Major stock indexes reverse roles, as Dow 30 hits new high

Weekly Review: MAAD & CPFL Analysis

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1770.61

+8.97

+..50%

Dow Jones Industrials

15761.78

+146.23

+.93%

NASDAQ Composite

3919.23

-2.81

-.07%

Value Line Index

4158.60

+8.75

+.21%

Russell 2000

1099.97

+4.10

+.37%

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

All of the major indexes except the NASDAQ Composite index finished on the plus side last week. At the same time, in a solo move the Dow Jones Industrial Average rallied to a new all-time closing high and its best level since March 2009. All of this occurred in spite of the fact the broad market absorbed a good-sized hit last Thursday that pushed the NASDAQ Composite, Value Line, and Russell 2000 indexes into negative territory on the Minor Cycle. The came Friday when the Dow popped to that new high with the S&P tagging along in second place. The other three were laggards.

Underscoring the new high in the Dow, our Daily Most Actives Advance/Decline Line (MAAD) squeaked out a new high last Tuesday to better its October 22 new high and then did it again on Friday. Problem is, the new Daily MAAD highs were made at a crawl and were only 13 positive issues above a new high Daily MAAD made back on September 18 when the S&P was nearly 50 points below current levels. Clearly, Daily MAAD has been losing upside Momentum over the past several weeks despite the fact the indicator was a noticeable cheerleader for the market off of the November 2012 lows. Then, Daily MAAD popped to a new high on December 11 while it took the S&P until January 17 to reach equivalent levels. Lately, however, the S&P and Daily MAAD have reversed roles with the former far outperforming the latter. It remains to be seen, however, if MAAD reluctance will prove to be prescient and eventually problematic for the market.

Market Overview – What We Know:

  • Major indexes excepting NASDAQ Composite index closed on plus side last week. Dow 30 rallied to new all-time closing high, but that action was solitary since COMPX, VALUA, and TFY via intraweek selling registered negative on Minor Cycle.
  • Market volume rose 2.2%.
  • Threatening on downside via last Thursday’s selling, S&P 500 struggled back on Friday and was last in positive territory, needing to sink below lower edge of 10-Day Price Channel (1755.93 through Monday) to suggest more negative tone. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel (1661.15 through November 15) is penetrated.
  • VBVI, our short-term VIX-based volatility indicator, was last vulnerable at 95.40% in “Overbought” territory on short-term cycle. Into mid-September Minor Cycle high, indicator was at 92.45%. On Intermediate Cycle VBVI remains positive, but overheated at 99%.
  • Daily MAAD eked out a new high last Friday, but was only marginally above new high made back on October 22. Indicator has noticeably lost upside Momentum over past several weeks to suggest reluctance of Smart Money on buy side. But indicator remains above uptrend line stretching back to November 2012 intermediate-term lows. On week, 11 issues were positive and 9 were negative.
  • Daily CPFL move to new short-term high last week, but remains below remains below uptrend line stretching back to October 2011 lows, and was last 50% below short to intermediate-term high made June 11.

In addition, the just created divergence between the Dow and the S&P that continue to look relatively robust on the upside and COMPX, VALUA, and TFY that do not is the flip side of the equation that persisted for a few weeks following the mid-September/early October short-term correction. Then the 500 and the 30 continued to lag COMPX, VALUA, and TFY that were consistently making new highs. There too the tables have been turned.

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