Stock market's range-bound trading reflects indecision

MAAD & CPFL Analysis

Stock market chart Stock market chart

 

Market Snapshot for session ending 2-7-13
 

Last

Day Change

%Change

S&P 500 Index

1509.39

-2.73

-.18%

Dow Jones Industrials

13944.05

-42.46

-.30%

NASDAQ Composite

3165.13

-3.34

-.11%

Value Line Arithmetic Index

3405.64

-8.02

-.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:

  • Major indexes posted marginal losses Thursday. None posted new closing highs. Value Line index rallied to slightly higher all-time high (3415.94) via intraday action, but not on closing basis.
  • Market volume was down just under 1% compared to Wednesday.
  • All trends remain positive on Minor, Intermediate and Major Cycles, but are also historically “Overbought.”
  • S&P 500 must decline below lower edge of 10-Day Price Channel at 1495.59 through Friday to signal new negative short-term trend. Intermediate trend turns negative below 1395.00 through Friday.
  • Daily MAAD pulled back Thursday from new short-term high made Wednesday. Six issues were positive and 14 were negative. Daily MAAD Ratio was marginally “Overbought” at 1.19.
  • Daily CPFL was positive Thursday by 1.19 to 1 and rallied to new short- and intermediate-term highs. Daily CPFL Ratio was moderately “Overbought” at 1.86.
  • Cumulative Volume (CV) in S&P Emini, Dow 30, and NASDAQ Composite continues to under perform pricing.

Market Overview – What We Think:

  • Waiting game continues as S&P 500 completed eighth session within range of upside measured move target at 1510 to suggest that resistance point may be problematic.
  • It also remains to be seen whether or not major indexes are working laterally in preparation for a resumption of uptrend, or if hesitation will precede some retrenchment on at least the Minor Cycle. “Overbought” conditions on all cycles suggest a pullback should not be ruled out.
  • 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 may be ending since upside targets have been met.
  • If market is on verge of short-term negativity, trend under way since November may be toward endgame given “Overbought” conditions and simple fact prices cannot continue higher indefinitely without a correction. Downside sell levels at lower edges of 10-Day Price Channels will determine staying power of short-term trend.
  • 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 divergences.

volume 

volume

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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