Stock market gains take indexes into overbought territory

MAAD & CPFL Review

 

Market Snapshot for session ending 4-11-13
 

Last

Day Change

%Change

S&P 500 Index

1593.37

+5.64

+.36%

Dow Jones Industrials

14865.14

+62.89

+.42%

NASDAQ Composite

3300.15

+2.90

+.09%

Value Line Arithmetic Index

3564.28

+12.63

+.36%

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

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • On heels of new highs Wednesday, major indexes rallied to best levels since March 2009 Thursday. Only NASDAQ Composite has yet to better March 2000 high (5132.52) to reach new all-time closing high.
  • Market volume was higher by fractions Thursday.
  • S&P 500 remains positive on Minor Cycle and must sell below lower edge of 10-Day Price Channel (1551.97 through Friday) to suggest short-term negative. Intermediate Cycle in S&P 500 remains positive until 1493.28 through April 12.
  • Daily MAAD was modestly positive Thursday (12 up to 8 down) and rallied to new short to intermediate high and to best level since December 2007. Daily MAAD Ratio moved higher into moderately “Overbought” territory at 1.49.
  • Daily CPFL was positive by 4.46 to 1 Thursday and moved to new short to intermediate-term high. Daily CPFL Ratio was marginally “Overbought” at 1.26.

Market Overview – What We Think:

  • Follow-on strength in major indexes Thursday to best levels since March 2009 has left Minor Cycle once again “Overbought” with volatility continuing to hold in bearish territory at levels often coincident with at least short-term highs.
  • Strength in Daily MAAD and CPFL underscored re-assertion of short-term positive, but “Overbought/Oversold” indicators in those indicators on Minor Cycle have also begun to move toward upside extremes to suggest overheating.
  • Nonetheless, because short-term buying also re-asserted still positive intermediate trend that began after November 16 lows, we must regard ALL short-term pullbacks as merely corrective so long as larger intermediate remains favorable.

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

4/8

4/9

4/10

4/11

1/12

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

SELL 3227.09

SELL 3216.31

SELL 3128.04

SELL 2882.50

Value Line Index

BUY 3542.79

BUY 3540.54

BUY 3534.99

SELL 3488.90

SELL 3475.15

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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