Market gains, sinks Monday, as short-term hangs in limbo

MAAD & CPFL Review

 

Market Snapshot for session ending 8-26-13
 

Last

Day Change

%Change

S&P 500 Index

1656.78

-6.72

-.40%

Dow Jones Industrials

14946.46

-64.04

-.43%

NASDAQ Composite

3657.57

-.22

-.01%

Value Line Arithmetic Index

3893.18

-4.44

-.11%

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

Intermediate Cycle* (Medium trend lasting weeks to several months) Positive / Neutral

Major Cycle* (Long-term trend lasting several months to years) Positive

* Cycle status is based on S&P 500.

Market Overview – What We Know:

  • Early session gains were eclipsed over the remainder of session Monday after major indexes peaked just before noon and headed lower. Biggest loser was Dow 30 with best performer still NASDAQ Composite. NYSE advance/decline data was negative by 1.36 to 1 with NYSE up/down volume negative by 1.88 to 1.
  • Market volume declined 6.1%
  • S&P 500 must rally above upper edge of 10-Day Price Channel (1676.45 through Tuesday) to turn Minor Cycle positive. Intermediate Cycle remains positive until S&P sells below lower edge of 10-Week Price Channel (1627.03 through August 30).
  • Our VIX-based short-term volatility indicator continues to correct short-term excesses accrued since June 24 Minor Cycle lows when indicator was last in buying zone. Indicator was last at 42%. At June 24 short-term low and Minor Cycle low, indicator was at 22%.
  • Daily MAAD was negative Monday by 7 to 13. Indicator remains just above intermediate uptrend line stretching back to November lows and could equal recent high made August 14 with only more net 15 positive issues. Daily MAAD Ratio was last at .88.
  • Daily CPFL was negative by 5.2 to 1 Monday and remains just above new short-term low made last Wednesday. Most recent high was made June 24. Indicator remains below uptrend line stretching back to November lows. Daily CPFL Ratio was “Oversold” at .62.

Market Overview – What We Think:

  • So long as contradictions between COMPX, VAY, MAAD and S&P 500 and Dow 30 persist, this market will remain a puzzle.
  • In our Weekly Summary that was published late Sunday night we suggested that MAAD could be a better gauge of market strength or weakness than traditional NYSE a-d line. That’s so long as MAAD remains above uptrend line stretching back to November lows and continues to threaten making new highs.
  • In meantime, near-term trend remains in limbo and we cannot rule out possibility market could be tracing out yet another short-term low, given strength in MAAD and fact COMPX could make new high with relative ease, Monday’s fractional loss in COMPX notwithstanding.
  • What remains to be seen is if recent weakness in Dow 30 and SPX is heavy duty enough to bring down all of market in sessions just ahead. With price-based indicators “Oversold,” an upside bounce remains as a possibility. How that might relate to new highs remains the question. If bounce develops and new highs are not made, that creates another issue with extant, and mature, Intermediate Cycle.
  • In background there is lingering potential for developing problems on larger cycles in that fall period has historically been backdrop for some of worst declines in stock market history. Think October 1929, October 1987, and October 2007.

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

8/26

8/27

8/28

8/29

8/30

8/30

8/31

S&P 500 Index

BUY 1681.87

BUY 1676.45

BUY 1671.54

BUY 1667.79

BUY 1665.75

SELL 1627.03

SELL 1422.19

Dow Jones Industrials

BUY 15340.58

BUY 15278.43

BUY 15215.94

BUY 15156.92

BUY 15114.85

SELL 15062.62

SELL 13195.39

NASDAQ Composite

BUY 3653.04

BUY 3646.18

BUY 3641.40

BUY 3638.86

BUY 3640.89

SELL 3455.72

SELL 3007.61

Value Line Index

BUY 3928.38

BUY 3916.77

BUY 3906.77

BUY 3900.98

BUY 3897.76

SELL 3740.46

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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