S&P and Dow under water on minor cycle seeking company

MAAD & CPFL Review

 

Market Snapshot for session ending 09-30-13
 

Last

Day Change

%Change

S&P 500 Index

1681.55

-10.20

-.60%

Dow Jones Industrials

15129.67

-128.57

-.84%

NASDAQ Composite

3771.47

-10.11

-.27%

Value Line Index

4011.34

-7.65

-.19%

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

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:

  • Weakness in futures contracts Sunday evening spilled over into Monday’s session when all of major indexes ultimately finished in red. Prices ultimately improved from Sunday’s opening levels, however.
  • Market volume increased 18% on general weakness.
  • Short-term trend has taken on negative tone in S&P 500 via weakness below lower edge of 10-Day Price Channel. To create favorable tone in S&P, bellwether must rally above upper edge of Price Channel (1713.63 through Tuesday). Intermediate Cycle remains positive so long as pricing holds above lower edge of 10-Week Price Channel (1652.28 through October 4).
  • Our VIX-based short-term volatility indicator, VBVI, worked lower Monday to 78.5% from Friday’s level at 87%. Into September 19 short-term high VBVI was at 92.4%.
  • Daily MAAD was negative by 5 to 15 Monday. Indicator’s most recent high, and best level since March 2009, was made September 19. MAAD remains above uptrend line stretching back to last November’s lows. Daily MAAD Ratio was last slightly “Oversold” at .90.
  • Daily CPFL dipped to another short-term low Monday via negative readings of 1.86 to 1. Plot was lowest since last February when S&P 500 was quoted near 1500. Indicator is now below long-term uptrend line stretching back to October 2011. CPFL Daily Ratio was last in the upper reaches of “Oversold” territory at .67.

Market Overview – What We Think:

  • More net selling Monday after weak opening in futures contracts Sunday night simply exacerbated already weak short-term trend. Negativity in S&P and Dow 30 is not promising since COMPX and VALUA are also now compromised, near –term.
  • But Daily MAAD has yet to give up ghost with weakness below uptrend line stretching back to last November’s lows. Admittedly, all indexes have also yet to fracture coincident uptrend lines.
  • With market now locked between recent highs (1729.86—intraday high S&P 500 on September 19) and what will ultimately prove to be short-term low, point then will become market’s ability to make new highs, or not, and how key indicators like MAAD will respond.
  • Since no negative divergence is yet evident in Daily MAAD, market tone is tipped slightly in favor of bulls. But any weakness in MAAD below months-old uptrend line would dampen bullish cause, negative divergences or not.
  • Ongoing CPFL weakness suggests options crowd still views market with skepticism and has been buying more puts on Dollar Value basis than calls since indicator peaked June 11. That negativity created first negative divergence in CPFL vs. S&P since last November. Negative tone of options buying could continue to weigh on market.

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

9/30

10/1

10/2

10/3

10/4

10/4

10/31

S&P 500 Index

BUY 1713.30

BUY 1713.63

BUY 1712.45

BUY 1711.43

BUY 1708.65

SELL 1652.28

SELL 1478.59

Dow Jones Industrials

BUY 15556.03

BUY 15546.22

BUY 15520.87

BUY 15497.37

BUY 15460.42

SELL 15102.50

SELL 13737.33

NASDAQ Composite

SELL 3742.16

SELL 3746.14

SELL 3749.80

SELL 3755.79

SELL 3758.85

SELL 3573.66

SELL 3099.00

Value Line Index

SELL 3991.63

SELL 3995.99

SELL 4001.49

SELL 4007.23

SELL 4009.64

SELL 3847.67

SELL 3285.29

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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