Nasdaq at high, but weak internals hold back other indexes

MAAD & CPFL Review

 

Market Snapshot for session ending 7-31-13
 

Last

Day Change

%Change

S&P 500 Index

1685.73

-.23

-.01%

Dow Jones Industrials

15499.54

-21.04

-.14%

NASDAQ Composite

3626.37

+9.90

+.27%

Value Line Arithmetic Index

3917.05

+8.85

+.23%

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

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 were mixed Wednesday with S&P 500 and Dow 30 lower. NASDAQ Composite was higher and trading at new closing high. Value Line index was also positive, but still quoted below its July 23 intraday and long-term high (3951.37).
  • Market volume rose 18.1% compared to Tuesday’s levels.
  • NYSE advance/decline issues were positive by 1.07 to 1, but NYSE up/down volume was negative by 1.13 to 1, underscoring slightly negative tone in S&P 500 and Dow 30.
  • Short-term trend would become unfavorable if S&P 500 declines below lower edge of 10-Day Price Channel (1683.14 through Thursday). Intermediate Cycle remains positive until S&P sells below lower edge of 10-Week Price Channel (1597.77 through August 2).
  • VIX-based short-term volatility indicator remains in zone of higher risk.
  • Daily MAAD moved lower Wednesday with 7 issues positive and 13 negative. Indicator nonetheless remains below peak made July 18. Daily MAAD Ratio was “Neutral” at .95.
  • Daily CPFL was negative Wednesday by 3.18 to 1. Indicator remains below new short to intermediate-term high reached June 11 and uptrend line stretching back to November lows. Daily CPFL Ratio was “Neutral” at .95.
  • Cumulative Volume (CV) in S&P 500, S&P 500 Emini futures contract, and Dow 30 has remained weak relative to pricing since short-term advance began on June 24.

Market Overview – What We Think:

  • While we’re not quite ready to throw in towel on short-term advance begun back on June 24, given new highs in NASDAQ Composite and “Neutral” readings in Daily MAAD and CPFL Ratios, slightly negative bias in NYSE up/down volume Wednesday and fades in Daily MAAD and CPFL, took a bit of bloom of rose.
  • Downside break below 10-Day Price Channels would likely ring death knell on short-term rally. Until then, short-term positive remains a coin flipper.
  • Also, ongoing failure of S&P, Dow 30, and VAY to make new highs with NASDAQ could tip scales negatively in favor of short-term correction. Lingering Minor Cycle “Overbought” levels based on pricing, vulnerability of our VIX-based volatility indicator, and fact short-term Momentum has confirmed none of strength since July 11 could be evidence of more bearish market inclinations.
  • And negative divergent action in Cumulative Volume (CV) in S&P 500, S&P Emini, and Dow 30 could be a hint short-term rally is somehow different from all previous Minor Cycle moves since intermediate lows were made last November 16. Weaker hands appear to have driven prices higher since June 24, as compared to other rally phases over past several months.

 

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

7/29

7/30

7/31

8/1

8/2

8/2

8/31

S&P 500 Index

SELL 1677.77

SELL 1681.55

SELL 1682.89

SELL 1683.14

SELL 1682.24

SELL 1597.77

SELL 1422.19

Dow Jones Industrials

SELL 15444.33

SELL 15470.90

SELL 15483.15

SELL 15483.56

SELL 15471.95

SELL 14849.26

SELL 13195.39

NASDAQ Composite

SELL 3583.48

SELL 3585.28

SELL 3584.77

SELL 3584.00

SELL 3583.11

SELL 3365.13

SELL 3007.61

Value Line Index

SELL 3888.59

SELL 3900.85

SELL 3904.79

SELL 3906.55

SELL 3905.69

SELL 3627.41

SELL 3107.83

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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