Stock market price action damages short-term positive trend

MAAD & CPFL Report

Stock index chart, technical analysis Stock index chart, technical analysis

 

Market Snapshot for session ending 2-20-13
 

Last

Day Change

%Change

S&P 500 Index

1511.95

-18.98

-1.24%

Dow Jones Industrials

13927.54

-108.12

-.77%

NASDAQ Composite

3164.40

-49.18

-1.53%

Value Line Arithmetic Index

3413.66

-63.27

-1.82%

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:

  • All major indexes suffered sharp losses Wednesday with biggest loser Value Line index that was down 1.82%.
  • Market volume rose by nearly 13% as compared to Tuesday’s activity.
  • All cycles remain positive and “Overbought,” but margin of error on downside to keep short-term trend favorable shrunk dramatically Wednesday.
  • If S&P 500 sells below lower edge of 10-Day Price Channel (1509.94 through Thursday), a new short-term negative would be suggested. Intermediate trend turns negative below lower edge of 10-Week Price Channel (1419.11 through Friday).
  • Daily MAAD was negative by 19 to 1 Wednesday, Daily MAAD Ratio moved back to even at 1.00, and short-term uptrend in MAAD stretching back to December 28 low was fractured on downside.
  • Daily CPFL was negative by 2.90 to 1 Wednesday and pulled back from new short to intermediate high hit Tuesday. Daily CPFL Ratio was moderately “Overbought” at 1.88.

Market Overview – What We Think:

  • Damage to short-term cycle Wednesday and downside break below defined near-term uptrend by Daily MAAD could be first sign that Minor Cycle advance in effect since late December low (1398.11—S&P 500) is all but over.
  • With short-term Momentum signaling no confidence in upside move since mid-January, a negative turn at this time should be no surprise.
  • New short-term negative would put pressure on larger Intermediate Cycle that remains positive, but also historically “Overbought,” as does Major Cycle.
  • Until there is a confirmed cyclical breakdown, however, it remains to be seen whether or not major indexes will have the power to continue higher in face of negative indicator divergences, most of which were created in early 2011,
  • Longer-term lingering weakness in MAAD, CPFL, Cumulative Volume, and Momentum, is an indication nothing but new highs by ALL our key indicators, an unlikely event, would erase longer-term statistical skepticism.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

2/18

2/19

2/20

2/21

2/22

2/22

2/28

S&P 500 Index

SELL 1503.13

SELL 1505.78

SELL 1508.18

SELL 1509.94

SELL 1511.41

SELL 1419.11

SELL 1330.62

Dow Jones Industrials

SELL 13898.60

SELL 13913.05

SELL 13921.66

SELL 13925.06

SELL 13924.57

SELL 13084.07

SELL 12570.95

NASDAQ Composite

SELL 3154.81

SELL 3161.49

SELL 3167.64

SELL 3172.01

SELL 3175.84

SELL 2996.17

SELL 2862.45

Value Line Index

SELL 3387.14

SELL 3394.89

SELL 3403.44

SELL 3410.70

SELL 3417.86

SELL 3130.63

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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