Stocks gain, but key technical highs remain selective

Weekly Review: MAAD, CPFL indicator analysis

A case in point is the movement of CV in both the S&P 500 cash index and the S&P 500 Emini futures contract since the fall of 2011 (see accompanying charts). Until the September price highs CV tracked S&P pricing. But with a downside break in November in the index with coincident weakness by CV below defined uptrend lines stretching back to October 2011, the ensuing rally carried S&P prices back above those September highs to the best levels since December 2007. But not CV. In fact, CV has been working higher and back up “under” both of those trend lines broken on the downside in November and without making new short to intermediate-term highs. We view that CV failure as return action after the creation of a statistical high in September.

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

emini, cumulative, volume

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

weekly, cumulative, volume

While, as we’ve noted before, higher prices do not a bear market make, we continue to believe the quality of the buying since November, let alone over the better part of the past two years has been remarkably inferior to the buying that developed after the March 2009 lows. The statistical divergences have been surfacing on the near-term trend over the past several weeks and have resulted in those sub par rates of return in pricing since May 2011.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

1/14

1/15

1/16

1/17

1/18

1/18

1/31

S&P 500 Index

SELL 1433.63

SELL 1438.25

SELL 1443.34

SELL 1448.54

SELL 1454.12

SELL 1388.08

SELL 1310.68

Dow Jones Industrials

SELL 13178.54

SELL 13208.47

SELL 13241.84

SELL 13281.24

SELL 13325.57

SELL 12864.44

SELL 12445.73

NASDAQ Composite

SELL 3041.15

SELL 3051.41

SELL 3063.79

SELL 3074.95

SELL 3086.86

SELL 2928.00

SELL 2809.46

Value Line Index

SELL 3186.77

SELL 3200.79

SELL 3216.53

SELL 3231.02

SELL 3244.64

SELL 2993.31

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.

In sum, if we are correct that the long-term disparities in this market will bog down pricing (they already have to a large extent), then the odds are good those gains in the major indexes since May 2011 will not improve substantially from current levels. If we are not correct, the market must continue to improve in the face of, and despite, indicator negativity that has never presaged positive market returns on the long-term trend.

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