Dow climbs but remains short of new highs

MAAD & CPFL Review


Market Snapshot for session ending 10-22-13


Day Change


S&P 500 Index




Dow Jones Industrials




NASDAQ Composite




Value Line Index




Russell 2000




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

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:

  • More buying spurred major indexes higher Tuesday. Dow 30 gained .49%, but bellwether has yet to make new high and remains 1.5% below intraday high (15709.58) and 1.3% below closing high (15676.94) made September 18.
  • Market volume rose 10.2%.
  • At new high, S&P 500 must decline below lower edge of 10-Day Channel (1681.67 through Wednesday) to reverse Minor Cycle to negative. Intermediate Cycle remains positive so long as S&P holds above lower edge of 10-Week Price Channel (1658.13 through October 25).
  • VBVI, our VIX-based short-term volatility indicator, was higher Tuesday (87.7%) and continues to approach “Overbought” levels made September 19 (92.4%).
  • Daily MAAD was slightly higher by 11 to 8 Tuesday and made a new nigh. Indicator remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was “Overbought” at 1.77.
  • Daily CPFL rallied again Tuesday and reached best level since August 29, but remains well below June 11 short to intermediate-term high, uptrend line stretching back to October 2011, and major resistance peak made February 2011. CPFL Daily Ratio was last marginally “Overbought” at 1.55.

Market Overview – What We Think:

  • In face of Minor Cycle “Overbought” stats on Minor Cycle, as measured by price-based Trading Oscillators, we would not be surprised to see short-term positive trend begin to falter at any time.
  • Despite Tuesday’s gains, ongoing failure of Dow 30 to make new highs relative to other indexes suggests structural weakness in market that will not be glossed over easily, considering importance of Dow to broad market.
  • And while Daily MAAD eked out another new high last Tuesday, that peak was again created with less enthusiasm than has been apparent in index pricing to suggest Smart Money is becoming less enthusiastic about market.
  • At same time, and despite net gains in CPFL over past several sessions, options players have been less bullish about market price strength since June 11 when CPFL topped. If market ultimately fails on upside, CPFL is poised to sink to another set of new lows and its worst levels since last February when S&P 500 was quoted toward 1500.
  • Simply put, all of major indexes including Dow 30 must rally to new highs or staying power of Intermediate and Major Cycles will be in doubt. Nothing but new highs will fully re-assert bull market begun in March 2009.

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








S&P 500 Index

SELL 1672.68

SELL 1676.88

SELL 1681.67

SELL 1688.57

SELL 1698.60

SELL 1658.13

SELL 1478.59

Dow Jones Industrials

SELL 14944.13

SELL 14981.99

SELL 15020.63

SELL 15067.58

SELL 15126.27

SELL 15060.15

SELL 13737.33

NASDAQ Composite

SELL 3735.68

SELL 3743.95

SELL 3756.38

SELL 3769.68

SELL 3792.76

SELL 3627.83

SELL 3099.00

Value Line Index

SELL 3974.48

SELL 3983.81

SELL 3993.92

SELL 4009.66

SELL 4032.25

SELL 3871.30

SELL 3285.29

Russell 2000

SELL 1061.01

SELL 1063.66

SELL 1067.56

SELL 1071.98

SELL 1079.12

SELL 1028.78

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.

Next page: Indicator review

Page 1 of 2 >>
comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome