Market off first two days of New Year, but weakness is a flutter

Weekly Review: MAAD & CPFL Report

 

Market Snapshot:
 

Last

Week Chg

Week %Chg

S&P 500 Index

1831.37

-10.03

-.54%

Dow Jones Industrials

16469.99

-8.42

-.05%

NASDAQ Composite

4131.91

-24.68

-.59%

Value Line Index

4349.49

-9.27

-.21%

Russell 2000

1156.09

-5.00

-.43%

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

The stock market was two-faced last week. After rallying to new highs on the last day of 2013 and the best levels since March 2009, all of the major indexes then moved lower the first two days of 2014. The market giveth and then it taketh away…. And while trading perked higher by nearly 26% during a truncated holiday week, activity was still below “normal” levels.

Long-term upside “Measured Move” targets as calculated from March 2009 bear market lows

 

Recent High

Target vs. Close

Diff / 1-3-14

S&P 500

1849.44

1778

+3.96%

Dow 30

16588.25

16810

-2.02%

NASDAQ Comp.

4177.73

4025

+2.66%

Value Line

4394.67

4410

-1.30%

Russell 2000

1167.96

1160

-.33%

                                                                                                                                Average: +.59%

So at the outset of a new trading year, all of the majors continue to look bullish with qualifiers, the first caveat being that the smallest Minor Cycle trend that has been underway since the December 18 short-term lows (1767.99—S&P 500) looks tentative. Not only did index pricing rally to new highs on so-so volume, but strength has quickly pushed short-term Momentum and our Trading Oscillators back to “Overbought” levels. In a word, as the New Year began, players began selling. Question is, will that initial weakness have any momentum?

Market Overview – What We Know:

  • Major indexes rallied to new highs last week on diminished holiday volume. All then succumbed to selling pressures during the first two days of new year of trading.
  • Market activity rose nearly 26% last week, but increase was only small improvement compared to previous holiday week. Relative to “normal” trading, activity remained low.
  • S&P 500 remains positive on all Cycles including Minor, Intermediate, and Major. To turn short-term trend negative, bellwether must sink below lower edge of 10-Day price Channel (1816.29 through Monday) to indicate more negative short-term tone. Intermediate Cycle remains positive until lower edge of 10-Week Price Channel is penetrated (1759.65 through January 10).
  • Our daily VIX-based volatility indicator, VBVI, was moderately “Overbought” at 77.65% last Friday and remained toward “Overbought” levels on larger Intermediate Cycle (88.65%).
  • Daily MAAD rallied to new high and best level since March 2009 on last day of 2013, then backed off slightly last Thursday and Friday. Indicator remains in uptrend since November 2012. Last week 9 issues were positive and 11 were negative. Weekly MAAD Ratio was moderately “Overbought” at 1.43.
  • Daily CPFL hit new short-term high last Thursday and best level since October 9 low. That peak is coincident with ascending uptrend line that stretches back to October 2011. Recent strength continues to look like “return action” rally in larger, negative trend. On week, CPFL Ratio was moderately “Overbought” at 1.50.

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