Stock market challenges bearish scenario with gains

MAAD & CPFL Review


Market Snapshot for session ending 4-23-13


Day Change


S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Arithmetic Index




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

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:

  • Major indexes rebounded further Tuesday, but none has yet risen above upper edge of 10-Day Price Channels to suggest reversal of lingering short-term negative to positive.
  • Trading volume rose 4.8% Tuesday compared to Monday.
  • Intermediate and Major Cycles remain positive.
  • S&P 500 must rally back above upper edge of 10-Day Price Channel (1581.54 through Wednesday) to suggest positive near-term reversal. Intermediate Cycle in S&P 500 remains positive until 1513.68 through April 26.
  • Short-term volatility measurements based on Daily Cycle continue to suggest price vulnerability. Volatility readings for intraday 5, 15, and 60 minute cycles are bearish.
  • Daily MAAD was positive Tuesday by 16 to 4, but remains below new short to intermediate-term high reached April 11. Daily MAAD Ratio was “Neutral” at 1.07.
  • Daily CPFL was marginally positive Monday by 1.60 to 1 and remains below new short to intermediate high reached April 12. Daily CPFL Ratio was toward “Neutral” at 1.12.

Market Overview – What We Think:

  • In just two sessions strength in major indexes has erased large part of weakness developed between April 11 and 18. But short-term trend remains negative nonetheless by a hair.
  • How Minor Cycle negative plays out will determine staying power of larger Intermediate Cycle that has been underway since November 16. That cycle is “Overbought,” vulnerable, and historically mature.
  • With intraday volatility bearish on 5, 15, and 60 minute intraday cycles within context of still negative Daily Cycle, prices could turn lower at any time.
  • S&P 500 has overshot our potential upside measured move to 1572, but so long as upper edge of 10-Day Price Channel contains pricing, short-term trend will remain negative.
  • As we have cautioned repeatedly, however, until larger Intermediate Cycle is definitively ended, we must regard all short-term pullbacks as merely corrections in that larger cycle trend.

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








S&P 500 Index

BUY 1582.43

BUY 1582.07

BUY 1581.54

BUY 1577.28

BUY 1573.44

SELL 1513.68

SELL 1349.76

Dow Jones Industrials

BUY 14782.57

BUY 14787.00

BUY 14789.13

BUY 14770.56

BUY 14733.98

SELL 14038.80

SELL 12653.67

NASDAQ Composite

BUY 3271.91

BUY 3272.63

BUY 3268.14

BUY 3259.71

BUY 3250.98

SELL 3163.27

SELL 2882.50

Value Line Index

BUY 3535.13

BUY 3528.46

BUY 3522.30

BUY 3507.84

BUY 3495.71

SELL 3409.09

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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