Market sinks in mature short-term uptrend

MAAD & CPFL Review

 

Market Snapshot for session ending 5-9-13
 

Last

Day Change

%Change

S&P 500 Index

1626.67

-6.01

-.37%

Dow Jones Industrials

15082.62

-22.50

-.15%

NASDAQ Composite

3409.17

-4.09

-.12%

Value Line Arithmetic Index

3660.85

-10.26

-.28%

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 red ink was evident in all of major indexes Thursday.
  • Market volume was up fractionally by .3%
  • All Cycles (Minor, Intermediate, and Major) remain positive.
  • Short-term volatility remains in zone of vulnerability.
  • Selling below lower edge of 10-Day Price Channel (1583.18 through Friday) in S&P 500 would suggest reversal of Minor Cycle to negative. Intermediate Cycle in S&P 500 remains positive until 1526.66 through May 10.
  • Daily MAAD pulled back slightly Thursday from new short to intermediate high reached Wednesday and best level since March 2009. Nine issues were positive and 11 were negative. Daily MAAD Ratio was “Overbought” at 1.98.
  • Call/Put Dollar Value Flow Line (CPFL) hit another short to intermediate high Thursday. CPFL Ratio was moderately “Overbought” at 1.69.
  • Cumulative Volume (CV) in S&P 500 Emini hit new short to intermediate high Wednesday by rallying above resistance point made back on April 11 when S&P 500 cash index closed at 1587.75. On relative basis, however, Emini CV has been lackluster in face of higher S&P prices.

Market Overview – What We Think:

  • Thursday’s marginal selling in major indexes proved little except that some players were willing to take profits. But, considering weak volume underpinnings into recent strength, currently “Overbought” conditions, and short-term volatility in zone of vulnerability, we would not be surprised to see some weakness developing on Minor Cycle in sessions just ahead.
  • While Cumulative Volume in S&P 500 Emini finally caught up with cash indexes Wednesday to extent it bettered its April 11 resistance high, compared to overall market strength since April 18, S&P Emini CV has underperformed to suggest a lack of commitment on upside by futures buyers.
  • At same time, VIX-derived volatility data relative to volume DID NOT reach new lows as index prices rallied to new highs to suggest move to new highs is suspicious. It wouldn’t take much for volatility to begin rallying, a reflection of negative pricing.
  • How Minor Cycle plays out will determine staying power of larger Intermediate Cycle that has been underway since November 16. That trend is now “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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