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

MAAD & CPFL Review

Stock market, bull shadow Stock market, bull shadow

 

Market Snapshot for session ending 3-11-13
 

Last

Day Change

%Change

S&P 500 Index

1556.22

+5.03

+.32%

Dow Jones Industrials

14447.29

+50.21

+.35%

NASDAQ Composite

3252.87

+8.50

+.26%

Value Line Arithmetic Index

3508.94

+7.80

+.22%

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:

  • 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.

Index Daily / Weekly / Monthly Stops Weekly Monthly
 

3/11

3/12

3/13

3/14

3/15

3/15

3/31

S&P 500 Index

SELL 1501.99

SELL 1506.08

SELL 1512.43

SELL 1518.89

SELL 1524.82

SELL 1459.67

SELL 1347.47

Dow Jones Industrials

SELL 13923.13

SELL 13963.12

SELL 14023.14

SELL 14084.96

SELL 14144.43

SELL 13468.82

SELL 12675.84

NASDAQ Composite

SELL 3136.94

SELL 3147.71

SELL 3161.56

SELL 3175.12

SELL 3187.98

SELL 3072.13

SELL 2890.17

Value Line Index

SELL 3374.06

SELL 3379.74

SELL 3393.11

SELL 3407.37

SELL 3422.49

SELL 3259.09

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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