Stock market drifts as near-term trend stuck in limbo

Weekly Review: MAAD & CPFL Analysis

There are other tidbits to digest. Our Daily Most Actives Advance/Decline (MAAD) Ratio has corrected all of its recently ”Overbought” characteristics and was last marginally “Oversold” at .94. At the same time, with a reading below 1.00, the Daily MAAD Ratio is also negative, a condition that can persist in the early stages of a trend change, in this case the Minor Cycle. But there’s a caveat– so long as the larger Intermediate Cycle remains positive, we must entertain the possibility that each short-term pullback is merely a correction in that larger trend. That has been the case since the November lows in the wake of which there was a short-term low at the end of December and then again at the end of February.

Daily S & P 500 with Cumulative Volume (CV)

Weekly S & P 500 with Cumulative Volume (CV)

If the intermediate uptrend in effect for over four months is to end, we must first see the short-term advance concluded. First, prices must sink below the lower edge of 10-Day Price Channels (1548.19—S&P 500 through Monday). Short-term Momentum must slip into negative territory. The Daily MAAD Ratio is already negative, but we would like to see the Daily MAAD cumulative plot break its uptrend stretching back to the November low. If those events occur, a pickup in market volatility on the Minor Cycle could be another hint of trend change since long-term volatility is currently back toward levels not seen since the intermediate highs of April 2010 and May 2011. A further fade in market volatility is possible, but considering the status of our other indicators, an Intermediate Cycle reversal in this environment would be nicely timed because short-term market volatility is as negatively overdone now as it was at the mid-February and December short-term highs.

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

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