Stocks gain, but key technical highs remain selective

Weekly Review: MAAD, CPFL indicator analysis

Market Overview – What We Know:

  • Major indexes posted small gains last week with Value Line index rallying to new all-time high. S&P 500 closed at best level since December 2007. But Dow Jones Industrial Average and NASDAQ Composite have yet to confirm S&P or VAY by similarly breaking above key resistance levels.
  • While Minor and Intermediate Cycles remain positive in all majors, Cumulative Volume (CV) did not confirm strength in S&P or VAY.
  • Market volume rose by 17.2% last week.
  • To signal Minor Cycle negative S&P 500 must sell below lower edge of 10-Day Price Channel (1433.63 through Monday). Intermediate Cycle remains positive until S&P falls below lower edge of 10-Week Price Channel (1388.08 through January 18).
  • After peaking back on December 20, and despite new short-term high by S&P 500, Daily MAAD has yet to better December 20 peak to underscore S&P enthusiasm. Indicator also remains well below intermediate resistance created back on March 20. Daily and Weekly MAAD Ratios were last moderately “Overbought” at 1.37 and 1.22, respectively.
  • Daily CPFL rallied to another short-term high last week, remains “Overbought” (2.11), and is in an uptrend initiated in December 2011. CPFL was positive by 4.07 to 1 last week with Weekly CPFL Ratio “Neutral” at .96. Major and long-term resistance persist in indicator at February 25, 2011 high.
  • Cumulative Volume (CV), while moving upward with prices since November lows, has continued to under perform relative to S&P 500 pricing.

Market Overview – What We Think:

  • Minor Cycle uptrend begun after November 16 lows (1343.35—S&P 500) remains intact, despite lack of overall indicator confirmation.
  • While strength in Value Line index to new all-time high and S&P 500 to best closing level since December 2007 last week were positive points for bulls, fact that Dow 30 and NASDAQ Composite have yet to confirm similarly on upside with coincident indicator validation is worrisome. In a word, in spite of apparent bullish “tendencies” since first of year, uptrend initiated in March 2009 remains in doubt.
  • So long as pricing and indicators are not in synch on upside as they were from March 2009 until May 2011, lingering long-term doubt will persist, let alone gains since November lows that have also not been underscored by positive indicator movement relative to prices.
  • In face of indicator non-confirmations that have prevailed since May 2011, we continue to wonder how much longer this market will be able to shake off unfavorable indicator divergences.

While its true MAAD, CPFL, CV, and Momentum have all remained in step with the major indexes when they rallied and then moved lower when the market declined, the problem is that uptrends have been met with less enthusiasm since May 2011 than have downtrends.

Daily S & P 500 with Cumulative Volume (CV)

volume, cumulative

Weekly S & P 500 with Cumulative Volume (CV)

weekly, cumulative, volume

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