Market gains Thursday, but strength remains spotty

MAAD, CPFL indicator review

Stock index, chart, technical analysis Stock index, chart, technical analysis

 

Market Snapshot for session ending 1-17-13
 

Last

Day Change

%Change

S&P 500 Index

1480.94

+8.31

+.56%

Dow Jones Industrials

13596.02

+84.78

+.63%

NASDAQ Composite

3136.00

+18.45

+.59%

Value Line Arithmetic Index

3322.30

+30.22

+.92%

Minor Cycle (Short-term trend lasting days to a few weeks) Positive

Intermediate Cycle (Medium trend lasting weeks to several months) Positive

Major Cycle (Long-term trend lasting several months to years) Positive / Neutral

Market Overview – What We Know:

  • Major indexes posted modest gains Thursday with Value Line index rallying to new all-time closing high (3322.30) and S&P 500 to highest closing level since late December 2007. Dow 30 and NASDAQ Composite have yet to better coincident resistance created at September/October highs.
  • Trading volume rose by nearly 10% Thursday as compared to Wednesday.
  • All cycles including Minor, Intermediate, and Major remain positive. To suggest short-term negative, S&P must sink below lower edge of 10-Day Price Channel (1454.12). Intermediate trend turns negative below (1388.08). And long-term trend below (1310.68). 
  • Daily MAAD was slightly positive again Thursday with 11 issues up and 8 down, but indicator has yet to rise above December 20 short-term high in spite of higher S&P prices since then. As a consequence, short-term negative divergence persists. Daily MAAD Ratio was last just above “Neutral” at 1.15.
  • Daily CPFL was positive Thursday by 1.16 to 1 and was just below new short-term high reached January 14. Daily CPFL Ratio is “Overbought” at 1.59.
  • Cumulative Volume (CV) in S&P 500 rallied above September resistance Thursday, but action was not confirmed by CV in S&P Emini, Dow 30, or NASDAQ Composite.

Market Overview – What We Think:

  • S&P’s move to best level Thursday since November 16 low (1343.35) and highest closing level since December 2007 gives market more favorable tone along with strength to new all-time highs in Value Line index.
  • Thursday’s move by CV in cash S&P to new short-term high gave bulls a vote of confidence, but failure by S&P Emini, Dow 30, and NASDAQ Composite continues to underscore fact market strength remains spotty without wide upside confirmation.
  • Suggestion lingers that rally since November lows has been fueled by weaker hands than during previous rallies.
  • Lower edges of trailing 10-Day Price Channels should be monitored with care since those levels will continue to act as downside “failsafe” levels for Minor Cycle trend.
  • Fact that short-term trend remains positive without indicator confirmation hints strength since November lows continues to lack statistical underpinnings. Larger cycles have also lacked indicator confirmation since early 2011.
  • Lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, are an indication market could be on borrowed time. Nothing but new highs by all indexes and all of our key indicators would erase that negativity.

volume

emini, volume

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.

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