Stock indexes make negative short-term noise

MAAD & CPFL Review

 

Market Snapshot for session ending 4-3-13
 

Last

Day Change

%Change

S&P 500 Index

1553.69

-16.56

-1.05%

Dow Jones Industrials

14550.35

-111.65

-.76%

NASDAQ Composite

3218.60

-36.25

-1.11%

Value Line Arithmetic Index

3456.37

-48.53

-1.38%

Minor Cycle* (Short-term trend lasting days to a few weeks) Neutral / Negative

Intermediate Cycle* (Medium trend lasting weeks to several months) Positive

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • Major indexes suffered sharp losses Wednesday with NASDAQ Composite and Value Line index suggesting beginnings of Minor Cycle negative trends.
  • Only S&P 500 and Dow 30 short-term trends remain “Overbought.” NASDAQ and VAY oscillators have moved downward toward “Neutral” from “Overbought.”
  • Market Volume rose 18% Wednesday compared to Tuesday’s levels.
  • S&P 500 needs to sell below 1550.24 through Thursday at lower edge of 10-Day Price Channel to suggest Minor Cycle Negative. Intermediate Cycle in S&P 500 remains positive until 1485.30 through April 5.
  • Daily MAAD was negative Wednesday and slightly fractured on downside uptrend in effect since November 16 lows. Indicator was negative by 3 to 17 after remaining below cumulative short to intermediate high made March 11 and despite new highs by S&P 500. Daily MAAD Ratio was “Neutral” with a negative bias at .96.
  • Daily CPFL remains below new short to intermediate high made March 27. Daily MAAD Ratio was “Neutral” negative with a negative bias at .90.
  • Cumulative Volume (CV) in both S&P 500 and S&P Emini has remained in synch with S&P 500 pricing since November intermediate-term lows, long-term negative divergences persist.

Market Overview – What We Think:

  • Sharp losses in NASDAQ and VAY Wednesday and movement by both indexes toward short-term negative territory could be leading indicator for S&P 500 and Dow 30.
  • Coupled with pickup in volatility from short-term bearish positions, we would not be surprised to see Minor Cycle gain some legs on downside in sessions just ahead.
  • When coupled with fact Daily MAAD fractured on downside Wednesday uptrend in effect since November 16 lows, this short-term pullback could have ramifications on larger Intermediate Cycle.
  • Fact that Daily MAAD did not confirm new highs in S&P 500 and Dow 30 by peaking back on March 11 means Smart Money did not believe new highs in those indexes was for real. Unfortunately, classic Advance/Decline Line was not so prescient and merely peaked last Thursday just two days in front of new highs in S&P and Dow with no negative divergence in place.
  • We must posit an ongoing warning, however. Until short-term trend has appreciable effect on larger Intermediate Cycle that began after November lows, we must regard ALL short-term pullbacks as merely corrections in larger intermediate trend. Put another way, intermediate uptrend remains intact until proven otherwise and until we see confirmed reversal of positive short-term trend to negative, any pullbacks will remain preliminary and not definitive.

Index

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

Weekly

Monthly

 

4/1

4/2

4/3

4/4

4/5

4/5

4/30

S&P 500 Index

SELL 1546.37

SELL 1547.14

SELL 1547.89

SELL 1550.24

SELL 1550.24

SELL 1485.30

SELL 1349.76

Dow Jones Industrials

SELL 14414.46

SELL 14419.66

SELL 14422.73

SELL 14440.07

SELL 14440.07

SELL 13712.81

SELL 12653.67

NASDAQ Composite

SELL 3225.72

SELL 3227.89

SELL 3227.54

SELL 3232.01

SELL 3232.01

SELL 3115.64

SELL 2882.50

Value Line Index

SELL 3507.31

SELL 3508.92

SELL 3507.87

SELL 3511.93

SELL 3511.93

SELL 3335.08

SELL 2859.75

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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