Stock market rallies; May 22 resistance holds

MAAD & CPFL Review

 

Market Snapshot for session ending 6-18-13
 

Last

Day Change

%Change

S&P 500 Index

1651.81

+12.77

+.78%

Dow Jones Industrials

15318.23

+138.38

+.91%

NASDAQ Composite

3482.18

+30.05

+.87%

Value Line Arithmetic Index

3765.29

+35.14

+.94%

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

  • More buying in major indexes Tuesday gave short-term trend a more positive flavor with all rallying above upper edges of 10-Day Price Channels and first resistance.
  • Trading Volume declined 1.4%.
  • With S&P 500 now back above upper edge of its 10-Day Price Channel, to suggest short-term negative, bellwether index must decline below edge of 10-Day Price Channel (1620.07 through Wednesday). Intermediate Cycle remains positive until 1575.70.
  • Our short-term volatility indicator based on VIX data remains negative.
  • Daily MAAD was positive Tuesday by 18 to 2 and remains below short-term high reached May 21. Daily MAAD Ratio was last just above “Neutral” at 1.06.
  • Daily CPFL was positive by 2.54 to 1 Tuesday and remains below new short to intermediate-term high reached June 11. Daily CPFL Ratio was just above “Neutral” at 1.12.

Market Overview – What We Think:

  • Follow-on buying Tuesday and ongoing reluctance of S&P 500 to sink back below June 6 short-term low at 1598.23 has moved Minor Cycle trend back into positive territory.
  • What remains to be seen now is whether or not there will be enough additional strength to cause major indexes to rally back above May 22 intraday, short-, and intermediate-term highs (1618.17—S&P 500) to suggest resumption of Intermediate Cycle begun last November and Major Cycle begun in March 2009.
  • If May 22 highs hold and prove to be top of rally since November 16, “Neutral-plus” readings from here on could prove to be enough of a statistical setup to preface another move to downside on Minor Cycle.
  • In a nutshell, broad market is at one of those key junctures between near-term resistance and support that will determine larger cycle staying power. Upside and downside boundaries of this market are defined and it will only be a matter of time before either bulls or bears take prize.

 

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

6/17

6/18

6/19

6/20

6/21

6/21

6/30

S&P 500 Index

BUY 1642.95

BUY 1641.46

SELL 1620.07

SELL 1618.28

SELL 1620.50

SELL 1575.70

SELL 1374.74

Dow Jones Industrials

BUY 15254.55

BUY 15244.97

SELL 15048.49

SELL 15026.69

SELL 15027.45

SELL 14671.22

SELL 12785.71

NASDAQ Composite

BUY 3469.51

BUY 3467.54

SELL 3420.92

SELL 3413.72

SELL 3413.85

SELL 3278.07

SELL 2932.03

Value Line Index

BUY 3734.33

BUY 3731.08

SELL 3682.79

SELL 3677.95

SELL 3681.07

SELL 3520.89

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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