Stock market continues short-term snail’s pace higher

Stock index, chart, technical analysis

Market Overview – What We Know:

• Market closed with slight upward bias Tuesday. Percentage gains were fractional and NASDAQ Composite succumbed to fractional selling. Value Line index rallied to another all-time closing high (3300.17) with S&P 500 at new short and intermediate-term closing highs. NASDAQ and Dow 30 continue to lag.
• Trading volume increased by less than 1% Tuesday relative to Monday’s levels
• Short-term trend in S&P 500 remains positive and index must sell below lower edge of 10-Day Price Channel (1443.34 through Wednesday) to suggest Minor Cycle negative. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel at 1388.08.
• Daily MAAD was unchanged Tuesday with 10 issues up and 10 down. Indicator continues to hold below December 20 short-term high in spite of higher S&P prices since then. Short-term negative divergence persists. Daily MAAD Ratio was last toward moderately “Overbought” at 1.26.
• Daily CPFL was negative Tuesday by 1.13 to 1 and was holding just below new short-term high reached Monday. Daily CPFL Ratio is “Overbought” at 1.93.
• Relative to cash pricing, Cumulative Volume (CV) in S&P 500, S&P Emini, Dow 30, and NASDAQ Composite remains weak. CV in none has hit a new short-term high.

Market Overview – What We Think:

• S&P’s move to best level since November 16 low (1343.35) last week and highest closing level since December 2007 is price positive along with strength to new all-time highs in Value Line index, but failure of Cumulative Volume (CV) continues to underscore fact strength since November lows has been fueled by weaker hands. As a consequence, note of caution is warranted.
• Lower edges of trailing 10-Day Price Channels should be watched with care.
• Fact that short-term trend remains positive without indicator confirmation hints strength since November lows is suspicious, let alone on larger cycles that have lacked indicator underpinnings since early 2011.
• Lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, are continuing suggestion market may be on borrowed time.

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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