S&P 500 at 'do or die' point on vulnerable intermediate trend

MAAD & CPFL Review

 

Market Snapshot for session ending 6-12-13
 

Last

Day Change

%Change

S&P 500 Index

1612.52

-13.61

-.84%

Dow Jones Industrials

14995.23

-126.78

-.84%

NASDAQ Composite

3400.43

-36.51

-1.06%

Value Line Arithmetic Index

3669.51

-29.70

-.80%

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 selling characterized price action in major indexes Wednesday. All closed toward session lows.
  • Market volume was little changed compared to Tuesday’s levels.
  • Short-term Trading Oscillators remain “Oversold” while Intermediate and Major Cycles remain “Overbought,” but positive.
  • Our short-term volatility indicator based on VIX data is negative.
  • To confirm reversal to positive on Minor Cycle, S&P 500 must rally above upper edge of 10-Day Price Channel (1643.86 through Thursday). Intermediate Cycle in S&P 500 remains positive until 1561.97 through June 14.
  • Daily MAAD was negative Wednesday with 3 issues higher, 16 lower, and one unchanged. Daily MAAD Ratio was last in upper reaches of “Oversold” territory at .74.
  • Daily CPFL was negative by 3.25 to 1 Wednesday with Daily CPFL “Neutral” at .97.

Market Overview – What We Think:

  • With more weakness in major indexes Wednesday, S&P 500 was last at point at which bellwether must either rally from “Oversold” short-term conditions or more weakness will almost certainly signal an end to Intermediate Cycle uptrend begun last November 16.
  • Selling below June 6 S&P intraday low at 1598.23 would suggest more selling would follow while weakness below the lower edge of S&P’s 10-Week Price Channel (1561.97) would likely clinch the deal while initiating a new Intermediate Cycle negative.
  • There is still a small hope that selling since May 22 intraday high at 1687.18—S&P 500 will be surpassed and that weakness since then will prove to be no more than a near-term corrective phase, but we doubt it.
  • So long as May 22 intraday S&P 500 high (1687.18), and potential Key Reversal Day, remains intact, nothing but new highs would eliminate KRD to re-assert Intermediate Cycle begun last November and Major Cycle begun in March 2009.
  • Fact that our VIX-based volatility indicator did not make new lows as prices made new highs is suggestive of fact rally into May 22 highs was suspect and in possible end game. Reversal of indicator to negative in conjunction with price negativity confirms unfavorable shift in market psychology on short to intermediate-term.

 

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

6/10

6/11

6/12

6/13

6/14

6/14

6/30

S&P 500 Index

BUY 1658.67

BUY 1655.63

BUY 1649.94

BUY 1643.86

BUY 1642.91

SELL 1561.97

SELL 1374.74

Dow Jones Industrials

BUY 15381.96

BUY 15364.86

BUY 15324.53

BUY 15265.77

BUY 15255.22

SELL 14564.10

SELL 12785.71

NASDAQ Composite

BUY 3489.75

BUY 3487.62

BUY 3479.31

BUY 3468.19

BUY 3467.70

SELL 3240.52

SELL 2932.03

Value Line Index

BUY 3761.80

BUY 3757.90

BUY 3747.71

BUY 3735.98

BUY 3734.35

SELL 3483.50

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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