More new highs in indexes confirmed by key indicator

MAAD & CPFL Report

 

Market Snapshot for session ending 12-23-13
 

Last

Net Chg

%Change

S&P 500 Index

1827.99

+9.67

+.53%

Dow Jones Industrials

16294.61

+73.47

+.45%

NASDAQ Composite

4148.90

+44.16

+1.08%

Value Line Index

4332.55

+34.90

+.81%

Russell 2000

1157.22

+10.75

+.94%

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:

  • Major indexes rallied to another series of new highs Monday.
  • In anticipation of Christmas holiday, market volume began shrinking and was down nearly 50% Monday.
  • S&P 500 must decline below lower edge of10-Day Price Channel (1781.43 through Tuesday) to suggest more negative near-term tone. Intermediate Cycle remains positive so long as S&P holds above lower edge of 10-Week Price Channel (1734.97 through December 27).
  • Our VIX-based volatility indicator, VBVI, moved into lower levels of “Overbought” territory Monday with reading at 80.41%, up from Friday’s 71.74%. Indicator remains “Overbought” on larger Intermediate Cycle (94.30%).
  • Daily MAAD rallied to new high Monday to better its previous peak made November 29 with 16 issues positive, 3 negative, and 1 unchanged. Indicator remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was last marginally “Overbought” at 1.12.
  • Daily CPFL moved to new short-term high and best level since October 9 Monday with net buying favoring Calls on Dollar Value basis by 3.28 to 1. But indicator continues to hold below June 11 short to intermediate-term peak, rising uptrend line stretching back to October 2011, and major resistance high made February 25, 2011. Daily CPFL Ratio was “Neutral” at 1.00.

Market Overview – What We Think:

  • New highs in major indexes Monday simply re-asserted Intermediate and Major Cycle uptrends, while confirmation of move to new high by Daily MAAD underscored positivity of move.
  • Decline in market volume in face of strength detracted somewhat from gains.
  • Nonetheless, short-term trend remains positive as do Intermediate and Major Cycles.
  • On more negative front, with Minor Cycle now re-approaching “Overbought” territory, so putting it back in step with Intermediate and Major Cycle overheated characteristics, prudence once again is watch word.
  • With yet another near-term pullback being followed by movement to new highs in major indexes, there is little to do but watch and wait until market shifts from buying on weakness to selling on strength.

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

12/23

12/24

12/25

12/26

12/27

12/27

12/31

S&P 500 Index

SELL 1782.85

SELL 1781.43

SELL 1778.55

SELL 1781.94

SELL 1786.62

SELL 1734.97

SELL 1525.71

Dow Jones Industrials

SELL 15809.96

SELL 15811.50

SELL 15808.46

SELL 15861.94

SELL 15920.11

SELL 15454.46

SELL 14176.10

NASDAQ Composite

SELL 4018.11

SELL 4016.25

SELL 4008.76

SELL 4013.69

SELL 4021.77

SELL 3846.28

SELL 3205.62

Value Line Index

SELL 4188.63

SELL 4187.41

SELL 4185.35

SELL 4193.78

SELL 4203.17

SELL 4091.97

SELL 3444.08

Russell 2000

SELL 1110.37

SELL 1110.19

SELL 1110.04

SELL 1112.23

SELL 1114.81

SELL 1083.63

SELL 909.73

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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