Stock indexes power higher, but Dow lags

Weekly Review: MAAD & CPFL Analysis

There is no denying that all of the major indexes have been heading upward for the past year, and that doesn’t even count the next gains since March 2009. All are also trading at or near all-time highs. The Dow aside, however, we wonder about the sharp ascent of the S&P, NASDAQ Composite, Value Line and Russell 2000 indexes over the past coupled of weeks. Factoring back in the upside failure of the Dow and Daily MAAD and the fact that ALL cycles are “Overbought,” is the short-term trend sustainable?

But if Daily MAAD and the Dow make new highs and the Dow confirms new highs already made by the Dow Jones Transportation Average to give a further thumbs up to the venerable Dow Theory, so much he better for the bull trend. Lacking a negative divergence from MAAD, the broad market might then sustain a near-term correction, as has been the case several times over the past year.

Daily S & P 500 with Cumulative Volume (CV)

Weekly S & P 500 with Cumulative Volume (CV)


Daily MAAD and the Dow do not make new highs. Short-term “Overbought” price-based Trading Oscillators head lower to confirm the need for a near-term pullback and short-term Momentum flips into negative territory to confirm a new Minor Cycle negative. Then the onus flips onto the back of the next larger Intermediate Cycle that is also overheated, and mature, and vulnerable statistically. Underscoring a potentially negative resolution of current upside divergences, Cumulative Volume (CV) in S&P and NASDAQ futures continues to suggest futures traders have not liked this market since the May highs. That time frame is also interesting because it was when our Call/Put Dollar Value Flow Line (CPFL) peaked on June 11.

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