Monday’s stock market gains look like return action rally

MAAD & CPFL Review

 

Market Snapshot for session ending 6-3-13

 

Last

Day Change

%Change

S&P 500 Index

1640.42

+9.68

+.59%

Dow Jones Industrials

15254.03

+138.45

+.92%

NASDAQ Composite

3465.36

+9.45

+.27%

Value Line Arithmetic Index

3732.76

+13.04

+.35%

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

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 heels of last Friday’s losses, major indexes posted small gains Monday.
  • Market volume faded 1.2% compared to last Friday’s levels.
  • Short-term trend in S&P 500 and Dow 30 is negative with new negativity also threatening near-term trend in NASDAQ Composite and Value Line index. Intermediate and Major Cycles remain positive, but “Overbought.”
  • Our volatility indicator based on VIX data remains positioned to reverse to negative to signal end of uptrend begun after April 18 short-term low.
  • To confirm reversal to positive on Minor Cycle, S&P 500 must to rally above upper edge of 10-Day Price Channel (1666.97 through Tuesday). Intermediate Cycle in S&P 500 remains positive until 1548.17 through June 7.
  • Daily MAAD was slightly higher Monday with 12 issues positive and 8 negative. Indicator remains below its May 21 short to intermediate-term high and best level since March 2009. Daily MAAD Ratio was last fractionally negative at .99.
  • Daily CPFL was positive by 1.16 to 1 Monday and remains below new short to intermediate-term high made last Thursday. CPFL Ratio was last plotted in marginally “Overbought” territory at 1.11.

Market Overview – What We Think:

  • Monday’s intraday strength could prove to be “return action” following downside break last Friday below defined support at an upsloping trendline near 1640. Resistance is visible toward 1643 in cash S&P and toward 1642 in S&P Emini.
  • Odds remain good that at least a Minor Cycle high (1687.18—S&P 500) was put in place May 22 at a point that could also prove to be top of Intermediate Cycle rally begun last November 16,
  • Any upside failures will continue to suggest possible Key Reversal Day on May 22 is valid.
  • Proximity of our VIX-based volatility indicator to negative territory is another suggestion rally underway since mid-April has been terminated.
  • Also, 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.

Index Price Channel Stops (10-Bar MAs of Highs/Lows ) Weekly Monthly
 

6/3

6/4

6/5

6/6

6/7

6/7

6/30

S&P 500 Index

BUY 1664.69

BUY 1666.97

BUY 1665.35

BUY 1664.60

BUY 1663.31

SELL 1548.17

SELL 1374.74

Dow Jones Industrials

BUY 15370.69

BUY 15405.18

BUY 15410.20

BUY 15411.66

BUY 15410.20

SELL 14456.37

SELL 12785.71

NASDAQ Composite

SELL 3461.24

SELL 3456.58

SELL 3455.26

SELL 3457.86

SELL 3456.96

SELL 3206.25

SELL 2932.03

Value Line Index

SELL 3719.12

SELL 3721.19

SELL 3719.99

SELL 3721.69

SELL 3720.57

SELL 3451.90

SELL 2949.32

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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