Stock market pulls back, challenging short-term trend

MAAD & CPFL Review

Stock market chart, technical analysis Stock market chart, technical analysis

 

Market Snapshot for session ending 2-28-13
 

Last

Day Change

%Change

S&P 500 Index

1514.68

-1.31

-.09%

Dow Jones Industrials

14054.49

-20.88

-.15%

NASDAQ Composite

3160.19

-2.06

-.07%

Value Line Arithmetic Index

3402.36

-1.17

-.03%

Minor Cycle (Short-term trend lasting days to a few weeks) Negative / Neutral

Intermediate Cycle (Medium trend lasting weeks to several months) Positive / Neutral

Major Cycle (Long-term trend lasting several months to years) Positive

Market Overview – What We Know:

  • Major indexes suffered small losses Thursday.
  • Trading volume rose 22%.
  • Short-term trend remains negative. S&P 500 must rally above upper edge of 10-Day Price Channel (1522.00 through Friday) to reverse new Minor Cycle negative to positive. Intermediate trend turns negative below lower edge of 10-Week Price Channel (1433.37 through Friday).
  • In wake of September 19 short-term high, Daily MAAD was negative by 7 to 13 Thursday. Daily MAAD Ratio remains in negative territory (.86) and toward “Oversold.” Defined short-term uptrend in Daily MAAD in effect since late December low (1398.11—S&P 500) has been ended.
  • Daily CPFL was positive Thursday by 2.34 to 1 and moved slightly higher, but remains below short-term high created February 19. Daily CPFL Ratio was marginally “Overbought” at 1.40.

Market Overview – What We Think:

  • Market strength since Tuesday’s interim low (1485.01) notwithstanding, until there is price movement in S&P 500 back above upper edge of 10-Day Price Channel, all strength must be regarded as nothing but short-covering/bargain-hunting rally. But then, even if S&P rallies above 10-Day Price Channel, buying back above February 19 intraday high (1530.94) is essential and would signal resumption of intermediate uptrend begun after November lows.
  • Given strength over past couple of days, is it possible short-term correction is over? It’s possible, but not likely. While there were obviously buyers just below market into Tuesday’s lows, do they have power to get intermediate rally going again?
  • Interestingly, despite gains after Tuesday’s lows, short-term Momentum, our proprietary Trading Oscillators, and Daily MAAD Ratio have all remained negative to suggest short-term downtrend may not yet be over.
  • Until larger cycles reverse to negative, all Minor Cycle pullbacks must be regarded as just that – short-term pullbacks within context of larger cycle positives even though longer-term negative indicator divergences, most of which were created in early 2011, remain intact.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

2/25

2/26

2/27

2/28

3/1

3/1

3/31

S&P 500 Index

BUY 1520.69

BUY 1522.96

BUY 1524.91

BUY 1523.11

BUY 1522.00

SELL 1433.37

SELL 1347.47

Dow Jones Industrials

BUY 14008.63

BUY 14015.34

BUY 14023.86

BUY 14007.79

BUY 14006.29

SELL 13205.69

SELL 12675.84

NASDAQ Composite

BUY 3196.13

BUY 3200.51

BUY 3204.02

BUY 3196.35

BUY 3190.23

SELL 3025.51

SELL 2890.17

Value Line Index

BUY 3438.54

BUY 3447.16

BUY 3454.54

BUY 3449.15

BUY 3444.22

SELL 3177.23

SELL 2852.92

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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