Market up, volume feeble, indicator near new high

MAAD & CPFL Review

 

Market Snapshot for session ending 7-8-13
 

Last

Day Change

%Change

S&P 500 Index

1640.46

+8.57

+.53%

Dow Jones Industrials

15224.69

+88.85

+.59%

NASDAQ Composite

3484.83

+5.45

+.16%

Value Line Arithmetic Index

3773.95

+15.01

+.40%

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

Intermediate Cycle* (Medium trend lasting weeks to several months) 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 rallied marginally Monday on improving volume that was more a function of a return to normal after long holiday than a surge in new bullishness.
  • Market volume was up 26% on the day as compared to last Friday.
  • Short-term trend is positive and S&P 500 needs to sell below lower edge of 10-Day Price Channel (1595.10 through Tuesday) to suggest reversal to negative. Intermediate Cycle remains positive until S&P declines below lower edge of 10-Week Price Channel (1602.90 through July 12).
  • Our short-term volatility indicator based on VIX data has moved into a zone of vulnerability, but that condition can persist for a period of time.
  • Daily MAAD was positive by 15 to 5 Monday and remains above uptrend line stretching back to November 16 market lows. Indicator has also performed better than market since May 22 highs and was last positioned not far below recent highs and could make new high with relative ease. Daily MAAD Ratio was moderately “Overbought” at 1.47.
  • Daily CPFL data was negative by 1.66 to 1 Monday and remains below new short to intermediate-term high reached June 11. Indicator also continues to hold below uptrend line stretching back to November lows. Daily CPFL Ratio was last just above “Neutral” at 1.07.
  • Cumulative Volume in S&P 500 and S&P Emini continues to underperform pricing, despite strength over past several sessions.

Market Overview – What We Think:

  • Market gains Monday, low volume, developing negativity in volatility, and what looks like rebounding rally continue to make strength since June 24 (1560.33—S&P 500) suspect.
  • Measurements from that June 24 low suggest current bids could reach 1670.85—S&P 500 and 1661.25—S&P 500 Emini before short-term advance stalls. But even if targets are hit, action would not be good enough to better May 22 highs (1687.18—S&P 500).
  • On a more positive note, however, our Daily Most Actives Advance/Decline Line (MAAD) that has performed much better than market over past several weeks was last positioned not far from recent high made May 21. Given fact most stats are not yet “Overbought,” we cannot rule out more gains and new high in Daily MAAD.
  • But considering fact that our VIX-based volatility indicator was last back toward same levels that preceded May 22 price highs, for market to muster enough power to better those levels might be flying in face of market reality.
  • Market volume is also an issue, considering fact most of strength developed in and around July 4 holiday. Cumulative Volume (CV) in S&P Emini has only retraced about 1/5th of its losses since May 22 and continues to hold near levels not seen since last January when cash S&P was trading bear 1460.
  • Given recent market weakness, odds are good Key Reversal Day made May 22 in all of major indexes could prove to be 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
 

7/8

7/9

7/10

7/11

7/12

7/12

7/31

S&P 500 Index

SELL 1593.29

SELL 1595.10

SELL 1596.73

SELL 1598.57

SELL 1602.69

SELL 1602.90

SELL 1398.13

Dow Jones Industrials

SELL 14808.19

SELL 14817.67

SELL 14822.73

SELL 14831.42

SELL 14865.12

SELL 14890.41

SELL 12986.65

NASDAQ Composite

SELL 3365.63

SELL 3375.06

SELL 3381.85

SELL 3389.87

SELL 3402.69

SELL 3359.20

SELL 2969.08

Value Line Index

SELL 3626.87

SELL 3633.87

SELL 3643.85

SELL 3854.30

SELL 3669.12

SELL 3629.13

SELL 3030.14

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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