S&P 500 building key technical: Minor top or bull flag?

MAAD, CPFL indicator review

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

 

Market Snapshot for session ending 1-8-13
 

Last

Day Change

%Change

S&P 500 Index

1457.15

-4.74

-.32%

Dow Jones Industrials

13328.85

-55.44

-.41%

NASDAQ Composite

3091.80

-7.00

-.23%

Value Line Arithmetic Index

3252.50

-11.79

-.36%

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:

  • Marginal losses were registered Tuesday by major indexes in fifth day of lateral price action that has left indexes little changed since sharp rally on January 2.
  • Market volume rose by just under 3% as compared to Monday’s activity.
  • Short-term trend remains positive and S&P 500 must sell below lower edge of 10-Day Price Channel (1414.23 through Wednesday) to suggest Minor Cycle negative. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel at 1385.21.
  • Daily MAAD was net negative Tuesday with 5 issues higher and 15 lower. Indicator remains below December 20 short-term high, despite fact S&P bettered equivalent level after that date. Short-term negative divergence persists. Daily MAAD Ratio was last “Neutral” at .99.
  • Daily CPFL was positive Tuesday by 3.50 to 1 and rallied to another new Minor Cycle High and best level since November 16 coincident with general market near-term low. Indicator has moved within range of September 24 high, but has yet to better that level. Daily CPFL Ratio remains “Overbought” at 1.83 although upside extreme has lessened over past week.

Market Overview – What We Think:

  • While short-term trend in S&P 500 remains positive, index continues to have problems with line of resistance created back in September. And it remains to be seen if peak via intraday high made last Friday in S&P 500 (1467.94) with prove to be short-term high or merely part of a small bull flag with upside implications. Strength back above that high would prove bullish point.
  • Although S&P closed at best levels since December 2007 last week, none of our key indicators has confirmed that move.
  • Fact that Daily MAAD remains 50% below Intermediate high made back in March and did not underscore S&P strength to new short-term high over past several days requires note of caution.
  • Cumulative volume has also not been overwhelming on upside to suggest market underpinnings remain suspect.

volume  

volume

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.

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