More red ink as oversold stock indexes hit new short-term lows

MAAD & CPFL Review

 

Market Snapshot for session ending 6-24-13
 

Last

Day Change

%Change

S&P 500 Index

1573.09

-19.34

-1.21%

Dow Jones Industrials

14659.56

-139.84

-.94%

NASDAQ Composite

3320.75

-36.48

-1.09%

Value Line Arithmetic Index

3574.13

-49.76

-1.37%

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

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

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 pushed all of major indexes lower to new short-term lows Monday.
  • But market volume diminished by nearly 33% compared to last Friday to suggest downside selling pressures may be abating somewhat.
  • To suggest reversal of short-term negative to positive, S&P 500 must rally above upper edge of 10-Day Price Channel (1643.47 through Tuesday). Intermediate Cycle remains positive until 1588.94 through June 28.
  • Our short-term volatility indicator based on VIX data remains negative, but indicator has moved to level that has often coincided with short-term lows in past.
  • Daily MAAD was negative by 3 to 17 Monday and was closing in on uptrend line stretching back to November 16 market lows. Last notable high in indicator was made May 21. Daily MAAD Ratio was last “Oversold” at .63.
  • Daily CPFL was negative by 1.25 to 1 Monday and remains below new short to intermediate-term high reached June 11. Indicator has also broken below uptrend line stretching back to November lows. Daily CPFL Ratio was “Oversold” at .70.
  • Cumulative Volume in S&P 500 Emini took another downside hit Monday with CV declining to levels not seen since end of last December when S&P 500 was trading near 1400.

Market Overview – What We Think:

  • Intermediate Cycle uptrend begun last November 16 is probably over. Selling below June 6 lows (1598.23—S&P) rang death knell on intermediate uptrend.
  • But given short-term “Oversold” conditions and status of our volatility indicator that is now toward buying zone, we would not be surprised to see market begin looking for Minor Cycle bottom from which to begin near-term rebound within context of what looks like new Intermediate Cycle negative.
  • But we do not think May 22 Intraday, Minor, and Intermediate Cycle highs (1687.18—S&P 500) will be surpassed anytime soon via any rebounding action.
  • Given recent market weakness, odds are increasingly good Key Reversal Day made May 22 in all of major indexes will prove to be accurate market reversal point on at least Intermediate Cycle. Depending on how intermediate trend plays out, staying power of Major Cycle advance begun in March 2009 could then become an issue.

 

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

6/24

6/25

6/26

6/27

6/28

6/28

6/30

S&P 500 Index

BUY 1640.82

BUY 1643.47

BUY 1645.67

BUY 1642.39

BUY 1634.45

SELL 1588.94

SELL 1374.74

Dow Jones Industrials

BUY 15228.61

BUY 15249.85

BUY 15267.18

BUY 15242.34

BUY 15171.42

SELL 14782.79

SELL 12785.71

NASDAQ Composite

BUY 3460.02

BUY 3465.11

BUY 3469.58

BUY 3460.15

BUY 3444.44

SELL 3309.93

SELL 2932.03

Value Line Index

BUY 3732.93

BUY 3740.12

BUY 3746.01

BUY 3741.93

BUY 3723.40

SELL 3555.14

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.

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus