Market sinks Thursday, but selling momentum lessens

MAAD & CPFL Report

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

 

Market Snapshot for session ending 2-21-13
 

Last

Day Change

%Change

S&P 500 Index

1502.42

-9.53

--.63%

Dow Jones Industrials

13880.62

-46.92

-.34%

NASDAQ Composite

3131.49

-32.91

-1.04%

Value Line Arithmetic Index

3382.14

-31.51

-92%

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 succumbed to selling pressures again Thursday, but rate of decent was diminished somewhat with some bargain hunting developing later in session. Value Line index and NASDAQ Composite were biggest losers on day.
  • Market volume rose by 2.4% as compared to Wednesday’s levels.
  • Short-term trend that is still “Overbought” looks increasingly negative with all of major indexes last trading below lower edges of defined 10-Day Price Channels. S&P 500 would now have to rise above upper edge of 10-Day Price Channel (1519.46 through Friday) to put short-term trend back on positive footing. Intermediate trend turns negative below lower edge of 10-Week Price Channel (1419.11 through Friday).
  • Daily MAAD was negative Thursday by 3 to 17 and Daily MAAD Ratio dipped into negative territory for first time since January 8. Defined short-term uptrend In Daily MAAD in effect since late December low (1398.11—S&P 500) has been breached on downside.
  • Daily CPFL was positive by 1.26 to 1 Thursday, but was still below new short-term high created Tuesday. Daily CPFL Ratio was moderately “Overbought” at 1.70.

Market Overview – What We Think:

  • Damage to short-term positive Wednesday and again Thursday and downside break below defined near-term uptrend by Daily MAAD with Daily MAAD Ratio negative below 1.00, is solid indication Minor Cycle advance in effect since late December is over.
  • Extent of developing negativity on Minor Cycle will determine staying power of larger Intermediate Cycle that has been underway since November lows (1343.35—S&P 500).
  • With short-term Momentum signaling no confidence in upside move since mid-January, short-term reversal to negative at this time should be no surprise.
  • Until there is a confirmed cyclical breakdown on larger cycles, however, it remains to be seen whether or not indexes will have the power to continue higher once short-term correction is over. Negative indicator divergences, most of which were created in early 2011, remain in effect. Nothing but new highs in MAAD, CPFL, Cumulative Volume (CV), and Momentum, 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

BUY 1519.46

SELL 1419.11

SELL 1330.62

Dow Jones Industrials

SELL 13898.60

SELL 13913.05

SELL 13921.66

SELL 13925.06

BUY 14010.05

SELL 13084.07

SELL 12570.95

NASDAQ Composite

SELL 3154.81

SELL 3161.49

SELL 3167.64

SELL 3172.01

BUY 3192.67

SELL 2996.17

SELL 2862.45

Value Line Index

SELL 3387.14

SELL 3394.89

SELL 3403.44

SELL 3410.70

BUY 3432.71

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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