Some stock indexes hit new highs, while others lag

MAAD & CPFL Review

 

Market Snapshot for session ending 7-9-13
 

Last

Day Change

%Change

S&P 500 Index

1652.32

+11.86

+.72%

Dow Jones Industrials

15300.34

+75.64

+.50%

NASDAQ Composite

3504.2628

+19.43

+.56%

Value Line Arithmetic Index

3807.89

+33.94

+.90%

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:

  • As major indexes rallied again Tuesday, NASDAQ Composite and Value Line index achieved new closing highs and best levels since March 2009. S&P 500, S&P Emini, and Dow Jones 30 have yet to make new highs. Cumulative Volume also remains weak in S&P, S&P Emini, Dow 30, and NASDAQ Composite, despite new closing high in latter.
  • Daily Market volume declined 4.6% Tuesday.
  • Short-term trend is positive and S&P 500 needs to sell below lower edge of 10-Day Price Channel (1596.73 through Wednesday) 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 sometimes persist for a period of time.
  • Daily MAAD rallied to a new short to intermediate-term high and its best level since March 2009 Tuesday. Fourteen issues were positive with 6 negative. Daily MAAD Ratio has moved back to “Overbought” territory (1.86), however.
  • Daily CPFL data was slightly positive by 1.07 to 1 Tuesday, but 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 1.13.

Market Overview – What We Think:

  • In one of those rare instances where what seemed “evident” was flouted Tuesday when NASDAQ Composite, Value Line index, and Daily Most Actives Advance/Decline Line (MAAD) rallied to their best levels since March 2009 while S&P 500 and Dow 30 continue to lag.
  • At this juncture, with short-term trend still positive within context of challenged but also still positive Intermediate Cycle, we must wait to see how current dilemma plays out.
  • In face of our short-term VIX-based volatility indicator now flirting with negative territory to same extent indicator pre-dated market top back on May 22, there is some vulnerability rapidly developing in this market and it remains to be seen whether or not new highs in COMPX, VAY, and Daily MAAD are reflecting misplaced enthusiasm—or not.
  • There is also fact short-term advance is being driven by subpar volume while near-term oscillators have moved back into “Overbought” territory.
  • Issue will probably be decided on downside to extent index pricing challenges near-term supports and lower edges of 10-Day Price Channels at downside “failsafe” points for Minor Cycle uptrend.
  • Measurements from June 24 short-term low suggest current bids could reach 1670.85—S&P 500 and 1661.25—S&P 500 Emini before Minor Cycle advance stalls.

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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