Overbought stock indexes squeak out more gains

MAAD & CPFL Review

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

 

Market Snapshot for session ending 3-13-13

 

Last

Day Change

%Change

S&P 500 Index

1554.52

+2.04

+.13%

Dow Jones Industrials

14455.28

+5.22

+.04%

NASDAQ Composite

3245.11

+2.79

+.09%

Value Line Arithmetic Index

3516.40

+13.19

+.38%

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:

  • All major indexes finished fractionally higher Wednesday, but only Dow Jones Industrial Average and Value Line index closed at new all-time highs.
  • All cycles remain positive.
  • Market volume decreased by 6.3% Wednesday.
  • To signal short-term negative, S&P 500 needs to decline below lower edge of 10-Day Price Channel (1518.89 through Thursday). Intermediate Cycle in S&P 500 becomes negative below lower edge of 10-Week Price Channel (1459.67 through March 15).
  • Daily MAAD was slightly negative Wednesday by 8 to 11 and pulled back again from new short and intermediate-term high reached March 11 at highest level since March 2009. Daily MAAD Ratio was moderately “Overbought” at 1.61.
  • Daily CPFL negative by 1.54 to 1 Wednesday with sharp drop in Call/Put Dollar Values. Indicator was plotted just below new short to intermediate high reached Tuesday. Daily CPFL Ratio was moderately “Overbought” at 1.61.
  • 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 negative CV negative persist.

Market Overview – What We Think:

  • So long as short-term trend remains positive, intermediate uptrend begun after November 16 lows remains intact.
  • But 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 to suggest long-term resistance remains intact. Given upside momentum of market, however, nitpicking over confirmatory action when pricing and trends remain favorable could prove problematic.
  • Intermediate Cycle remains historically “Overbought,” but statistics could continue to lack prescience until short-term trend breaks to downside 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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