Dow makes new closing high, while other indexes stall

MAAD & CPFL Review

 

Market Snapshot for session ending 11-6-13
 

Last

Day Change

%Change

S&P 500 Index

1770.49

+7.52

+.43%

Dow Jones Industrials

15746.88

+128.66

+.82%

NASDAQ Composite

3931.94

-7.91

-.20%

Value Line Index

4166.96

-2.04

-.05%

Russell 2000

1098.63

-4.96

-.45%

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:

  • Pricing in major indexes was mixed Wednesday with bluer chips on plus side and lesser blues showing small losses. Dow Jones Industrial Average rallied to new closing high.
  • Market volume increased by 1.4%.
  • S&P 500 needs to sell below lower edge of 10-Day Price Channel (1753.46 through Thursday) 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, continues to dig deeper into “Overbought” territory. Indicator was at 96.81% Wednesday compared to Tuesday’s level at 95.36%. At September 19 short-term high VBVI peaked at 92.4%.
  • Daily MAAD was flat Wednesday with 10 issues positive and 10 negative. Indicator made fractionally higher new high Tuesday and hit best level since March 2009. Clearance above previous peak made October 22 was by only two positive issues, however. Indicator remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was last marginally “Overbought” at 1.18.
  • Daily CPFL was positive by 1.49 to 1 Wednesday and hit 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 1.24.

Market Overview – What We Think:

  • New high made by Daily MAAD Tuesday, albeit by fractions, and new solo closing high by Dow 30 Wednesday eliminated near-term negative divergences in both that had persisted for past few weeks. But despite those new highs, other indexes were nonplussed Wednesday
  • What is now new issue is whether or not all major indexes will follow lead of MAAD and Dow 30 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 and Dow have re-confirmed long-term uptrend.
  • Only thing that could throw a wrench into equation is if Daily MAAD move to new high Tuesday is not strong enough to suggest enough buying power is still left in short-term rally begun nearly a month ago. Or if prices simply falter on upside.
  • 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

11/6

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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