Major indexes bounce Tuesday, but short-term trend still in limbo

MAAD & CPFL Report

 

Market Snapshot for session ending 1-7-14
 

Last

Net Chg

%Change

S&P 500 Index

1837.88

+11.11

+.61%

Dow Jones Industrials

16530.94

+105.84

+.64%

NASDAQ Composite

4153.18

+39.50

+.96%

Value Line Index

4359.01

+35.11

+.80%

Russell 2000

1157.63

+10.47

+.91%

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

Market Overview – What We Know:

  • Major indexes moved higher Tuesday to recover some losses incurred during the previous three sessions.
  • Market volume rose slightly by .41% relative to Monday’s levels.
  • S&P 500 remains positive on Minor Cycle and must close below lower edge of 10-Day Price Channel (1828.67 through Wednesday) to suggest more negative near-term trend. Intermediate Cycle remains positive so long as S&P holds above lower edge of 10-Week Price Channel (1759.65 through January 10).
  • VBVI, our VIX-based volatility indicator, moved higher to 82.93% and lower reaches of “Overbought” territory Tuesday. VBVI remains “Overbought” on larger Intermediate Cycle (94.47%).
  • Daily MAAD was higher Tuesday with 13 issues positive, 7 negative, and 1 unchanged. Indicator remains three net positive issues below new high made December 31 and best level since March 2009. Daily MAAD Ratio was moderately “Overbought” at 1.51.
  • Daily CPFL was positive by 4.14 to 1 Tuesday and reached best level since October 9 short-term low. Indicator remains below June 11 short to intermediate-term peak, but margin relative to that high is diminishing. Daily CPFL Ratio was “Overbought” at 2.18.

Market Overview – What We Think:

  • Our suggestion in Monday’s “Snapshot” that market could rebound in face of statistical support at lower edges of 10-Day Price Channels bore fruit Tuesday. But what now remains to be seen is if strength was simple short-covering retracement, or a continuation of Minor Cycle uptrend initiated December 18.
  • If market does not respond on upside by making new highs in sessions just ahead, we could make case for Minor Cycle high and new short-term negative that could then have some effect on larger, but still positive, Intermediate Cycle. Extent to which short-term negative might affect larger trend could then determine whether or not advance since November 2012 is in endgame.
  • On other hand, nothing but new highs would re-assert long-term advance begun in March 2009.
  • Given fact market has taken on “Neutral” tone short term, burden of proof is on both bulls and bears, although considering fact bears have demonstrated little staying power over past year, longer-term onus rests more on their shoulders than with bulls who could create new highs will only marginally more effort.

 

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

1/6

1/7

1/8

1/9

1/10

1/10

1/31

S&P 500 Index

SELL 1816.29

SELL 1822.76

SELL 1828.67

SELL 1830.74

SELL 1832.15

SELL 1759.65

SELL 1551.80

Dow Jones Industrials

SELL 16210.08

SELL 16282.68

SELL 16347.78

SELL 16381.91

SELL 16409.65

SELL 15656.09

SELL 14355.21

NASDAQ Composite

SELL 4102.44

SELL 4115.56

SELL 4129.35

SELL 4135.28

SELL 4137.79

SELL 3910.11

SELL 3288.16

Value Line Index

SELL 4291.05

SELL 4309.50

SELL 4325.96

SELL 4334.87

SELL 4340.24

SELL 4147.41

SELL 3527.53

Russell 2000

SELL 1142.63

SELL 1147.59

SELL 1151.81

SELL 1152.57

SELL 1153.55

SELL 1097.49

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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