Dow 30 to new high, while indicator best since '09

Stock market, bull shadow

Market Overview – What We Know:

• Major indexes including S&P 500, Dow 30, NASDAQ Composite, and Value Line index rallied to new short to intermediate highs Monday with Dow 30 and VAY hitting new all-time closing highs. Dow 20, however, has failed to make new high since March 6 to create small problem for Dow Theory that requires new closing high in Dow Industrials and Transports to underscore positive primary trend. .
• Market volume declined 5.3% relative to Friday’s levels.
• Short-term trend remains favorable in all indexes and S&P 500 needs to decline below lower edge of 10-day Price Channel (1506.08 through Tuesday) to suggest negative short-term trend. Intermediate Cycle in S&P 500 becomes negative below lower edge of 10-Week Price Channel (1459.67 through March 15).
• Daily MAAD hit another short to intermediate high Monday and best level since March 2009 lows. Indicator was positive by 15 to 5 with Daily MAAD Ratio “Overbought” at 2.44.
• Daily CPFL was positive by 1.88 to 1 Monday and was last plotted at new short to intermediate high. Daily CPFL Ratio was moderately “Overbought” at 1.53.
• Cumulative Volume (CV) in both S&P 500 and S&P Emini remains in synch with S&P 500 pricing in that both have moved higher since November lows, but long-term CV negative divergences remain intact.

Market Overview – What We Think:

• Short-term market gains have re-asserted intermediate uptrend begun after November 16 lows and momentum remains in favor of bulls until Minor Cycle inevitably weakens with possible threat to Intermediate Cycle.
• While S&P 500 has moved to highest levels since November lows, index has yet to overcome previous bull market closing high (1565.15) made October 9, 2007. Admittedly, however, given upside momentum of market, nitpicking over confirmatory action when pricing and trends remain positive will prove to be pointless until short term trend turns lower.
• While Intermediate Cycle remains historically “Overbought,” statistics may continue to lack prescience until short-term trend breaks to downside with conviction to justify “Overbought” warnings on intermediate trend. With only two brief short-term lulls, one in December and one recently, tone on Intermediate Cycle has been net positive 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.

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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