Market gains push aside threats to short-term cycle

MAAD & CPFL Review

 

Market Snapshot for session ending 3-5-13
 

Last

Day Change

%Change

S&P 500 Index

1539.79

+14.59

+.96%

Dow Jones Industrials

14253.77

+125.94

+.89%

NASDAQ Composite

3224.13

+42.09

+1.32%

Value Line Arithmetic Index

3452.22

+39.07

+1.14%

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:

  • Strong gains Tuesday propelled Dow Jones 30 and 20 to new all-time closing highs and moved S&P 500 within range of best closing level (1565.15) hit October 9, 2007. NASDAQ Composite index rallied to quotes since November 8, 2000. Value Line index rallied Tuesday, but did not exceed February 19 new all-time closing high (3476.94).
  • All major indexes were last positive on short-term trend.
  • Despite strength, however, Cumulative Volume did not confirm new short to intermediate-term highs in S&P Emini futures contract and NASDAQ Composite.
  • Market volume rose 5% compared to Monday’s levels.
  • To suggest return to negativity on short-term trend, S&P 500 must decline below lower edge of 10-Day Price Channel (1498.91). Intermediate Cycle in S&P 500 turns negative below lower edge of 10-Week Price Channel (1447.88).
  • Daily MAAD rallied to new short-term high and best level since November 16 indicator low, but intermediate resistance put in place March 20, 2012 remains intact by small margin. Indicator was positive Tuesday by 17 to 3 and Daily MAAD Ratio was just above “Neutral” at 1.19.
  • Daily CPFL was negative by 1.02 to 1 Tuesday. Indicator remains below short-term high created February 19. Daily CPFL Ratio was last just below ”Neutral” at .89.

Market Overview – What We Think:

  • Tuesday’s market gains have re-asserted intermediate uptrend begun after November 16 lows. Ironically, failure of Value Line index to confirm S&P 500 and Dow 30 strength after leading on upside recently did not act as psychological drain on stronger indexes. Nor did upside failure of Cumulative Volume in S&P Emini and NASDAQ.
  • With Intermediate Cycle re-asserted, bias remains in favor of bulls until short-term trend inevitably weakens to suggest possible threat to intermediate uptrend.
  • Also, while Dow 30 and 20 have underscored Dow Theory with new highs, and while S&P has moved to best levels since November lows, latter has yet to overcome October 9, 2007 closing high at 1565.15. Admittedly, however, given upside power of market, nitpicking over confirmatory action when trend remains positive, could prove to be futile on the short term.
  • There is also fact that while Dow and S&P lagged NASDAQ and VAY prior to latest rally, now they are leading. That variance could simply be reflection of market rotation.
  • While Intermediate Cycle remains historically “Overbought,” those statistics may continue to lack prescience until short-term trend breaks to the downside with conviction. With only two brief lulls in December and recently, that tone has been decidedly lacking since November 16.
  • As a consequence, until larger cycles reverse to negative, all Minor Cycle pullbacks must be regarded as just that – short-term corrections within context of larger cycle positives.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

3/4

3/5

3/6

3/7

3/8

3/8

3/31

S&P 500 Index

BUY 1522.69

SELL 1500.99

SELL 1498.91

SELL 1500.76

SELL 1500.28

SELL 1447.88

SELL 1347.47

Dow Jones Industrials

SELL 13885.09

SELL 13862.58

SELL 13860.28

SELL 13890.67

SELL 13898.61

SELL 13349.57

SELL 12675.84

NASDAQ Composite

BUY 3188.72

BUY 3178.18

SELL 3137.14

SELL 3138.56

SELL 3134.96

SELL 3051.31

SELL 2890.17

Value Line Index

BUY 3442.39

BUY 3428.62

SELL 3379.01

SELL 3379.82

SELL 3374.22

SELL 3221.65

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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