Monday’s stock market selling puts dent in intermediate trend

 

Market Snapshot for session ending 4-15-13
 

Last

Day Change

%Change

S&P 500 Index

1552.36

-36.49

-2.30%

Dow Jones Industrials

14599.20

-265.85

-1.79%

NASDAQ Composite

3216.48

-78.45

-2.38%

Value Line Arithmetic Index

3432.54

-116.71

-3.29%

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

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

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

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • Sharp losses across board characterized trading Monday in all of major indexes. Value Line index, largest loser on day (-3.29%), also confirmed new short-term negative trend by declining below lower edge of 10-Day Price Channel.
  • Market volume rose 31.1% compared to last Friday’s levels.
  • To suggest new short-term negative. S&P 500 must sell below lower edge of 10-Day Price Channel (1552.96 through Tuesday). Given proximity of Price Channel to Monday’s close, such action could occur by default. Intermediate Cycle in S&P 500 remains positive until 1505.64 through April 19.
  • Short-term volatility moved higher Monday, but continues to hold in bearish zone to suggest lingering market vulnerability, the potential for some rebounding notwithstanding.
  • Daily MAAD was negative Monday by 3 to 17 and pulled back toward uptrend line stretching back toward November lows. Daily MAAD Ratio was marginally “Overbought” at 1.19.
  • Daily CPFL was negative by 4.19 to 1 Monday after registering new short to intermediate high last Friday and moved to new short to intermediate-term high. Daily CPFL Ratio “Neutral” at .98.
  • Cumulative Volume (CV) moved sharply lower in S&P 500 and S&P Emini futures contract Monday. In case of Emini, CV has declined below uptrend line in effect since November 16 intermediate lows and was last at equivalent S&P 500 price of 1518 vs. Monday’s S&P 500 close at 1552.36.

Market Overview – What We Think:

  • Monday’s sharp losses in major indexes in face of short-term “Overbought” conditions, failing upside Momentum, and bearish volatility readings should not have been big surprise.
  • With 3.29% loss in Value Line index putting that index into short-term negative territory and with Cumulative Volume (CV) now negative in S&P 500 Emini below uptrend line since November, there intermediate trend could soon be in jeopardy.
  • To prove negative point, S&P 500, Dow Jones Industrials, and NASDAQ Composite must follow lead of VAY and sink to negative on short-term trend.
  • Once short-term is negative in all indexes, staying power of larger Intermediate Cycle could become an issue.
  • Nonetheless, until short-term trend is decidedly in negative column and is positioned to threaten larger intermediate-term trend, all pullbacks must be regarded as pullbacks in larger Intermediate Cycle.

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

4/15

4/16

4/17

4/18

4/19

4/19

4/30

S&P 500 Index

SELL 1551.37

SELL 1552.96

SELL 1555.68

SELL 1561.28

SELL 1565.13

SELL 1505.64

SELL 1349.76

Dow Jones Industrials

SELL 14502.95

SELL 14522.61

SELL 14552.20

SELL 14598.02

SELL 14638.51

SELL 13933.03

SELL 12653.67

NASDAQ Composite

SELL 3211.24

SELL 3210.34

SELL 3215.18

SELL 3227.53

SELL 3235.74

SELL 3150.40

SELL 2882.50

Value Line Index

SELL 3469.49

BUY 3505.65

BUY 3512.45

BUY 3522.75

BUY 3530.41

SELL 3384.79

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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