Stock market keeps rising, but anxiety looms

Weekly Review: MAAD & CPFL Analysis

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

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1551.18

+32.98

+2.17%

Dow Jones Industrials

14397.07

+307.41

+2.18%

NASDAQ Composite

3244.37

+74.63

+2.35%

Value Line Arithmetic Index

3501.14

+96.59

+2.83%

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

Traditional chess includes an Opening, Middle game, and an End game. Even though the means can be difficult, the ultimate objective is clear – to immobilize, or “checkmate,” the opponent’s king. Chess, which is believed to have originated in India in the 6th century, like the stock market is all about goals and strategy.

There is another variant of the traditional form of the game with its 64 squares and 32 chess pieces, 16 for each opponent. It’s call “3-D Chess.” That variant was popularized in the TV series “Star Trek” where the “logical” Mister Spock would systematically eviscerate unwitting opponents. Three-D employs two additional dimensions, one higher and one lower to more closely approximate warfare above (air) and below (underwater) the usual flat plane of two-dimensional chess. Naturally, with an additional 128 space variables plus the vertical components, the possibilities for chess piece movement in the 3-D version can become even more infinite, tantalizing, and puzzling.

The stock market resembles 3-D chess. On the lateral plane there is the constant adjustment between supply and demand that creates pricing. But it is with the vertical variables above and below the market at potential support and resistance points that make the market “game” more interesting. For example, when prices make a low on the long-term, that nadir can occur at a point that is higher than the previous low, or lower. If the former, it can be argued buyers have put a floor under prices before propelled bids higher. On the other hand, if prices drop below all previous price lows, then it can be argued an eventual equilibrium between buyers and sellers is what kept pricing from dropping to zero even though it appears the low came out of nowhere.

Market Overview – What We Know:

  • Major indexes rallied again last week with all adding in excess of 2%. Dow Jones Industrial Average and Value Line index rallied to new all-time closing highs. S&P 500 remains shy of October 2007 peak. NASDAQ Composite remains nearly 37% below all-time high made 13 years ago this month (5132.52).
  • Trading volume shrank 3% compared to previous week.
  • All trends remain positive, but also “Overbought.”
  • Minor Cycle remains positive until S&P 500 sinks below lower edge of 10-Day Price Channel (1501.99 through Monday). Intermediate trend remains positive until lower edge of 10-Week Price Channel (1459.67—through March 15).
  • Daily MAAD rallied to best level last week since March 2009, but Weekly MAAD while close to new highs for move since March 2009, is still shy. Weekly MAAD has nevertheless returned to long-term downtrend line stretching back to 1999 and point prior to 2000 market highs.
  • Daily and Weekly MAAD Ratios were last “Overbought” at 1.80 and 1.62, respectively.
  • Daily CPFL popped to new short to intermediate-term high last Friday, but still remains well below major resistance put in place week of February 25, 2011.
  • Cumulative Volume has rallied to best levels since March 2009, but remains well below long-term resistance peak made in spring of 2010.

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