Stock indexes recover, cautiously bolstering short-term

MAAD & CPFL Review

 

Market Snapshot for session ending 5-2-13
 

Last

Day Change

%Change

S&P 500 Index

1597.59

+14.89

+.94%

Dow Jones Industrials

14831.58

+130.62

+.89%

NASDAQ Composite

3340.62

+41.49

+1.26%

Value Line Arithmetic Index

3562.41

+43.31

+1.23%

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:

  • Buying in major indexes Thursday propelled S&P 500 to new all-time closing high by .02. NASDAQ Composite made new high, but Dow 30 again failed. Value Line index also did not make new high to better Tuesday’s new peak.
  • Market volume declined 7.8%.
  • All cycles remain positive, including Minor, Intermediate, and Major.
  • Short-term volatility is re-approaching danger zone.
  • Selling below lower edge of 10-Day Price Channel (1562.69 through Friday) in S&P 500 would suggest new short-term negative. Intermediate Cycle in S&P 500 remains positive until 1521.53 through May 3.
  • Daily MAAD rallied to new short to intermediate-term high Thursday and best level since March 2009. Seventeen issues were positive and 4 were negative. Daily MAAD Ratio was “Overbought” at 2.00.
  • Daily CPFL rallied to new short to intermediate high Thursday by bettering its April 12 peak. Indicator was positive by 1.40 to 1. Daily CPFL Ratio was marginally “Overbought” at 1.39.
  • Cumulative Volume (CV) in S&P 500 and S&P 500 Emini continues to point out short-term negative disparity relative to pricing. CV remains weak and has only retraced about 50% of its losses since April 11 while pricing has been stronger. Only CV in NASDAQ Composite has confirmed new high in that index.

Market Overview – What We Think:

  • Recovery Thursday of most of losses from Wednesday’s selling kept short-term trend intact, but ongoing problem with Cumulative Volume to extent CV continues to lag S&P 500 and S&P Emini pricing is suggestion enthusiasm for rally since April 18 has been lukewarm.
  • Nonetheless, short-term trend remains positive and there were buyers waiting to snap up equities on pullback via weakness provided by Wednesday’s selling. With that volume consideration, however, we wonder just how informed that buying will prove to be.
  • Also to give any rally validity, we would need to see Dow 30 also make new high (above April 18 intraday high at 14887.51 and old closing high at 14865.14 also made on April 18).
  • How Minor Cycle plays out will ultimately determine staying power of larger Intermediate Cycle that has been underway since November 16, a trend that is “Overbought” and historically mature.

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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