New stock market highs always bring calls for more new highs

Weekly Review: MAAD & CPFL Analysis

MAAD reached its highest level since 1961 on the long term in mid-1999. As the ensuing bear market unfolded following the highs in early 2000, MAAD fell back with pricing and was weaker than the S&P 500 into its lows. Then MAAD rallied off of the 2003 bear market bottom, but only recovered about 50% of its losses as it worked upward to a top in 2007. When the 2008 bear hit, MAAD declined to another new low. But it is the bull trend from March 2009 to date that has demonstrated the largest MAAD disparity in its history. Remember that this is the same MAAD that failed to confirm all the gloom and doom into the 1987 Crash while suggesting selling was merely an intermediate pullback within the context of a primary bull trend. And then MAAD failed to take the bait that price movement prior to the 2000 highs was the beginning of that other “new paradigm.” Recently, in the move from March 2009, MAAD was on board for the first 106% of the rally, but has been AWOL since 2011. Investors who bought late, got in on the new highs after May 2011, and who have realized a return of a little under 20% on their equity in just over two years, have done so with no encouragement from MAAD.

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

It’s possible the failure of MAAD to confirm on the upside could have something to do with a steady deterioration in market volume over the past 13 years and since the 2000 highs. CV and CPFL may be suffering similarly. Or it could have to do with the fact that the so-called “Smart Money” crowd that MAAD specifically measures has been less enthralled with this market since March 2009 for any number of reasons. And especially since May 2011.

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

5/6

5/7

5/8

5/9

5/10

5/10

5/31

S&P 500 Index

SELL 1567.36

SELL 1572.24

SELL 1575.54

SELL 1578.44

SELL 1583.18

SELL 1526.66

SELL 1360.47

Dow Jones Industrials

SELL 14615.90

SELL 14643.25

SELL 14659.52

SELL 14676.02

SELL 14712.53

SELL 14205.35

SELL 12701.94

NASDAQ Composite

SELL 3245.70

SELL 3258.66

SELL 3270.01

SELL 3281.06

SELL 3301.08

SELL 3178.45

SELL 2896.99

Value Line Index

SELL 3484.43

SELL 3500.21

SELL 3508.93

SELL 3515.54

SELL 3536.84

SELL 3434.31

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.

<< Page 3 of 5 >>
Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome