Stock market pricing, indicators look tired on minor cycle

Stock index, chart, technical analysis

Market Overview – What We Know:

• Major indexes closed mixed again Wednesday. Only S&P 500 was able to eke out slightly higher high to register new short and intermediate-term high. Value Line index was just below new all-time high (3301.12) reached Tuesday while Dow 30 and NASDAQ Composite continue to lag, compared to September highs, by relatively wide margin.
• Trading volume fell by nearly 8% compared to Tuesday’s levels.
• Short-term trend in S&P 500 remains positive and index must decline below lower edge of 10-Day Price Channel (1448.54 through Thursday) to suggest Minor Cycle negative. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel at 1388.08.
• Daily MAAD was even again Wednesday 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 just above “Neutral” at 1.07.
• Daily CPFL was negative Wednesday by 1.55 to 1 and was just below new short-term high reached Monday. Daily CPFL Ratio is “Overbought” at 1.70.
• Relative to cash pricing, Cumulative Volume (CV) in S&P 500, S&P Emini, Dow 30, and NASDAQ Composite remains weak. CV in no major index 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.
• Failure of CV on Minor Cycle into recent highs relative to September levels, is first such failure since October 2011 price lows.
• Lower edges of trailing 10-Day Price Channels should be monitored with care.
• Fact that short-term trend remains positive without indicator confirmation hints strength since November lows has lacked statistical underpinnings. Let alone on larger cycles that have lacked indicator confirmation since early 2011.
• Lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, are continuing suggestion market could 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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