Stock market bias shifting from buyers to sellers

MAAD & CPFL Analysis

Stock market chart Stock market chart

 

Market Snapshot for session ending 1-31-13
 

Last

Day Change

%Change

S&P 500 Index

1498.11

-3.85

-.26%

Dow Jones Industrials

13860.58

-49.83

-.36%

NASDAQ Composite

3142.13

-.17

-.01%

Value Line Arithmetic Index

3380.00

+13.53

+.40%

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 finished session Thursday mixed with only Value Line index in positive territory.
  • Trading volume rose 13% compared to Wednesday’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 1482.17 through Friday to suggest new short-term trend to negative. Intermediate trend turns negative below 1393.45 through Friday.
  • Daily MAAD was negative Thursday with 6 issues positive and 14 negative. Indicator via Thursday’s negativity fractured small uptrend line stretching back to December 28 near-term low. Daily MAAD Ratio was marginally “Overbought” at 1.16.
  • Daily CPFL was negative by 2.63 to 1 Thursday after hitting new short-term high Tuesday.
  • Cumulative Volume (CV) in S&P 500 hit a new short-term high Tuesday and has backed off since then. 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:

  • Trend under way since November lows in all of major indexes may be in endgame given “Overbought” conditions and simple fact prices cannot continue higher indefinitely without some retrenching.
  • Wednesday’s weakness may have been beginning of at least short-term pullback after S&P tapped upside measured move target toward 1510 Wednesday (1509.94).
  • 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.
  • While confirming movement in cash S&P CV to new short-term highs has been positive, failure of CV In S&P Emini and NASDAQ Composite means strength has been selective.
  • Longer-term lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, is an indication market could be on borrowed time. Nothing but new highs by all our key indicators, an unlikely event, would erase negative divergence.

cumulative, volume 

cumulative, volume

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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