Is Apple bad medicine for a rising stock market?

Weekly Report: MAAD and CPFL Indicator Analysis

iPad, stock market chart iPad, stock market chart

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1513.17

+10.21

+.67%

Dow Jones Industrials

14009.79

+113.81

+.81%

NASDAQ Composite

3179.10

+29.39

+.93%

Value Line Arithmetic Index

3411.65

+23.05

+.68%

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

It’s obvious lately that the “What goes up must come down School of Market Analysis” hasn’t been working very well. In fact, unless you have been holding Apple Computer (AAPL) since the end of September, it hasn’t been working at all. Unfortunately, that’s always the way it is with the buy and hold strategy which is nothing but a one note sonata beginning with “Buy.” “Sell” rarely enters into the equation. But eventually that Apple, or Cisco, or Enron, or lest we say, S&P 500, make long-term tops and begin moving lower. The “Buy and Holders” will continue to do what they always do – give back what they have already made and wonder why. A frantic search of earnings reports and other arcane data will be made in an attempt to determine “WHY” prices are selling lower. The answer? There are more sellers than buyers and the trend has changed. That’s it. Adjust or lose.

Back at our drawing boards we are still confronted with a market that doesn’t appear to be doing what we think it ought to do. It keeps inching higher in the face of indicators that, while they have improved somewhat, are still confronted by a band of resistance created back in the spring of 2011. We know that the S&P rallied 106% from March 2009 until early May 2011, but since May 2011 the bellwether has only added a little over 10%, assuming an investor bought the highs of May 2011 (1370.58—S&P 500). In fact, the “gain” finally squeaked above the 10% last week after refusing to better that level for most of the previous two years. Some will point to the Value Line index as a stellar performer recently, but the fact is the VAY relative to its 2011 highs is only up just over 11%. Hardly ripping unless you bought VAY options last November.

Market Overview – What We Know:

  • Major indexes posted gains again last week as S&P 500 moved to best level since October 2007 while Value Line index hit new all-time high. Dow 30 also rallied to new short and intermediate-term highs. NASDAQ Composite continues to lag.
  • All cycles, including Minor, Intermediate, and Major, remain positive.
  • Market volume rose 36%, but previous week only had four trading sessions due to Monday holiday
  • To suggest short-term negative, S&P 500 must sell below lower edge of 10-Day Price Channel (1485.71 through Monday). Intermediate Cycle remains positive until S&P declines below lower edge of 10-Week Price Channel (1395.00 through February 8).
  • Daily MAAD popped to new short-term high last Friday, was marginally “Overbought” at 1.30, but continues to remain below resistance made last March 20.
  • Weekly MAAD has moved above resistance created last September, but remains below long-term downtrend line stretching back to mid-1999. Weekly MAAD Ratio is “Overbought” at 1.76.
  • Daily CPFL hit new short-term high last Wednesday and is fractionally above resistance made last September. Daily CPFL Ratio was “Overbought” at 1.81 while the Weekly Ratio was overheated at 1.76.
  • Cumulative Volume (CV) confirmed S&P 500 strength last week to a new intermediate high, but remained relatively weak in S&P 500 Emini, Dow 30, and NASDAQ Composite.

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