Key indicator taps new high Tuesday, as market waffles

MAAD & CPFL Review

 

Market Snapshot for session ending 11-5-13
 

Last

Day Change

%Change

S&P 500 Index

1762.97

-4.96

-.28%

Dow Jones Industrials

15618.22

-20.90

-.13%

NASDAQ Composite

3939.86

+3.27

+.08%

Value Line Index

4169.39

-14.02

-.34%

Russell 2000

1103.59

-4.69

-.42%

Minor Cycle* (Short-term trend lasting days to a few weeks) Positive / 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, except NASDAQ Composite that was up slightly, closed Tuesday with a slight downward bias.
  • Market volume rose 7.8%.
  • Short-term trend remains positive in S&P 500 and index must decline below lower edge of 10-Day Price Channel (1751.57 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 (1664.08 through November 8).
  • VBVI, our VIX-based volatility indicator, now “Overbought” on Minor Cycle, hit 96.36% Tuesday after Monday’s 93.87%. At September 19 short-term high VBVI peaked at 92.4%.
  • Daily MAAD was positive by 12 to 9 Tuesday and hit new high and best level since March 2009. Clearance above previous peak made October 22 was by only two positive issues, however. But indicator remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was last “Neutral” at 1.02.
  • Daily CPFL was positive by 2 to 1 Tuesday and hit a new short-term high and best level since October 9. But indicator 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 1.27.

Market Overview – What We Think:

  • New high made by Daily MAAD Tuesday, albeit by fractions, nonetheless eliminated near-term negative divergence that had plagued indicator since it peaked back on October 22.
  • What is now the new issue is whether or not major indexes will follow lead of MAAD and also rally to new highs. With short-term trends still positive in all majors except TFY, new highs cannot be ruled out since Daily MAAD has re-confirmed long-term uptrend.
  • Only thing that could throw a wrench into equation is if Daily MAAD move to new high is not strong enough to suggest enough buying power is still left in short-term rally begun nearly a month ago.
  • Despite strength in CPFL for the past month and since October 9 low, there is still larger statistical overhang in options indicator referenced to June 11 high holding nearly 50% above current levels.

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

11/4

11/5

1/6

11/7

11/8

11/8

11/30

S&P 500 Index

SELL 1742.92

SELL 1748.37

SELL 1751.57

SELL 1753.46

SELL 1754.04

SELL 1664.08

SELL 1500.00

Dow Jones Industrials

SELL 15408.79

SELL 15449.80

SELL 15483.76

SELL 15504.96

SELL 15520.15

SELL 15040.79

SELL 13944.86

NASDAQ Composite

SELL 3899.58

SELL 3910.09

SELL 3915.09

SELL 3916.39

SELL 3915.17

SELL 3671.35

SELL 3145.05

Value Line Index

SELL 4139.47

SELL 4151.05

SELL 4155.07

SELL 4154.80

SELL 4150.14

SELL 3909.50

SELL 3358.97

Russell 2000

BUY 1116.27

BUY 1118.36

BUY 1119.95

BUY 1118.32

BUY 1115.25

SELL 1040.17

SELL 887.74

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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