Major stock indexes set new highs; S&P E-mini volume lags

MAAD & CPFL Review

 

Market Snapshot for session ending 5-7-13
 

Last

Day Change

%Change

S&P 500 Index

1625.96

+8.46

+.52%

Dow Jones Industrials

15056.20

+87.31

+.58%

NASDAQ Composite

3396.62

+3.65

+.11%

Value Line Arithmetic Index

3652.54

+22.78

+.63%

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:

  • Marginal gains caused new highs in major indexes Tuesday.
  • Trading volume increased by just over 9%.
  • All cycles remain positive, including Minor, Intermediate, and Major.
  • Short-term volatility has entered zone of vulnerability.
  • Selling below lower edge of 10-Day Price Channel (1575.54 through Wednesday) in S&P 500 would indicate new short-term negative. Intermediate Cycle in S&P 500 remains positive until 1526.66 through May 10.
  • Daily MAAD moved to another new short to intermediate-term high Tuesday and best level since March 2009. Thirteen issues were positive and 6 were negative. Daily MAAD Ratio was “Overbought” at 2.03.
  • Call/Put Dollar Value Flow Line (CPFL) rallied to new short to intermediate high Tuesday. CPFL Ratio was moderately “Overbought” at 1.56.
  • Cumulative Volume (CV) in Dow 30 finally eked out new high Tuesday, but CV in S&P Emini continues to lag and has yet to reach new high above April 11 peak when S&P 500 hit 1597.35.

Market Overview – What We Think:

  • Ongoing failure of Cumulative Volume (CV) in S&P 500 Emini on upside relative to April S&P high makes us wonder if recent buying could prove to be near term “draw play,” considering fact this would be first time since November 16 lows CV has not confirmed Emini price action.
  • At same time, Minor Cycle volatility has dipped back into zone of vulnerability. Of interest is fact that despite new highs, VIX-derived data relative to volume DID NOT reach new lows, as has been case since last November. That variance suggests move to new highs is suspicious. It wouldn’t take much for volatility to flip back into mode that would be negative for prices.
  • 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.

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.

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