Market hits highs on lower volume, bearish volatility

Weekly Review: MAAD & CPFL Analysis


Market Snapshot:


Week Chg

Week %Chg

S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Arithmetic Index




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

Back in those adventurous teenage days when mountains were climbed because they were there, your intrepid reporter and a buddy decided to assault Huckleberry Mountain in the Mt. Hood National Forest. We knew the trail would traverse the behemoth until the summit was reached in excess of 5,000 feet. But neither of us had an inkling of what was required to reach that objective or that the elevation gain would prove be relatively steep -- like a sharp market rally.

About two thirds of the way up, there was intense conversation as to how much further it would be until we hit the top. Requiring something of a philosophical bent because we were on the hike in the first place, we finally arrived at the conclusion that if we kept hiking, “Up a little bit, down a little bit, and then up…,” we would arrive. The strategy worked and within a couple of hours we were on top of Huckleberry Mountain looking out at 11,260-foot high Mt. Hood to the east, Mt. Rainer and an intact, pre-eruptive Mt. St. Helens to the North, and Mt. Jefferson and the Three Sisters to the South.

Market Overview – What We Know:

  • All of major indexes rallied to best levels since March 2009 last week. Only NASDAQ Composite index did not reach new all-time closing high.
  • All Cycles remains positive, but “Overbought.”
  • Market volume declined 24% last week, but that was because of market closure for Good Friday.
  • S&P 500 weakness below lower edge of 10-Day Price Channel (1546.37 through Monday) would reverse to negative short-term advance in effect since February 26 low. Intermediate trend remains positive until lower edge of 10-Week Price Channel (1485.30 through April 5).
  • On short-term cycle Daily MAAD remained below its March 11 short to intermediate-term high last week. Weekly MAAD gained a little, but also remained below same March 11 high. Weekly MAAD remains in vicinity of long-term trend line stretching back to 1999 at point prior to March 2000 market highs. Weekly MAAD has yet to overcome resistance made in spring of 2011.
  • Daily CPFL reached new short to intermediate-term high last Thursday. Indicator remains in gradually upsloping longer-term advance begun in December 2011, but is nowhere near major resistance plot high made week of February 25, 2011.

The point of our story? Like our journey up Huckleberry Mountain, the stock market is still hiking upward in an “up a little bit, down a little bit, and up….” configuration. Buyers continue to want to purchase on dips. But since the November 16 intermediate-term lows, the major indexes have experienced two short-term pullbacks that culminated in the late December and late February lows.

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