Stock market minor cycle will show first signs of turn

MAAD & CPFL Report

 

Market Snapshot for session ending 5-21-13

 

Last

Day Change

%Change

S&P 500 Index

1669.16

+2.87

+.17%

Dow Jones Industrials

15387.58

+52.29

+.34%

NASDAQ Composite

3502.12

+5.69

+.16%

Value Line Arithmetic Index

3783.41

+7.97

+.21%

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:

  • Major indexes were all positive Tuesday and all rallied to new closing highs.
  • Market volume was ahead 1.5%
  • Minor, Intermediate, and Major Cycles remain positive and “Overbought.”
  • Our short-term volatility indicator based on VIX data continues to reflect fact Minor Cycle has entered into zone of historical vulnerability.
  • To suggest negativity on short term, S&P 500 would need to sell below lower edge of 10-Day Price Channel (1627.08 through Wednesday). Intermediate Cycle in S&P 500 remains positive until 1534.87 through May 24.
  • Daily MAAD hit new short, intermediate, and long-term high relative to March 2009 lows Tuesday with 14 issues positive and 6 negative. Daily MAAD Ratio remains “Overbought” at 2.23.
  • Call/Put Dollar Value Flow Line (CPFL) rallied to new short to intermediate high Tuesday. CPFL Ratio remains “Overbought” territory at 2.83.

Market Overview – What We Think:

  • Short-term trend remains positive, but looks increasingly tired.
  • Short-term volatility based on VIX data has not, for the first time since November 16, made new low as prices have made new highs. That latter divergence could be signaling impending vulnerability prior to short-term negative reversal and possible turning point for larger, and increasingly mature, Intermediate Cycle.
  • Steepness of market ascent since April 18 lows is probably unsustainable and could be an indication of overly eager “blow off” buying. Steep moves up, or down, usually do not last.
  • Market is also “Overbought” on all cycles, a condition that cannot persist.
  • 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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