Market rebounds on low volume; near-term trend in doubt

MAAD & CPFL Review

 

Market Snapshot for session ending 4-8-13
 

Last

Day Change

%Change

S&P 500 Index

1563.07

+9.79

+.63%

Dow Jones Industrials

14613.48

+48.23

+.33%

NASDAQ Composite

3222.25

+18.39

+.57%

Value Line Arithmetic Index

3494.52

+27.55

+.79%

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

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:

  • Monday’s rebounding action left status of Minor Cycle in major indexes mixed. S&P 500 and Dow 30 short-term trends remain positive while NASDAQ Composite and Value Line index remain negative.
  • Trading Volume declined 18.2% compared to last Friday’s levels.
  • To suggest Minor Cycle negative, S&P 500 must sell below lower edge of 10-Day Price Channel (1552.00 through Tuesday). Intermediate Cycle in S&P 500 remains positive until 1493.28 through April 12.
  • Daily MAAD was positive Monday by 17 to 3 and remains fractionally below cumulative short to intermediate high made March 11. Daily MAAD Ratio was marginally “Overbought” at 1.16.
  • Daily CPFL remains below new short to intermediate high made March 27, but was positive Monday by 1.20 to 1. Daily MAAD Ratio was last “Neutral” with a negative bias at .91.
  • 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, but remains negative on the longer-term trend.

Market Overview – What We Think:

  • It remains to be seen if Monday’s strength was merely a bounce in a developing short-term negative or something else. Considering volume deterioration on strength, for the moment we will presume strength was merely a rebound.
  • Nothing but new closing highs in S&P 500, Dow 30, and Daily MAAD would erase some of our skepticism. At issue then would be status of NASDAQ Composite and VAY that remain negative on near-term trend.
  • There is also an issue with Minor Cycle volatility that remains pegged in bearish zone to suggest short-term uptrend initiated after February 26 lows continues to look mature.
  • Until short-term trend has appreciable negative effect on larger Intermediate Cycle that began after November lows, as has been case recently, however, we must regard ALL short-term pullbacks as merely corrections in larger intermediate trend. And new highs cannot be ruled out.

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

4/8

4/9

4/10

4/11

4/12

4/12

4/30

S&P 500 Index

SELL 1552.00

SELL 1554.37

SELL 1554.19

SELL 1554.31

SELL 1551.97

SELL 1493.28

SELL 1349.76

Dow Jones Industrials

SELL 14458.16

SELL 14482.65

SELL 14495.45

SELL 14508.06

SELL 14500.21

SELL 13801.77

SELL 12653.67

NASDAQ Composite

BUY 3259.49

BUY 3261.64

BUY 3262.05

BUY 3256.15

BUY 3247.18

SELL 3128.04

SELL 2882.50

Value Line Index

BUY 3542.79

BUY 3540.54

BUY 3534.99

BUY 3524.00

BUY 3512.66

SELL 3352.98

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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