New highs in stock indexes confirmed by some indicators

MAAD & CPFL Review

 

Market Snapshot for session ending 8-1-13
 

Last

Day Change

%Change

S&P 500 Index

1706.87

+21.14

+1.25%

Dow Jones Industrials

15628.02

+128.48

+.83%

NASDAQ Composite

3675.74

+49.37

+1.36%

Value Line Arithmetic Index

3985.21

+68.16

+1.74%

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 to new highs Thursday and best levels since March 2009.
  • Market volume declined 6% compared to Wednesday.
  • NYSE advance/decline issues were positive by 1.30 to 1 with NYSE up/down volume favorable by 3.58 to 1.
  • Short-term trend would become unfavorable if S&P 500 declines below lower edge of 10-Day Price Channel (1682.24 through Friday). 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 rallied to new high Thursday and best level since March 2009 and bettered recent peak made July 18. Sixteen issues were higher with 4 lower. Daily MAAD Ratio was “Neutral” at 1.04.
  • Daily CPFL was negative Thursday by 1.40 to 1. Negativity was fourth day in row and despite market gains. Indicator remains below new short to intermediate-term high made June 11 and uptrend line stretching back to November lows. Daily CPFL Ratio was last moving deeper into “Oversold” territory at .85.
  • Cumulative Volume (CV) made new high in S&P 500 Thursday, but has yet to confirm in S&P 500 Emini futures contract and Dow 30 relative to pricing in short-term advance begun June 24.

Market Overview – What We Think:

  • New highs in major indexes Thursday with confirming action in Daily MAAD, NYSE up/down volume, and Cumulative Volume (CV) in S&P 500 eliminated some of recent uncertainties on short-term trend.
  • But short-term Momentum, unfavorable divergent action in CV in Dow 30 and S&P Emini, and vulnerability of our short-term VIX-based indicator speak for negativity on flip side. And short-term price stats continue to suggest “Overbought” conditions. But price action, as always is final arbiter.
  • So until we see enough negative price movement that could threaten lower edges of 10-Day price Channels, bulls will continue to roam.

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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