Stock market drifts as near-term trend stuck in limbo

Weekly Review: MAAD & CPFL Analysis

There is also the overall volume configuration. Last week we highlighted in special Cumulative Volume (CV) charts how CV in the S&P 500, S&P 500 Emini, Dow 30, and NASDAQ Composite have only recovered about 50% of the ground lost from the October 2007 highs through the March 2009 lows. Losses in the S&P 500 Emini futures contract created historic new lows. What CV continues to suggest is that while the price rally in the major indexes over the past four years has been powerful, the underpinnings of that strength have not been equal to the uptrends that preceded the March 2000 or October 2007 highs. That failure in volume has also been underscored by Weekly MAAD which, although it has moved with the market since March 2009, is nowhere near its October 2007 highs and only recovered about 50% of its bear market losses since October 2007.

Index Price Channel Stops (10-Bar MAs of Highs/Lows ) Weekly  
 

3/25

3/26

3/27

3/28

3/29

3/29

3/31

S&P 500 Index

SELL 1548.19

SELL 1547.08

SELL 1547.50

SELL 1546.86

SELL 1546.61

SELL 1480.97

SELL 1347.47

Dow Jones Industrials

SELL 14399.63

SELL 14404.86

SELL 14418.87

SELL 14415.95

SELL 14418.45

SELL 13656.60

SELL 12675.84

NASDAQ Composite

SELL 3230.37

SELL 3226.53

SELL 3229.05

SELL 3226.56

SELL 3226.93

SELL 3109.83

SELL 2890.17

Value Line Index

SELL 3498.43

SELL 3499.60

SELL 3503.46

SELL 3505.61

SELL 3508.16

SELL 3321.64

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.

So, back from that island vacation you will find the market at about the same point as it was more than a week ago. All cycles remain positive with the short-term trend once again on the cusp of negativity, but tentatively so. If developing neutrality on the Minor Cycle proves to be in synch with the short-term lows created in December and February, then we cannot rule out the possibility this market may make another upside attempt and the best levels since the lows of March 2009 could follow. At this juncture, there are few choices. It is also a good bet that another relaxed week on the island might not be prudent.

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD was indecisive for most of last week and spent the majority of the five sessions marginally below its March 15 plot high. The indicator also remains in an intermediate-term uptrend in effect since mid-November. The Daily MAAD Ratio has dipped into the upper regions of “Oversold” territory, but is also negative, a component of the early stages of a market reversal.

What remains significant with MAAD on both the Daily and Weekly cycles, however, is that the indicator continues to under perform the market. While Daily MAAD finally broke above its March 20, 2012 resistance high on March 6, the S&P has far outperformed the indicator. As a consequence, our only solace in observing the two is to say that on the long term trend, MAAD continues to suggest that Smart Money has not liked the market since March 2009 to the same it extent it liked earlier advances. That variance could eventually come back to haunt the broad market.

 

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