Prices confirm stock uptrend, as indicators remain skeptical

Stock index, chart, technical analysis

Market Overview – What We Know:

• Major indexes rallied modestly Thursday when S&P 500 hit best close in more than five years and Value Line index rallied to new all-time high. Dow Jones Industrial Average and NASDAQ Composite continue to lag and remain below September resistance highs.
• Trading volume increased by 4% compared to Wednesday.
• S&P 500 remains positive on short-term trend and must sell below lower edge of 10-Day Price Channel (1427.67 through Friday) to suggest Minor Cycle negative. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel at 1385.21.
• Daily MAAD was positive Thursday with 17 issues higher and 3 lower, but indicator continues to hold below December 20 short-term high in spite of fact S&P bettered equivalent level in subsequent trading. As a consequence, short-term negative divergence persists. Daily MAAD Ratio was marginally “Overbought” at 1.21.
• Daily CPFL was positive Thursday by 1.39 to 1, hit new short-term high and best level since November lows. CPFL remains within range of September 24 resistance high. Daily CPFL Ratio remains “Overbought” at 1.93.

Market Overview – What We Think:

• S&P’s move to best level since November 16 low (1343.35) and highest closing level since December 2007 is encouraging, but bellwether has also failed to overcome September 14 intraday resistance high (1474.51) with coincident failure by Daily MAAD to confirm S&P strength. As a consequence, note of caution is still warranted.
• But we cannot deny short-term uptrend in prices and fact all cycles, Minor, Intermediate, and Major remain positive, despite lack of indicator underpinnings including lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, proof yet again that price is final arbiter profit.

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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