S&P 500 target at 1510 holds again as market sells lower

MAAD & CPFL Analysis

Stock market chart Stock market chart

 

Market Snapshot for session ending 2-4-13
 

Last

Day Change

%Change

S&P 500 Index

1495.71

-17.46

-1.15%

Dow Jones Industrials

13880.08

-129.71

-.93%

NASDAQ Composite

3131.16

-47.93

-1.51%

Value Line Arithmetic Index

3369.27

-42.37

-1.24%

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

Market Overview – What We Know:

  • Sharp losses were registered by major indexes Monday. Biggest loser was NASDAQ Composite (1.51%) with smallest loser Dow 30 (-.93%).
  • Trading volume declined 6% compared to Friday’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 1489.05 through Tuesday to suggest new short-term trend to negative. Intermediate trend turns negative below 1395.00 through Friday.
  • Daily MAAD reversed Friday’s gains Monday and is once again threatening short-term uptrend stretching back to December 28 low with 4 issues positive and 16 negative. Daily MAAD Ratio was near “Neutral” at 1.09.
  • Daily CPFL was slightly positive Monday at 1.10 to 1 Daily CPFL Ratio was moderately “Overbought” at 1.67.
  • Cumulative Volume (CV) in S&P Emini, Dow 30, and NASDAQ Composite continues to under perform pricing.

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.
  • Monday’s reversal of last Friday’s gains to new short-term highs is suggestion sellers remain just above current bids near major resistance levels.
  • Short-term measured move target toward 1510 has been “teased” over past five sessions and has held to suggest Minor Cycle could be in termination phase.
  • 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 ending.
  • 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.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

2/4

2/5

2/6

2/7

2/8

2/8

2/28

S&P 500 Index

SELL 1485.71

SELL 1489.05

SELL 1492.17

SELL 1494.02

SELL 1495.59

SELL 1395.00

SELL 1330.62

Dow Jones Industrials

SELL 13702.83

SELL 13749.07

SELL 13790.75

SELL 13817.61

SELL 13837.35

SELL 12903.12

SELL 12570.95

NASDAQ Composite

SELL 3130.09

SELL 3132.01

SELL 3133.89

SELL 3135.18

SELL 3137.22

SELL 2941.35

SELL 2862.45

Value Line Index

SELL 3339.86

SELL 3349.75

SELL 3355.06

SELL 3358.91

SELL 3364.69

SELL 3411.65

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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