Key stock market indicator breaks significance resistance

MAAD & CPFL Review

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

 

Market Snapshot for session ending 3-6-13
 

Last

Day Change

%Change

S&P 500 Index

1541.60

+1.67

+.11%

Dow Jones Industrials

14296.24

+42.47

+.30%

NASDAQ Composite

3222.36

-1.76

-.05%

Value Line Arithmetic Index

3460.89

+8.67

+.25%

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:

  • Dow Jones Industrial Average rallied to new all-time closing high Wednesday, but action was not confirmed by Dow Jones Transportation Average which declined 25.79. S&P 500 rose fractionally, but remains 23.55 points below October 9, 2007 all-time closing high at 1565.15. NASDAQ Composite rallied to best level in nearly 13 years. Broad-based Value Line index continues to hold below February 19 closing, and new all-time high, at 3476.94.
  • Market volume declined 4% compared to Tuesday’s levels.
  • Short-term trend was last positive in all major indexes. To suggest short-term negative S&P 500 must decline below lower edge of 10-Day Price Channel (1500.76 through Thursday). Intermediate Cycle in S&P 500 turns negative below lower edge of 10-Week Price Channel (1447.88).
  • Daily MAAD rallied to new short- and intermediate-term high Wednesday to slightly eclipse intermediate resistance point put in place March 20, 2012. Indicator was positive by 15 to 5 and Daily MAAD Ratio has begun moving back toward “Overbought” territory (1.59).
  • Daily CPFL was positive by 2.37 to 1 Wednesday, but indicator remains below short-term high created February 19. Daily CPFL Ratio was last toward ”Neutral” at 1.04.
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini eked out new short to intermediate highs Tuesday, but remains weak on longer-term basis.

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 other indexes.
  • 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 underscored Dow Theory with new highs, and while S&P 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 all trends remain positive, could prove to be pointless on short term.
  • While Intermediate Cycle remains historically “Overbought,” those statistics may continue to lack prescience until short-term trend breaks to downside with conviction. With only two brief lulls in December and recently, negative tone on Intermediate Cycle 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

BUY1522.69

SELL1500.99

SELL1498.91

SELL1500.76

SELL1500.28

SELL1447.88

SELL1347.47

Dow Jones Industrials

SELL13885.09

SELL13862.58

SELL13860.28

SELL13890.67

SELL13898.61

SELL13349.57

SELL12675.84

NASDAQ Composite

BUY3188.72

BUY3178.18

SELL3137.14

SELL3138.56

SELL3134.96

SELL3051.31

SELL2890.17

Value Line Index

BUY3442.39

BUY3428.62

SELL3379.01

SELL3379.82

SELL3374.22

SELL3221.65

SELL2852.92

 

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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