S&P, Dow to new highs Thursday, as momentum fades in others

MAAD & CPFL Review

 

Market Snapshot for session ending 11-14-13
 

Last

Net Chg

%Change

S&P 500 Index

1790.62

+8.62

+.48%

Dow Jones Industrials

15876.22

+54.59

+.35%

NASDAQ Composite

3972.74

+7.16

+.18%

Value Line Index

4211.17

+8.50

+.20%

Russell 2000

1111.44

-.74

-.07%

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:

  • S&P 500, Dow 30, NASDAQ Composite and Value Line index closed at new highs again Thursday, but rate of ascent in COMPX and VALUA diminished. At same time, Russell 2000 again failed to make high with other indexes.
  • Market volume increased by 4.7%.
  • S&P 500 must sell below lower edge of 10-Day Price Channel (1754.70 through Friday) to suggest new Minor Cycle negative. Intermediate Cycle remains positive so long as S&P holds above lower edge of 10-Week Price Channel (1661.15 through November 15).
  • VBVI, our VIX-based volatility indicator, moved to another “Overbought” short-term high (97.51%) Thursday and to highest level since October 9 short-term low.
  • Daily MAAD was positive Thursday with 12 issues higher and 12 lower. Rate of ascent in indicator slowed somewhat relative to S&P and Dow. Nonetheless, indicator made new high and reached best level since March 2009. While Daily MAAD “strength” over past several weeks has been anemic, it remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was last into the lower reaches of “Overbought” territory at 1.48%.
  • Daily CPFL was positive Thursday by 1.75 to 1 and rallied to best level since October 9 short-term low. 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 1.20%.

Market Overview – What We Think:

  • New highs again Thursday by four of five major indexes we follow was bullish on surface, but diminishing rate of ascent in COMPX. VALUA, and Daily MAAD and fact TFY did not make highs with other indexes, is indicative of possibility short-term advance begun October 9 could be tiring.
  • Move by Daily MAAD Ratio toward “Overbought” levels is also possible early sign of impending near-term top when ”Overbought” price-based Trading Oscillators are also taken into account. Put another way, since Daily MAAD, CPFL, and Momentum were not “Oversold” prior to rally, they could move to fully “Overbought” levels more quickly.
  • This move to new highs by 80% of indexes we follow is bullish to extent prices rallied, but we do know this short-term uptrend already has some signs of vulnerability prior to making of new highs over past couple of days. Nevertheless, burden of proof still rests with bears.


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

11/11

11/12

11/13

11/14

11/15

11/15

11/30

S&P 500 Index

SELL 1755.93

SELL 1756.38

SELL 1758.23

SELL 1756.34

SELL 1754.70

SELL 1661.15

SELL 1500.00

Dow Jones Industrials

SELL 15539.54

SELL 15542.77

SELL 15563.05

SELL 15570.84

SELL 15574.23

SELL 14975.85

SELL 13944.86

NASDAQ Composite

BUY 3946.23

BUY 3946.72

BUY 3948.81

BUY 3946.88

BUY 3941.37

SELL 3672.28

SELL 3145.05

Value Line Index

BUY 4183.50

BUY 4183.67

BU 4184.86

BUY 4183.76

BUY 4178.92

SELL 3911.47

SELL 3358.97

Russell 2000

BUY 1113.80

BUY 1112.00

BUY 1111.16

BUY 1109.27

BUY 1107.20

SELL 1040.69

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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