Market up a bit Thursday; short-term trend looking mature

MAAD & CPFL Review

 

Market Snapshot for session ending 7-18-13
 

Last

Day Change

%Change

S&P 500 Index

1680.91

+4.65

+.28%

Dow Jones Industrials

15470.52

+18.67

+.12%

NASDAQ Composite

3609.99

+11.49

+.32%

Value Line Arithmetic Index

3897.04

+12.46

+.32%

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:

  • Major indexes rallied marginally Wednesday and recovered most of small losses incurred Tuesday. NASDAQ Composite reached new high on closing basis.
  • Short-term trend is positive in S&P 500. To suggest reversal to negative index must sell below lower edge of 10-Day Price Channel (1632.03 through Thursday). Intermediate Cycle remains positive until S&P declines below lower edge of 10-Week Price Channel (1606.93 through July 19).
  • VIX-based short-term volatility indicator remains in higher risk zone that has been generally coincident, historically, with Minor Cycle tops.
  • Daily MAAD was unchanged again Wednesday with 10 issues higher and 10 lower. Indicator rallied to best level since Last November 16 Monday and since March 2009. Daily MAAD Ratio was moderately “Overbought” at 1.63.
  • Daily CPFL was positive by 2.06 to 1 Wednesday, 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 moving into “Overbought” territory at 1.71.
  • Cumulative Volume (CV) in S&P 500, S&P 500 Emini futures contract, and Dow 30 has remained weak relative to pricing during recent short-term advance.

Market Overview – What We Think:

  • Short-term “Overbought” levels based on pricing, status of our VIX-based volatility indicator, and overheated short-term status of Daily MAAD and CPFL, could be suggestive of development of near-term top develop relatively soon.
  • Negative divergent action in Cumulative Volume (CV) in S&P 500, S&P Emini, and Dow 30 suggests for first time since November 16, 2012 Intermediate Cycle lows that current short-term rally is somehow different than all previous short-term moves that were preceded by Minor Cycle corrective action. Weaker hands appear to have driven current rally upward as compared to other rally phases since last November.
  • As a consequence, it remains to be seen if new highs are reflecting misplaced enthusiasm into Intermediate Cycle end game, or are simply a resumption of long-term advance on both Intermediate and Major Cycles.

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.

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