Stock volatility indicator on cusp of reversing short-term positive

MAAD & CPFL Review

 

Market Snapshot for session ending 5-23-13
 

Last

Day Change

%Change

S&P 500 Index

1650.51

-4.84

-.29%

Dow Jones Industrials

15294.50

-12.66

-.08%

NASDAQ Composite

3459.41

-3.88

-.11%

Value Line Arithmetic Index

3731.61

+1.28

+.03%

Minor Cycle* (Short-term trend lasting days to a few weeks) Neutral / 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 with exception of Value Line index were fractionally negative Thursday. Following day’s low 10 minutes after opening, prices worked higher over balance of session.
  • Market volume declined nearly 13%
  • Minor, Intermediate, and Major Cycles remain positive, but “Overbought.”.
  • Despite Thursday’s post-opening recovery, our volatility indicator based on VIX data slipped again and was last close to signaling end to rally begun after April 18 and new Minor Cycle negative.
  • To confirm negativity on short term, S&P 500 would need to sell below lower edge of 10-Day Price Channel (1637.43 through Friday). Intermediate Cycle in S&P 500 remains positive until 1534.87 through May 24.
  • Daily MAAD was net lower Thursday for second day in row with 7 issues positive and 13 negative. Daily MAAD Ratio remains “Overbought” at 1.66.
  • Call/Put Dollar Value Flow Line (CPFL) rallied to new short to intermediate high Thursday, despite overall negative market tone. CPFL Ratio remains in “Overbought” territory at 2.36.

Market Overview – What We Think:

  • Marginal market recovery Thursday on heels of Wednesday’s sharp losses and creation of what could prove to be Key Reversal Day is suggestion short-term positive underway since April 18 lows (1536.03—S&P 500) may be over.
  • Market strength since April 18 short-term low could prove to be 5th, and final, “wave” of Intermediate Cycle rally begun November 16. Five waves are especially noticeable in our Daily MAAD chart with potential final Wave 5 also showing an upward “spike” in activity.
  • Uptick in volatility and threat to reverse positive trend since April 18 is consistent with near-term topping action, as are lingering “Overbought” conditions on all cycles.
  • But Minor Cycle must turn negative to suggest threat to intermediate trend. So long as Intermediate Cycle remains intact, all near-term pullbacks must be regarded as merely 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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