Dow 30 closes at new high but other indexes don't confirm

MAAD & CPFL Review

 

Market Snapshot for session ending 5-28-13
 

Last

Day Change

%Change

S&P 500 Index

1660.06

+10.46

+.63%

Dow Jones Industrials

15409.39

+106.29

+.69%

NASDAQ Composite

3488.88

+29.74

+.86%

Value Line Arithmetic Index

3765.15

+37.72

+1.01%

Minor Cycle* (Short-term trend lasting days to a few weeks) Neutral / Negative

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:

  • After long holiday weekend, major indexes rallied Tuesday with Dow 30 hitting new closing high. But as other indexes failed to confirm new close in Dow, none also did not rally above intraday highs made May 22 (1687.18—S&P 500) at top of potential Key Reversal Day formation.
  • Market volume rose 19.3% Tuesday compared to last Friday’s levels.
  • Minor, Intermediate, and Major Cycles remain positive, but toward “Overbought.”
  • Our volatility indicator based on VIX data slipped back a bit Tuesday, but is still positioned to signal end to rally begun after April 18 short-term low.
  • To confirm negativity on short term, S&P 500 would need to sell below lower edge of 10-Day Price Channel (1649.79 through Wednesday). Intermediate Cycle in S&P 500 remains positive until 1538.83 through May 31.
  • Daily MAAD was positive by 14 to 6 Tuesday, but remains below new short to intermediate-term high hit May 21. Daily MAAD Ratio was moderately “Overbought” at 1.36.
  • CPFL was negative by 1.4 to 1 Tuesday with Dollar Value Flow Line holding marginally below short to intermediate high reached last Thursday. CPFL Ratio remains “Overbought” territory at 1.87.

Market Overview – What We Think:

  • Despite new closing high in Dow 30 Tuesday, a high that was not confirmed by any of other indexes, or even Dow relative to its intraday high (15542.40) reached last Wednesday in Key Reversal Day territory, odds are good Tuesday’s buying could prove to be short-covering rally.
  • Nothing but new highs above last Wednesday’s intraday high would end suggestion of KRD to resume intermediate-term uptrend begun November 16.
  • Market strength since April 18 short-term low could 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
 

5/27

5/28

5/29

5/30

5/31

5/31

5/31

S&P 500 Index

HOL

SELL 1648.25

SELL 1649.79

SELL 1648.60

SELL 1647.24

SELL 1538.83

SELL 1360.47

Dow Jones Industrials

HOL

SELL 15207.56

SELL 15228.36

SELL 15229.14

SELL 15231.02

SELL 14379.32

SELL 12701.94

NASDAQ Composite

HOL

SELL 3460.59

SELL 3461.24

SELL 3456.14

SELL 3452.47

SELL 3185.53

SELL 2896.99

Value Line Index

HOL

SELL 3724.33

SELL 3726.56

SELL 3722.36

SELL 3719.12

SELL 3435.05

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.

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus