Short-term stock trend tired; long-term intact

Weekly Review: MAAD & CPFL Analysis

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1692.09

+11.90

+.71%

Dow Jones Industrials

15543.74

+79.44

+.51%

NASDAQ Composite

3587.61

-12.47

-.35%

Value Line Arithmetic Index

3927.50

+44.56

+1.15%

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.

Yes, the short-term trend begun after the June 24 lows (1560.33—S&P 500) is still positive, but it is also “Overbought.” So is the next larger Intermediate Cycle that began after lows were made last November 16 (1074.77—S&P 500) and the Major Cycle that was initiated after the March 6, 2009 lows (666.79-S&P 500). But to a greater extent, all of that is old news.

Market Overview – What We Know:

  • Major indexes rallied to new highs least week. Biggest gainer at 3.47% was NASDAQ Composite.
  • Trading volume compared to previous week was down nearly 2.6%.
  • Minor Cycle in S&P 500 remains positive, S&P must decline below lower edge of 10-Day Price Channel (1649.95 through Monday) to suggest negative reversal. Intermediate Cycle must decline below lower edge of 10-Week Price Channel (1604.19 through July 26) to reverse uptrend in effect since November 16 lows.
  • Our short-term volatility indicator based on VIX data has returned to levels of vulnerability not seen since May short-term highs. Also, indicator that operates inversely from pricing, has failed to make new lows since April 11, so creating a negative longer-term divergence.
  • Daily MAAD rallied to new high and best levels since March 2009 last Thursday and remains above intermediate-term uptrend line stretching back to last November’s price and indicator lows. Daily and Weekly MAAD Ratios were last moderately “Overbought” at 1.49 and 1.31.
  • Daily CPFL moved higher again last week on short-term, but was unable to better resistance high made on June 11. Daily CPFL Ratio was moderately “Overbought” at 1.50 with Weekly Ratio marginally overheated at 1.28.
  • Despite strength to new highs by S&P 500, S&P Emini, and Dow 30 last week, Cumulative Volume (CV) did not confirm new highs in any of three, so maintaining negative short to intermediate-term divergence.

There are some other truths about this market….

Since the March 2009 Major Cycle low, there have been two Intermediate Cycle pullbacks of larger importance (weeks of April 30 to July 2, 2010 and May 6 to October 7, 2011). And two smaller intermediate-term pull backs (weeks of April 6 to June 8, 2012 and September 14 to November 16, 2012). Following the corrective action on all four Intermediate Cycles, the major indexes rallied to new highs for the move and again, most recently, to new all-time highs, except for the NASDAQ Composite that must still better its March 2000 (5132.52) all-time high.

It is also true that by historical standards, this bull market in terms of time elapsed is mature as it moves toward the 4 ½-year mark. But even that reality is incidental to the fact that since March 2009 the S&P 500, from trough to last week’s high has rallied 153.9%, the Dow Dows Industrials 140.9%, the NASDAQ Composite 186.4%, and the Value Line index a whopping 296.3%, or an average of nearly 5% a month, for top honors.

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