S&P 500 returns to resistance and downside break point, fades

MAAD & CPFL Review

 

Market Snapshot for session ending 6-4-13
 

Last

Day Change

%Change

S&P 500 Index

1631.38

-9.04

-.55%

Dow Jones Industrials

15177.54

-76.49

-.50%

NASDAQ Composite

3445.25

-20.10

-.58%

Value Line Arithmetic Index

3706.81

-25.95

-.70%

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

Intermediate Cycle* (Medium trend lasting weeks to several months) Positive / Neutral

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • More red ink spilled into major indexes Tuesday. NASDAQ Composite and Value Line index confirmed short-term reversals to negative and are now in synch with S&P 500 and Dow 30.
  • Market volume declined 13.7%.
  • Short-term trend is now negative in all major indexes. Intermediate and Major Cycles remain positive, but “Overbought.”
  • Our volatility indicator based on VIX data has turned negative for first time since April 18 lows to confirm at least short-term trend has reversed to negative.
  • To confirm reversal to positive on Minor Cycle, S&P 500 must to rally above upper edge of 10-Day Price Channel (1665.35 through Wednesday). Intermediate Cycle in S&P 500 remains positive until 1548.17 through June 7.
  • Daily MAAD was negative by 8 to 12 Tuesday and indicator remains below May 21 short to intermediate-term high and best level since March 2009. Daily MAAD Ratio was last marginally negative at .90.
  • Daily CPFL was positive by 1.13 to 1 Tuesday and remains below new short to intermediate-term high made last Thursday. CPFL Ratio was “Neutral” at 1.02.

Market Overview – What We Think:

  • Monday’s intraday strength, and subsequent breakdown Tuesday, underscores developing negative bias on Minor Cycle. 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 from this point on suggest possible Key Reversal Day on May 22 is valid.
  • Reversal of our VIX-based volatility indicator to negative in conjunction with price negativity amplifies shift to negative on Minor Cycle.

 

 

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

BUY1664.69

BUY1666.97

BUY1665.35

BUY1664.60

BUY1663.31

SELL1548.17

SELL1374.74

Dow Jones Industrials

BUY15370.69

BUY15405.18

BUY15410.20

BUY15411.66

BUY15410.20

SELL14456.37

SELL12785.71

NASDAQ Composite

SELL3461.24

SELL3456.58

SELL3455.26

SELL3457.86

SELL3456.96

SELL3206.25

SELL2932.03

Value Line Index

SELL3719.12

SELL3721.19

SELL3719.99

SELL3721.69

SELL3720.57

SELL3451.90

SELL2949.32

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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