Stock market chops recent gains; intermediate negative looms

MAAD & CPFL Review

 

Market Snapshot for session ending 6-19-13
 

Last

Day Change

%Change

S&P 500 Index

1628.93

-22.88

-1.39%

Dow Jones Industrials

15112.19

-206.04

-1.35%

NASDAQ Composite

3443.20

-38.98

-1.12%

Value Line Arithmetic Index

3715.12

-50.17

-1.33%

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

  • Slightly positive market flavor developed since last Thursday (1606.07—S&P 500) was largely erased Wednesday when all of major indexes reversed to downside mid-afternoon and closed sharply lower toward day’s lows.
  • Market volume rose more than 13% compared to Tuesday’s levels.
  • But to suggest resumption of short-term negative, S&P 500 must now decline below Lower Edge of 10-Day Price Channel (1618.28 through Thursday). Intermediate Cycle remains positive until 1575.70.
  • Our short-term volatility indicator based on VIX data remains negative.
  • Daily MAAD was negative Wednesday by 3 to 17. Indicator remains below short-term high reached May 21. Daily MAAD Ratio was last just above “Neutral” at 1.11.
  • Daily CPFL was positive by 2.06 to 1 Wednesday and remains below new short to intermediate-term high reached June 11. Daily CPFL Ratio was just above “Neutral” at 1.18.
  • Cumulative Volume in S&P 500 Emini has slightly fractured uptrend line since November 16 to suggest that futures players are anticipating lower prices on Intermediate Cycle.

Market Overview – What We Think:

  • Quick erasure Wednesday of positive gains developed over past several sessions simply underscores likelihood that May 22 intraday and short-term high (1687.18—S&P 500) will prove to be top of Intermediate Cycle advance begun last November 16.
  • Selling below June 6 intraday short-term support low at 1598.23—S&P 500 would almost certainly confirm reversal of Intermediate Cycle to negative.
  • Given Wednesday’s selling, odds are increasing that May 22 high will hold, that new highs will not develop, and that Key Reversal Day made May 22 in all of major indexes will prove to be turning point on intermediate-term trend. Nothing but new highs would erase potential for negative bias of current pricing.
  • In a nutshell, broad market remains 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

BUY1642.95

BUY1641.46

SELL1620.07

SELL1618.28

SELL1620.50

SELL1575.70

SELL1374.74

Dow Jones Industrials

BUY15254.55

BUY15244.97

SELL15048.49

SELL15026.69

SELL15027.45

SELL14671.22

SELL12785.71

NASDAQ Composite

BUY3469.51

BUY3467.54

SELL3420.92

SELL3413.72

SELL3413.85

SELL3278.07

SELL2932.03

Value Line Index

BUY3734.33

BUY3731.08

SELL3682.79

SELL3677.95

SELL3681.07

SELL3520.89

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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