Stock market mixed Monday in uneven near-term trend

MAAD & CPFL Report

 

Market Snapshot for session ending 5-20-13

 

Last

Day Change

%Change

S&P 500 Index

1666.29

-1.18

-.07%

Dow Jones Industrials

15335.28

-19.12

-.12%

NASDAQ Composite

3496.43

-2.53

-.07%

Value Line Arithmetic Index

3775.44

+9.96

+.26%

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:

  • Following a slightly higher new high in NASDAQ Composite that was not confirmed by other major indexes, pricing headed south Thursday
  • Market volume rose a little over 3%.
  • Minor, Intermediate, and Major Cycles remain positive and “Overbought.”
  • Short-term volatility based on VIX data continues to suggest Minor Cycle has entered zone of vulnerability, strength over past several days notwithstanding.
  • Selling in S&P 500 below lower edge of 10-Day Price Channel (1611.75 through Friday) would suggest reversal of short-term trend to negative. Intermediate Cycle in S&P 500 remains positive until 1532.39 through May 17.
  • Daily MAAD pulled back from new short to intermediate-term high made Wednesday at its best level since March 2009 with 7 issues positive and 13 negative. Daily MAAD Ratio, still “Overbought,” fell to 2.21.
  • Call/Put Dollar Value Flow Line (CPFL) rallied to new short to intermediate high Thursday as CPFL Ratio got a bit more “Overbought” at 2.47.
  • Cumulative Volume (CV) near new highs in S&P 500, S&P Emini, Dow 30, and NASDAQ Composite has underscored positive flavor of recent uptrend but, relative to pricing, CV has been less enthusiastic than price action since April 18 short-term lows.

Market Overview – What We Think:

  • Short-term trend remains positive, but looks increasingly tired for two important reasons: First, short-term Momentum has confirmed none of strength since May 7, and Second short-term volatility based on VIX data has not, for the first time since November 16 lows, made new low when prices made new highs. That divergence is significant and likely presages a short-term negative reversal and possibly turning point for larger, and mature, Intermediate Cycle.
  • Market is also “Overbought” on all cycles, a condition that cannot persist. And market has begun to look “spikey” on upside to suggest Minor Cycle could be approaching a high.
  • How Minor Cycle plays out will determine staying power of larger Intermediate Cycle that has been underway since November 16. But so long as Intermediate Cycle remains intact, all near-term pullbacks must be regarded as corrective.

 

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

5/20

5/21

5/22

5/23

5/24

5/24

5/31

S&P 500 Index

SELL 1616.06

SELL 1620.82

SELL 1627.08

SELL 1632.50

SELL 1637.43

SELL 1534.87

SELL 1360.47

Dow Jones Industrials

SELL 14972.05

SELL 15006.03

SELL 15049.20

SELL 15090.85

SELL 15126.58

SELL 14333.98

SELL 12701.94

NASDAQ Composite

SELL 3389.29

SELL 3402.60

SELL 3415.63

SELL 3427.63

SELL 3438.76

SELL 3181.00

SELL 2896.99

Value Line Index

SELL 3634.16

SELL 3648.04

SELL 3665.72

SELL 3679.73

SELL 3693.86

SELL 3437.79

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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