S&P 500 erases Tuesday’s gains, threatens near-term trend

MAAD & CPFL Review

 

Market Snapshot for session ending 5-29-13
 

Last

Day Change

%Change

S&P 500 Index

1648.36

-11.70

-.70%

Dow Jones Industrials

15302.80

-106.58

-.69%

NASDAQ Composite

3467.51

-21.37

-.61%

Value Line Arithmetic Index

3733.96

-31.18

-.83%

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:

  • On Wednesday, major indexes gave back most of the gains made Tuesday. All were negative and all continue to flirt with trend reversal to negative on Minor Cycle.
  • Market volume rose 2.2% yesterday.
  • Minor, Intermediate, and Major Cycles remain positive, but toward “Overbought.”
  • Our volatility indicator based on VIX data remains positioned to signal end of uptrend 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 (1648.60 through Thursday). Intermediate Cycle in S&P 500 remains positive until 1538.83 through May 31.
  • Daily MAAD was negative by 9 to 10 Wednesday and remains below new short to intermediate-term high hit May 21. Daily MAAD Ratio was marginally “Overbought” at 1.25.
  • CPFL was positive by 1.6 to 1 Wednesday Tuesday with Dollar Value Flow Line holding marginally below short to intermediate high reached last Thursday. CPFL Ratio remains “Overbought” territory at 1.72.

Market Overview – What We Think:

  • Major indexes continue to flirt with short-term negativity by continuing to tease lower edges of 10-Day Price Channels. Wednesday’s reversal to negative after what looked like short-covering rally Tuesday underscores that point.
  • In wake of possible Key Reversal Day last Wednesday, a Minor Cycle reversal to negative in this environment would not be surprising.
  • Nothing but new highs above last Wednesday’s intraday high (1687.18—S&P 500) would end validity of KRD. New high would then 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 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

SELL1648.25

SELL1649.79

SELL1648.60

SELL1647.24

SELL1538.83

SELL1360.47

Dow Jones Industrials

HOL

SELL15207.56

SELL15228.36

SELL15229.14

SELL15231.02

SELL14379.32

SELL12701.94

NASDAQ Composite

HOL

SELL3460.59

SELL3461.24

SELL3456.14

SELL3452.47

SELL3185.53

SELL2896.99

Value Line Index

HOL

SELL3724.33

SELL3726.56

SELL3722.36

SELL3719.12

SELL3435.05

SELL2895.29

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
Check out Futures Magazine - Polls on LockerDome on LockerDome