Stock indexes generally higher Tuesday on more volume

MAAD & CPFL Review

 

Market Snapshot for session ending 09-03-13
 

Last

Day Change

%Change

S&P 500 Index

1639.77

+6.80

+.42%

Dow Jones Industrials

14833.96

+23.65

+.16%

NASDAQ Composite

3612.61

+22.74

+.63%

Value Line Arithmetic Index

3800.54

-44.07

-1.15%

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

Intermediate Cycle* (Medium trend lasting weeks to several months) 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:

  • Major indexes, with exception of Value Line index that sank 1.15% to new short-term low, rallied marginally Tuesday after three day holiday. NYSE a/d stats were positive by 1.18 to 1 with NYSE up/down volume higher by 1.65 to 1.
  • Market volume rose nearly 19% compared to last Friday’s activity
  • Short-term trend remains negative, but S&P 500 was closing in on upper edge of 10-Day Price Channel (1657.40 through Wednesday). Intermediate Cycle, as measured by lower edge of 10-Week Price Channel (1638.33 through September 6) is in jeopardy.
  • Our VIX-based short-term volatility indicator turned slightly higher Tuesday (18.7%) from Friday’s level (13.6%) to suggest slightly more positive flavor to market. Indicator remains at level that could be coincident with short-term low. At June 24 Minor Cycle low VBVI was at 22%.
  • Daily MAAD, positive by 15 to 5 Tuesday, was just 9 positive issues from equaling its August 14 high. Daily MAAD Ratio was marginally “Overbought” at 1.23.
  • Daily CPFL was positive by 1.78 to 1 Tuesday and ticked upward from long-term uptrend line stretching back to October 2011 after making new short-term low last Thursday. Daily CPFL Ratio remains “Oversold” at .58.

Market Overview – What We Think:

  • VAY weakness Tuesday notwithstanding, we continue to find recent strength in MAAD “informative” relative to weakness in NYSE a/d and up/down volume stats, both of which failed to confirm new highs made by indexes in early August. Time will tell whether or not MAAD optimism is misplaced, or not.
  • If not, and if market is on verge of short-term improvement, issue would then become ability of indexes to make new highs. Failure would underscore potential for developing Intermediate Cycle high.
  • “Oversold,” short-term, price-based Oscillators highlight potential for near-term rally, but, as we’ve mentioned before, near-term “Oversold” conditions in early stages of Intermediate Cycle reversal to negative can prove to be deceptive and could simply be reflecting new negative tone of market.
  • In other words, if short-term “Oversold” readings do not “bite” to extent they spur more follow through buying, renewed selling could simply extend near-term losses while putting larger Intermediate Cycle in jeopardy.
  • In background there is lingering potential for 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
 

9/2

9/3

9/4

9/5

9/6

9/6

9/30

S&P 500 Index

BUY 1665.17

BUY 1661.92

BUY 1657.40

BUY 1654.82

BUY 1651.69

SELL 1638.33

SELL 1448.73

Dow Jones Industrials

BUY 15085.99

BUY 15044.12

BUY 14999.46

BUY 14974.28

BUY 14944.36

BUY 15451.27

SELL 13465.21

NASDAQ Composite

BUY 3647.50

BUY 3644.06

BUY 3637.62

BUY 3637.80

BUY 3635.26

SELL 3485.26

SELL 3044.23

Value Line Index

BUY 3898.45

BUY 3895.81

BUY 3883.73

BUY 3877.96

BUY 3871.23

SELL 3773.80

SELL 3180.51

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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