Stock market jury tilting negative, but verdict still uncertain

Weekly Review: MAAD & CPFL Analysis

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1691.92

-17.75

-1.04%

Dow Jones Industrials

15425.51

-232.85

-1.49%

NASDAQ Composite

3660.11

-29.48

-.80%

Value Line Arithmetic Index

3944.23

-39.83

-1.00%

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

For the better part of the past seven weeks, and since the June 24 short-term lows (1560.33—S&P 500), the broad stock market, as measured by the major indexes, has been in an uptrend. During that period the S&P 500 gained 9.5% from the intraday low on June 24 until new highs were made on August 2 (1709.67). Similarly, the Dow 30 was up 7.6% from June 24 through August 2. The NASDAQ composite, the biggest gainer, was ahead 12.1% from June 24 through August 5. And the Value Line Index rallied 11.6% from June 24 through August 1.

But what has been happening over the past several days is that while bids in the S&P, Compx, and VAY have backed off slightly, more concerted selling in the Dow 30 has not only propelled prices in the bluest 30 below the lower edge of its 10-Day Price Channel, but the Minor Cycle is now negative in the Dow. Is that new negative premature, or is it signaling that Minor Cycle negativity isn’t far away in the other major indexes? In fact, it could take only one session of concerted selling to prove the point. So what we are looking at is a market on the cusp, yet again. And in the background lingers that very mature Intermediate Cycle that has been advancing since the lows of last November 16 (1343.35—S&P 500).

Market Overview – What We Know:

  • Marginal weakness developed in major indexes last week with biggest loss in Dow Jones Industrials (-1.48%), the latter of which also signaled new negative on Minor Cycle. S&P 500, NASDAQ Composite, and Value Line index remain positive on Minor Cycle. All major indexes remain positive, but “Overbought,” on Intermediate and Major Cycles.
  • Market volume deteriorated 10% on week.
  • To turn short-term trend negative, S&P 500 must sell below lower edge of 10-Day Price Channel (1690.11 through Monday). Intermediate Cycle must decline below lower edge of 10-Week Price Channel (1604.48 through August 16) to reverse uptrend in effect since November 16 lows.
  • Our short-term volatility indicator (VBVI), although it has backed away from extreme negativity, nonetheless remains in zone of vulnerability not seen since May short-term highs. VBVI on Intermediate Cycle remains positive.
  • Daily MAAD rallied to new high August 5 and was last holding just below that level. No negative divergences are evident in indicator that has remained in uptrend since last November 16. Daily MAAD Ratio was last at 1.11 with Weekly Ratio at 1.35.
  • Daily CPFL was negative by 2.95 to 1 last week, remains below resistance high made June 11, and was last only slightly above support low made June 24. Daily CPFL Ratio was last “Oversold” at .60 with Weekly Ratio toward “Neutral” at 1.06.
  • Cumulative Volume (CV) remains weak relative to pricing in S&P 500 and Dow 30, and especially in S&P 500 Emini.

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