Indexes to new highs, but volume underpinnings lag

MAAD & CPFL Review

 

Market Snapshot for session ending 7-15-13
 

Last

Day Change

%Change

S&P 500 Index

1682.50

+2.31

+.14%

Dow Jones Industrials

15484.26

+19.96

+.13%

NASDAQ Composite

3607.49

+7.41

+.21%

Value Line Arithmetic Index

3902.32

+19.38

+.50%

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

Intermediate Cycle* (Medium trend lasting weeks to several months) Positive

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • New closing highs were created Monday by all major indexes.
  • But market volume declined 8.6% relative to last Friday’s levels.
  • Short-term trend is positive in S&P 500. To suggest reversal to negative bellwether must sell below lower edge of 10-Day Price Channel ((1617.47 through Tuesday). Intermediate Cycle remains positive until S&P declines below lower edge of 10-Week Price Channel (1606.93 through July 19).
  • Our VIX-based short-term volatility indicator remains in higher risk zone that has often reflected near-term vulnerability. Condition can persist, however.
  • Daily MAAD rallied to best level since Last November 16 Monday and since March 2009. Fifteen issues were higher and 5 were lower. Daily MAAD Ratio was moderately “Overbought” at 1.67.
  • Daily CPFL Ratio was positive by 1.85 to 1 Monday, but indicator continues to hold below new short to intermediate-term high reached June 11 and uptrend line stretching back to November lows. Daily CPFL Ratio was last moderately “Overbought” at 1.49.
  • Despite movement to new highs Monday, Cumulative Volume (CV) in S&P 500, S&P 500 Emini futures contract, and Dow 30 failed to make new highs with pricing.

Market Overview – What We Think:

  • Strength to new highs by all of major indexes has re-asserted Intermediate and Major Cycle uptrends in effect since last November and March 2009, respectively.
  • Confirming move to new highs by Daily Most Actives Advance/Decline Line (MAAD) after indicator did not break uptrend since last November underscores fact Smart Money was not selling as much from May 22 highs to June 24 lows as S&P pricing would seem to have indicated.
  • But short-term trend is “Overbought” and our short-term VIX-based volatility indicator continues to flirt with negative territory just as indicator pre-dated market top back on May 22.
  • Divergent action in Cumulative Volume (CV) in S&P 500, S&P Emini, and Dow 30 to extent prices made new highs, but CV did not is indication rally has been fueled by weaker hands.
  • It remains to be seen if new highs are reflecting misplaced enthusiasm toward Intermediate Cycle end game, or are a resumption of long-term advance on both Intermediate and Major Cycles after yet another short-term correction.

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

7/15

7/16

7/17

7/18

7/19

7/19

7/31

S&P 500 Index

SELL 1609.81

SELL 1617.47

SELL 1624.51

SELL 1632.03

SELL 1641.08

SELL 1606.93

SELL 1398.13

Dow Jones Industrials

SELL 14924.66

SELL 14992.63

SELL 15053.82

SELL 15111.41

SELL 15179.81

SELL 14924.58

SELL 12986.65

NASDAQ Composite

SELL 3420.07

SELL 3436.45

SELL 3452.51

SELL 3474.58

SELL 3497.63

SELL 3372.92

SELL 2969.08

Value Line Index

SELL 3690.06

SELL 3710.80

SELL 3732.47

SELL 3753.18

SELL 3779.80

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.

Next page: Indicator review

Page 1 of 2 >>
Comments
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome