Market closes mixed Tuesday, while short-term trend still in limbo

MAAD & CPFL Review

 

Market Snapshot for session ending 09-24-13
 

Last

Day Change

%Change

S&P 500 Index

1697.42

-4.42

-.26%

Dow Jones Industrials

15334.59

-66.78

-.43%

NASDAQ Composite

3768.25

+2.96

+.08%

Value Line Index

4021.89

+7.97

+.20%

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

Market Overview – What We Know:

  • Major indexes closed mixed Monday with bluer chips slightly more negative than lesser blue.
  • Market volume rose a little over 1%.
  • To turn short-term trend negative, S&P must sell below lower edge of 10-Day Price Channel (1685.08 through Wednesday). Intermediate Cycle, as measured by lower edge of 10-Week Price Channel (1654.26 through September 27), remains tentatively positive.
  • VBVI, our VIX-based short-term volatility indicator dipped to 88.3% Tuesday from 89.1% on 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 was negative again Tuesday with 7 issues higher and 13 lower. Indicator remains above uptrend line stretching back to last November lows and continues to correct recent “Overbought” conditions on short term. Daily MAAD Ratio was last near “Neutral” at 1.10.
  • Daily CPFL was negative by 1.19 to 1 Tuesday and indicator dipped to new short to intermediate-term low and lowest level since March 14 when S&P 500 was quoted near 1560. Indicator remains below long-term uptrend line stretching back to October 2011. CPFL Daily Ratio was last in the upper reaches of “Oversold” territory at .87.

Market Overview – What We Think:

  • More selling Tuesday pushed index pricing toward reversal of Minor Cycle to negative.
  • While Daily MAAD remains somewhat stronger than S&P 500, Daily CPFL sank to new low Tuesday and lowest level since last March to suggest that options crowd has continued to view recent market strength with increasing skepticism and has been buying more puts on Dollar Value basis than calls.
  • But until there is confirmed reversal of new short-term negative with selling below lower edges of 10-Day Price Channels, we cannot preclude possibility selling since last Thursday could prove to be nothing but a lull in Minor Cycle positive within context of still positive intermediate and long-term cycles.
  • We are concerned, however, about price-based “Overbought” readings on near-term and lingering vulnerability by short-term Momentum and our volatility-based indicator, VBVI.
  • Most of what indexes have had going for them is that new highs have been made with possibility remaining that further gains could follow. MAAD may be more accurately reflecting Smart Money tendencies than other breadth-based indicators. Nothing but new short-term negative after upside failure would reverse positive possibilities.

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

9/23

9/24

9/25

9/26

9/27

9/27

9/30

S&P 500 Index

SELL 1673.16

SELL 1679.47

SELL 1685.08

SELL 1693.17

SELL 1697.97

SELL 1654.26

SELL 1448.73

Dow Jones Industrials

SELL 15156.30

SELL 15239.51

SELL 15303.52

SELL 15383.57

SELL 15418.60

SELL 15160.93

SELL 13465.21

NASDAQ Composite

SELL 3690.85

SELL 3700.73

SELL 3710.68

SELL 3726.33

SELL 3738.26

SELL 3561.72

SELL 3044.23

Value Line Index

SELL 3921.72

SELL 3937.46

SELL 3951.51

SELL 3972.26

SELL 3986.37

SELL 3847.32

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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