Dow drifts as other stock indexes make new highs

MAAD & CPFL Review

 

Market Snapshot for session ending 4-30-13
 

Last

Day Change

%Change

S&P 500 Index

1597.57

+3.96

+.25%

Dow Jones Industrials

14839.80

+21.05

+.14%

NASDAQ Composite

3328.78

+21.76

+.66%

Value Line Arithmetic Index

3579.06

+19.93

+.56%

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:

  • Major indexes were plus side Tuesday with S&P 500, NASDAQ Composite, and Value Line index rallying to new closing highs. Dow 30 remains main laggard and has yet to get back above April 11 high (14887.51). Cumulative volume did not confirm new high in S&P 500, but did confirm in NASDAQ Composite.
  • Market volume rose 35% compared to Monday’s levels.
  • All cycles are positive, including Minor, Intermediate, and Major.
  • S&P 500 must decline below lower edge of trailing 10-Day Price Channel (1555.07 through Wednesday) to suggest new short-term negative. Intermediate Cycle in S&P 500 remains positive until 1521.53 through May 3.
  • Short-term volatility remains positive.
  • Daily MAAD rallied to new short to intermediate-term high Tuesday and best levels since last November 16 at intermediate lows, and also since March 2009. Indicator was positive by 13 to 7. Daily MAAD Ratio was moderately “Overbought” at 1.41.
  • Running contrary to market strength, CPFL was negative Tuesday by 1.56 to 1 and remains below new short to intermediate high reached April 12. Daily CPFL Ratio was marginally “Overbought” at 1.19.
  • Despite general market strength, Cumulative Volume (CV) in S&P 500 and S&P 500 Emini remains relatively weak and has only retraced about 50% of its losses since April 11.

Market Overview – What We Think:

  • Failure of our Call/Put Dollar Value Flow Line (CPFL) to follow through on upside with prices Tuesday as Cumulative Volume (CV) in S&P 500 and S&P Emini continues to lag pricing makes us wonder about buying over past several days. Is it possible strength could prove to be a nice draw play into end of intermediate uptrend?
  • Lingering negative divergences between pricing and indicators on very near term will continue to cast shadow on validity of up move. If disparity continues, we wouldn’t be surprised to see development of sharp downward reversal.
  • There is also fact that venerable Dow 30, in which short-term Momentum is still negative, and Dow 20, has not confirmed strength in S&P and other indexes. That is also suspicious.
  • How Minor Cycle plays out will determine staying power of larger Intermediate Cycle that has been underway since November 16, a trend that is “Overbought” and historically mature.
  • But until larger Intermediate Cycle is terminated, we must regard all short-term pullbacks as merely corrections in larger cycle trend.

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

4/29

4/30

5/1

5/2

5/3

5/3

5/31

S&P 500 Index

SELL 1550.59

SELL 1551.64

SELL 1555.07

SELL 1558.94

SELL 1562.69

SELL 1521.53

SELL 1360.47

Dow Jones Industrials

BUY 14704.73

SELL 14546.39

SELL 14559.23

SELL 14572.00

SELL 14615.9

SELL 14127.12

SELL 12701.94

NASDAQ Composite

SELL 3202.81

SELL 3207.22

SELL 3213.68

SELL 3224.30

SELL 3233.03

SELL 3176.91

SELL 2896.99

Value Line Index

SELL 3432.14

SELL 3432.35

SELL 3441.49

SELL 3455.99

SELL 3469.20

SELL 3430.97

SELL 2895.29

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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