New stock market highs intraday, but indexes fall short at close

MAAD & CPFL Review

 

Market Snapshot for session ending 09-16-13
 

Last

Day Change

%Change

S&P 500 Index

1697.60

+9.61

+.57%

Dow Jones Industrials

15494.78

+118.72

+.77%

NASDAQ Composite

3717.84

-4.33

-.12%

Value Line Index

3978.51

+14.99

+.38%

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

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

  • Following through on strong gains made by futures Sunday evening, all of major indexes except NASDAQ Composite posted gains Monday. S&P 500 Emini, Value Line index, and Russell 2000 all hit new highs on intraday basis, but none of majors closed at new highs.
  • Market volume rose 10.5%. NYSE a/d data was positive by 2.06 to 1. NYSE up/down volume was positive by 2.29 to 1.
  • Short-term trend remains positive and S&P must sell below lower edge of 10-Day Price Channel (1647.85 through Tuesday) to signal short-term reversal to negative. Intermediate Cycle, as measured by lower edge of 10-Week Price Channel (1653.49 through September 20), remains tentatively positive.
  • Our VIX-based short-term volatility indicator rose to 83% Monday. Most recent VBVI statistical low was13.6% made on August 30. Into August 5 short-term high VBVI was at 98.3%.
  • Daily MAAD eked out new high Monday with 12 issues positive and 7 negative and bettered previous high made September 11. Daily MAAD Ratio was “Overbought” at 2.25.
  • Still bearish, Daily CPFL was negative by 1.68 to 1 Monday and dipped to new short to intermediate-term low. Level was lowest since March 14, 2013. Indicator was last just below long-term uptrend line stretching back to October 2011. Daily CPFL Ratio was still “Oversold” at .86, but was working higher toward “Neutral.”

Market Overview – What We Think:

  • Monday’s strength in cash indexes on heels of Sunday night buying in futures was not surprising, nor was profit taking later in session. But with Daily MAAD having tapped out yet another new high, there is still suggestion market could make further gains.
  • Of concern, however, is extremely overheated Daily MAAD Ratio (2.25), “Overbought” conditions based on index pricing, and fact CPFL hit low short-term low Monday. At same time, our volatility indicator (VBVI) has entered zone of vulnerability.
  • If Minor Cycle top develops without S&P, Dow, and Value Line index closing at new highs, then price action thereafter could become problematic on larger Intermediate Cycle that has just entered its 10th month.
  • If short-term top develops this side of new closing highs, ongoing bullish status of MAAD would become an increasing puzzle unless weakness occurred below MAAD uptrend in effect since last November. Then, even without negative price divergence to hint at impending top, there would be little hope for continuation of intermediate uptrend.
  • But for moment, so long as short-term trend remains intact based on pricing, possibility remains further gains could follow and that MAAD may be more accurately reflecting Smart Money tendencies than other breadth-based indicators.

 

 

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

9/16

9/17

9/18

9/19

9/20

9/20

9/30

S&P 500 Index

SELL 1641.48

SELL 1647.85

SELL 1654.68

SELL 1661.21

SELL 1666.79

SELL 1653.49

SELL 1448.73

Dow Jones Industrials

SELL 14831.98

SELL 14876.16

SELL 14941.21

SELL 15014.66

SELL 15083.99

BUY 15513.08

SELL 13465.21

NASDAQ Composite

SELL 3621.20

SELL 3640.12

SELL 3655.66

SELL 3670.43

SELL 3680.72

SELL 3543.30

SELL 3044.23

Value Line Index

SELL 3836.20

SELL 3853.38

SELL 3873.84

SELL 3891.25

SELL 3905.74

SELL 3839.05

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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