Stock market defines buy/sell points on intermediate trend

Weekly Review: MAAD & CPFL Analysis

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1626.73

-16.65

-1.01%

Dow Jones Industrials

15070.18

-177.94

-1.16%

NASDAQ Composite

3423.56

-45.66

-1.31%

Value Line Arithmetic Index

3705.31

-26.20

-.70%

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

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

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

* Cycle status is based on S&P 500.

For the past three weeks, and since the May 22 short-term highs (1687.18—S&P 500), each upward price move and apparent retracement back toward those highs, has been met with renewed selling. Following the May 23 through May 31 consolidation and subsequent downside break, prices recovered and then failed on June 4 and then June10. Yet again, last Thursday’s rally was followed by weakness on Friday. In a nutshell, what this market has been saying is that there are sellers waiting to exit positions each time there is some price improvement back toward the May 22 highs.

But something else on the charts has also developed. Via downdrafts into the June 6 and June 10 intraday lows (1598.23 and1608.07—S&P 500), a downside boundary has been created which, if penetrated in a new round of selling, would not only fracture the defined intermediate-term uptrend that stretches back to the November 16 lows (1343.35—S&P 500), but it would very likely initiate a new Intermediate Cycle negative. How that cycle evolved could determine the staying power of the long-term trend that has been underway since March 2009 (666.79—S&P 500).

Market Overview – What We Know:

  • Major indexes all ended in negative column last week.
  • Market volume decline nearly 14% as compared to previous five days of trading.
  • Minor Cycle remains negative, but larger Intermediate and Major Cycles are positive, but “Overbought.”
  • Our short-term volatility indicator based on VIX data remains negative.
  • S&P 500 must rally above upper edge of 10-Day Price Channel (1642.95 through Monday) to reverse currently negative short-term trend. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel (1575.70 through June 21).
  • Daily MAAD remains below new short to intermediate-term high reached back on May 21 and daily indicator is “Oversold” at .77. Weekly MAAD backed off last week from new intermediate-term high made week of June 7. Weekly MAAD Ratio remains moderately “Overbought:” at 1.67.
  • Daily CPFL rallied to new short to intermediate-term high June 11 and was last just below that level. Daily CPFL Ratio was last just above “Neutral” (1.11) while Weekly CPFL Ratio was moderately “Overbought” (1.56)

The upside and downside boundaries of this market on the short-term cycle are defined. But there are also nuances. On the upside, nothing but strength back above the May 22 peaks would re-assert the Intermediate Cycle advance begun last November. In the face of short-term “Oversold” conditions for the fourth time since last November, lacking a definitive downside break below the June 6 lows (1598.23—S&P 500), we cannot preclude the possibility market weakness since May 22 could prove to be just another near-term corrective phase within the context of an intermediate-term uptrend. In fact, Daily MAAD and CPFL data has been holding up relatively well over the past three weeks with CPFL rising to a new short to intermediate-term high on June 11. The options-sensitive indicator could make another new high with ease.

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