Market fades again as mature uptrend lines come into view

MAAD & CPFL Review

 

Market Snapshot for session ending 10-07-13
 

Last

Day Change

%Change

S&P 500 Index

1676.12

-14.38

-.85%

Dow Jones Industrials

14936.24

-136.34

-.90%

NASDAQ Composite

3770.37

-37.37

-.98%

Value Line Index

3988.78

-40.31

-1.00%

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:

  • More selling surfaced in major indexes Monday, as Dow 30 sold down to new short-term low. Value Line index was biggest loser on day, down 1%.
  • Market volume declined 2.9%.
  • S&P 500 remains negative on Minor Cycle and must rally above upper edge of 10-Day Price Channel (1701.84 through Tuesday). Intermediate Cycle remains positive so long as S&P holds above lower edge of 10-Week Price Channel (1650.48 through October 11).
  • Our VIX-based short-term volatility indicator, VBVI, continues to correct lower in wake of excesses developed into recent short-term highs. Indicator was at 36.8% Monday, down from Friday’s 54.4%. Into September 19 short-term high VBVI was at 92.4%.
  • Daily MAAD was negative Monday by 7 to 13. Indicator remains above uptrend line stretching back to November 2012 lows, but that margin of safety is diminishing. Best level since March 2009 was made September 19. Daily MAAD Ratio remains near “Neutral” (.96).
  • Daily CPFL was negative by 1.63 to 1 Monday, but indicator remains above new short to intermediate-term low made October 3. That plot was lowest since last February when S&P 500 was quoted near 1490. Indicator is below long-term uptrend line stretching back to October 2011. CPFL Daily Ratio is “Oversold” at .75.

Market Overview – What We Think:

  • Resumption of selling Monday not only weakened all of major indexes further, but downside pressure pushed Dow 30 to new short-term low, VALUA into negative territory on Minor Cycle via 10-Day Price Channel, with Dow, S&P 500, and Daily MAAD coming within range of uptrend line stretching back to last November’s intermediate-term lows.
  • Cumulative Volume (CV) is underscoring negative tone in cash S&P, but interestingly CV in S&P Emini has remained stronger to extent there has been marginally less selling in futures than in cash.
  • But it wouldn’t take much net weakness to create problems for all sectors on larger Intermediate Cycle.
  • In meantime, since uptrend lines continue to hold on Intermediate Cycle while short-term Trading Oscillators and Momentum have dipped into “Oversold” territory, we still cannot prelude possibility weakness since mid-September could prove to be no more than brief correction in larger cycle advance. Nothing, however, but new highs across board will re-assert long-term bull trend.

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

10/7

10/8

10/9

10/10

10/11

10/11

10/31

S&P 500 Index

BUY 1704.24

BUY 1701.84

BUY 1699.11

BUY 1696.76

BUY 1695.01

SELL 1650.48

SELL 1478.59

Dow Jones Industrials

BUY 15412.33

BUY 15362.17

BUY 15313.63

BUY 15264.59

BUY 15218.03

BUY 15317.66

SELL 13737.33

NASDAQ Composite

SELL 3755.73

SELL 3759.38

SELL 3764.71

SELL 3762.70

SELL 3764.89

SELL 3584.77

SELL 3099.00

Value Line Index

SELL 4004.81

BUY 4041.91

BUY 4043.33

BUY 4043.16

BUY 4041.88

SELL 3844.18

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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