Is recent stock market strength a victory with costs too great?

Weekly Review: MAAD, CPFL indicator analysis

Short-term Momentum has confirmed none of the new highs in the S&P or the Value Line while all index pricing on the Minor Cycle is currently “Overbought.” At the same time, Daily MAAD has yet to rally to a new near-term peak and above its December 20 high, despite S&P strength. And then there is the fact the Daily MAAD cycle has only recovered about 50% of its losses since peaking on the Intermediate Cycle in March while failing to generate confirming enthusiasm as the market rallied off of the June lows. Weekly MAAD remains an abject failure to the extent the indicator peaked on April 29, 2011 and has remained in a defined longer-term downtrend since then. The Daily MAAD Ratio remains near “Neutral” (1.06) while the Weekly MAAD Ratio is moderately “Overbought” (1.25).

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

cumulative, volume, emini

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

cumulative, volume, emini, weekly

Our Call/Put Dollar Value Flow Line (CPFL) has rallied to a new short-term high over the past several sessions and since the December 18 S&P near-term highs, but the Daily CPFL Ratio has moved into extremely “Overbought” territory (2.81) while the Weekly CPFL Ratio remains toward “Oversold” territory (.89). While Weekly CPFL has been in a shallow uptrend for the past year, the indicator remains well below a major resistance high made the last week of February 2011.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

1/7

1/8

1/9

1/10

1/11

1/11

1/31

S&P 500 Index

SELL 1416.53

SELL 1412.70

SELL 1414.23

SELL 1420.87

SELL 1427.67

SELL 1385.21

SELL 1310.68

Dow Jones Industrials

SELL 13079.42

SELL 13036.99

SELL 13038.90

SELL 13087.55

SELL 13137.17

SELL 12835.98

SELL 12445.73

NASDAQ Composite

SELL 2988.34

SELL 2981.17

SELL 2997.81

SELL 3014.06

SELL 3028.65

SELL 2926.34

SELL 2809.46

Value Line Index

SELL 3127.88

SELL 3123.00

SELL 3129.58

SELL 3149.28

SELL 3168.22

SELL 2976.50

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.

Underscoring all of these trends including index and indicator divergences is the fact that while the S&P 500 gained nearly 106% from March 2009 through early May 2011, since then the S&P is up only 7% as the risks from upside non-confirmations in price and indicators have increased. While there is no denying the fact all indexes made significant lows in March 2009, since May 2011 trending has become increasingly problematic. Until there is some synchronicity in most aspects of this market, scattering will continue and the ability to determine WHERE the “trend is your friend” could remain difficult.

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