Stock market sees more selling on minor cycle, but CPFL rallies

MAAD & CPFL Review

 

Market Snapshot for session ending 6-11-13
 

Last

Day Change

%Change

S&P 500 Index

1626.13

-16.68

-1.02%

Dow Jones Industrials

15122.02

-116.56

-.76%

NASDAQ Composite

3436.94

-36.81

-1.06%

Value Line Arithmetic Index

3699.31

-43.14

-1.15%

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

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:

  • Major indexes succumbed to renewed selling pressures on Minor Cycle Tuesday and all finished in negative column, but CPFL rallied to new short to intermediate-term high and best level since late 2011.
  • Market volume increased 6.6%.
  • Short-term Trading Oscillators remain “Oversold.” 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 (1649.94 through Wednesday). Intermediate Cycle in S&P 500 remains positive until 1561.97 through June 14.
  • Daily MAAD was negative Tuesday with 2 issues higher and 18 lower. Daily MAAD Ratio was last in upper reached of “Oversold” territory at .84.
  • Daily CPFL was positive by 2.02 to 1 Tuesday and Daily CPFL Ratio was last toward “Neutral” at 1.07

Market Overview – What We Think:

  • With renewed weakness on Minor Cycle Tuesday, it remains to be seen if weakness is merely a test of June 6 S&P intraday low (1598.23) or a full-fledged resumption of Minor Cycle selling.
  • Fact that Daily CPFL rallied to new short to intermediate-term high Tuesday, despite general market weakness, gives us some cause for concern for bearish case. Given positive CPDL disparity, nothing but new price lows below June 6 S&P low will suffice to suggest “healthy” Minor Cycle negative.
  • But since May 22 intraday S&P 500 high (1687.18) and potential Key Reversal Day remains intact, nothing but new highs would eliminate KRD while re-asserting Intermediate Cycle begun last November and Major Cycle begun in March 2009.
  • If renewed selling does develop and June 6 intraday S&P low is fractured, intermediate Cycle in effect since November 16 would almost certainly be over.
  • Reversal of our VIX-based volatility 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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