative, S&P would need to sell below lower edge of 10-Day Price Channel (1423.96 through Thursday). Intermediate Cycle would take on more negative tone with weakness below lower edge of 10-Week Price Channel (1385.41 through January 4)
  • Daily MAAD was positive Wednesday with 18 issues higher and 2 lower. Indicator did not rally above near-term resistance peak made December 20. As a consequence, negative near-term divergence relative to S&P move to new minor high Thursday lingers. Daily MAAD Ratio was last just above “Neutral” at 1.09.
  • Daily CPFL rallied to another short-term high Wednesday by 2.5 to 1 on Dollar Value basis. Options volume picked up a bit, but Daily CPFL Ratio remains “Overbought” at 2.87.

Market Overview – What We Think:

  • Wednesday’s powerful rally in major indexes with new all-time high in Value Line index leaves question hanging in air – was rally a short-term flourish with no staying power, or was it beginning of something larger?
  • While Value Line strength remains impressive, S&P 500, Dow 30, and NASDAQ Composite must follow suit with strength above September/October highs (1474.51—S&P 500) to win broad confirmation.
  • So far, it looks as if VAY move has been prescient relative to resumption of bull trend begun in March 2009, but in addition to other index strength we must also see MAAD and CPFL overcome key resistance made in September and in case of MAAD, the peak back in March.
  • Even if S&P betters September high, index would be nowhere near overcoming October 2007 peak at 1576.09.

cumulative, volume, sp

cumulative, volume, emini

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

12/31

1/1

1/2

1/3

1/4

1/4

1/31

S&P 500 Index

BUY 1439.28

HOL

BUY 1436.90

SELL 1423.86

SELL 1419.99

SELL 1385.41

SELL 1310.68

Dow Jones Industrials

BUY 13302.30

HOL

BUY 13264.12

SELL 13154.68

SELL 13118.04

SELL 12851.05

SELL 12445.73

NASDAQ Composite

BUY 3033.90

HOL

BUY 3029.59

SELL 3003.96

SELL 2994.87

SELL 2927.92

SELL 2809.46

Value Line Index

BUY 3157.12

HOL

BUY 3137.02

SELL 3137.02

SELL 3131.38

SELL 2965.34

SELL 2779.90

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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