Market mixed Monday with just half day to go in year

MAAD & CPFL Report

 

Market Snapshot for session ending 12-30-13
 

Last

Net Chg

%Change

S&P 500 Index

1841.07

-.33

-.02%

Dow Jones Industrials

16504.29

+25.87

+.16%

NASDAQ Composite

4154.19

-2.39

-.06%

Value Line Index

4364.61

+5.85

+.13%

Russell 2000

1160.59

-.50

-.04%

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:

  • In light holiday trading major indexes were mixed Monday.
  • Market volume rose 9.4% compared to last Friday’s activity.
  • S&P 500 remains positive on Minor Cycle and must close below lower edge of 10-Day Price Channel (1786.62 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 (1750.25 through January 3).
  • Our VIX-based volatility indicator, VBVI, remaining “Overbought” territory, faded slightly to 68.54% Monday from Friday’s reading at 87.20%. Indicator remains “Overbought” on larger Intermediate Cycle (95.15%).
  • Daily MAAD was negative 6 to 14 Monday after rallying to new indicator high last Thursday. Indicator holds above uptrend line stretching back to November 2012. Daily MAAD Ratio was “Overbought” at 1.66.
  • Daily CPFL was positive by 6.00 to 1 Monday and moved to highest point since October 9 short-term low. Indicator continues to rest well 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 last “Overbought” at 2.23.

Market Overview – What We Think:

  • “Overbought” short-term trend looks tired, but given low holiday volume and lack of overall commitment one way or another, analytical bias of short-term trend may remain clouded until market returns to normal next week.
  • In meantime, short-term trend remains positive within context of still favorable Intermediate and Major Cycle trends. Burden of proof continues to rest with bears who have not put in any meaningful appearance for over a year.
  • Underscoring bearish failure is fact that while larger Intermediate and Major Cycle trends have remained “Overbought” for many months, while short-term trend is now re-approaching such levels, Minor Cycle overheated readings over past year have not morphed into anything more than brief, corrective action.
  • That kind of trending will inevitably change. But first, near-term selling must develop to extent pricing and indicators hint that more market weakness via new short-term negative will be developing. That action could then affect larger Intermediate Cycle and possibly Major Cycle advance underway for nearly five years.
  • Nonetheless, for now all cycles remain positive and there is little to do but watch and wait until market creates shift that will indicate selling on strength rather than buying on weakness is most prudent course of action.

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

12/30

12/31

1/1 HOL

1/2

1/3

1/3

1/31

S&P 500 Index

SELL 1781.94

SELL 1786.62

SELL 1793.21

SELL 1801.68

SELL 1810.43

SELL 1750.25

SELL 1551.80

Dow Jones Industrials

SELL 15920.11

SELL 15980.35

SELL 16049.50

SELL 16126.56

SELL 16210.08

SELL 15585.42

SELL 14355.21

NASDAQ Composite

SELL 4021.77

SELL 4040.90

SELL 4062.39

SELL 4084.32

SELL 4102.44

SELL 3879.09

SELL 3288.16

Value Line Index

SELL 4203.17

SELL 4221.02

SELL 4244.16

SELL 4269.79

SELL 4291.05

SELL 4124.47

SELL 3532.00

Russell 2000

SELL 1114.81

SELL 1121.67

SELL 1129.23

SELL 1136.83

SELL 1142.63

SELL 1092.22

SELL 933.67

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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