S&P 500 taps short-term price target at 1510, fades

MAAD & CPFL Analysis

Stock market chart Stock market chart

 

Market Snapshot for session ending 1-30-13
 

Last

Day Change

%Change

S&P 500 Index

1501.96

-5.88

-.39%

Dow Jones Industrials

13910.42

-43.99

-.32%

NASDAQ Composite

3142.30

-11.35

-.35%

Value Line Arithmetic Index

3366.47

-25.12

-.74%

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:

  • S&P 500 eked out new short to intermediate high via intraday strength (1509.94) Wednesday, but coming within .06 of short-term measured move target at 1510, bellwether then sold lower and did not close at new high.
  • Dow 30, NASDAQ Composite, and Value Line index also lost on day.
  • Trading volume was little changed from Tuesday’s levels.
  • All trends remain positive, but all, including Minor, Intermediate and Major Cycles, are historically “Overbought.”
  • S&P 500 needs to sell below lower edge of 10-Day Price Channel at 1478.29 through Thursday to suggest reversal of short-term trend to negative. Intermediate trend turns negative below 1393.45 through Friday.
  • Daily MAAD was flat Wednesday with 10 issues positive and 10 negative. Daily MAAD Ratio was marginally “Overbought” at 1.26.
  • Daily CPFL hit another new short-term high Tuesday and was positive by 1.29 to 1.
  • Cumulative Volume (CV) in S&P 500 hit a new short-term high Tuesday and backed off a bit from that level Wednesday. CV action in S&P Emini an NASDAQ Composite has yet to confirm S&P cash on upside above September resistance.

Market Overview – What We Think:

  • Short-term trend in all of major indexes looks overextended on upside in face of “Overbought” conditions and simple fact prices cannot continue higher indefinitely without some retrenching.
  • Wednesday’s weakness could be beginning of short-term pullback after S&P tapped upside measured move target toward 1510.
  • If move since November lows turns out to be A-B-C rally with “B” leg pullback from December 19 to January 2, “C” leg rally could be in termination phase.
  • Confirming movement in cash S&P CV to new short-term high is positive, but failure of CV In S&P Emini and NASDAQ Composite on same cycle means strength has been selective.
  • Suggestion lingers that rally since November lows has been fueled by weaker and weaker hands. Larger cycles have also lacked indicator confirmation since early 2011.
  • Longer-term lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, are an indication market could be on borrowed time. Nothing but new highs by all our key indicators, an unlikely event, would erase negative tone.

cv

cv

 

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

1/28

1/29

1/30

1/31

2/1

2/1

2/28

S&P 500 Index

SELL 1467.39

SELL 1470.52

SELL 1474.79

SELL 1478.29

SELL 1482.17

SELL 1393.45

SELL 1330.62

Dow Jones Industrials

SELL 13465.24

SELL 13501.33

SELL 13548.19

SELL 13600.05

SELL 13552.08

SELL 12901.57

SELL 12570.95

NASDAQ Composite

SELL 3108.12

SELL 3111.70

SELL 3119.72

SELL 3121.81

SELL 3125.47

SELL 2936.97

SELL 2862.45

Value Line Index

SELL 3284.42

SELL 3293.98

SELL 3305.88

SELL 3316.66

SELL 3328.72

SELL 3030.39

SELL 2817.27

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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