Stock indexes rebound on low volume, bearish volatility

MAAD & CPFL Review

 

Market Snapshot for session ending 4-4-13
 

Last

Day Change

%Change

S&P 500 Index

1559.98

+6.29

+.40%

Dow Jones Industrials

14606.11

+55.76

+.38%

NASDAQ Composite

3224.98

+6.37

+.20%

Value Line Arithmetic Index

3476.94

+20.56

+.60%

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:

  • On heels of Wednesday’s sharp losses, major indexes recovered marginally Thursday on declining market volume (-18.2%).
  • Value Line index appears to have turned negative on Minor Cycle with NASDAQ Composite not far behind. S&P 500 and Dow 30 remain positive on near term, but not by much.
  • To suggest Minor Cycle negative, S&P 500 must sell below lower edge of 10-Day Price Channel (1550.24 through Friday). Intermediate Cycle in S&P 500 remains positive until 1485.30 through April 5.
  • Daily MAAD was positive Thursday by 16 to 4, but remains below cumulative short to intermediate high made March 11. Daily MAAD Ratio was “Neutral” with a negative bias at .95.
  • Daily CPFL remains below new short to intermediate high made March 27. Daily MAAD Ratio was last “Neutral” with a negative bias at .95.
  • 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:

  • Thursday’s lower volume rebound could prove to be temporary bounce within context of developing short-term top.
  • Coupled with pickup in volatility from bearish levels, 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. 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.
  • But 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.

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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