Stock market rises Thursday, but May 22 highs hold

MAAD & CPFL Review

 

Market Snapshot for session ending 5-30-13
 

Last

Day Change

%Change

S&P 500 Index

1654.41

+6.05

+.37%

Dow Jones Industrials

15324.53

+21.73

+.14%

NASDAQ Composite

3491.29

+23.78

+.69%

Value Line Arithmetic Index

3758.29

+24.33

+.65%

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:

  • Major indexes rallied marginally Thursday, but remained locked in trading range bounded by last Wednesday’s possible Key Reversal Day intraday high (1687.18—S&P 500) and last Thursday’s intraday low (1635.53—S&P 500).
  • Market volume declined fractionally Thursday.
  • Minor, Intermediate, and Major Cycles remain positive, and “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 trend, S&P 500 must to sell below lower edge of 10-Day Price Channel (1647.24 through Friday). Intermediate Cycle in S&P 500 remains positive until 1538.83 through May 31.
  • Daily MAAD was higher Thursday (16 issues positive, 3 negative, and 1 unchanged) and was able to equal its May 21 short to intermediate-term high and best level since March 2009. An on-balance positive MAAD Friday would put indicator at new high. Daily MAAD Ratio was marginally “Overbought” at 1.26.
  • CPFL rallied to new short to intermediate high Thursday and was positive by 1.29 to 1. CPFL Ratio remains “Overbought” territory at 1.63.

Market Overview – What We Think:

  • New short to intermediate-term high in CPFL Thursday with Daily MAAD having equaled its May 21 intermediate high gives us pause, but only to extent major indexes must rally to new highs above May 22 peaks (1687.18—S&P 500) to re-assert intermediate-term uptrend.
  • Any upside failure would continue to suggest possible Key Reversal Day on May 22 remains valid. In meantime, major indexes continue to flirt with short-term negativity by teasing lower edges of 10-Day Price Channels.
  • 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.
  • Position of our VIX-based volatility indicator 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

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.

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