Market hovers on edge of short-term bearish sentiment

MAAD & CPFL Report

 

Market Snapshot for session ending 1-9-14
 

Last

Net Chg

%Change

S&P 500 Index

1838.13

+.64

+.03%

Dow Jones Industrials

16444.76

-17.98

-.11%

NASDAQ Composite

4156.19

-9.41

-.23%

Value Line Index

4359.81

-2.41

-.05%

Russell 2000

1158.35

+.89

+.08%

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

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:

  • Market closed mixed again Thursday with slight downward bias. Three of five major indexes we follow were slightly negative. NASDAQ Composite was biggest loser on day, down .23%.
  • Market volume declined by nearly 6%.
  • S&P 500 remains positive on Minor Cycle and must close below lower edge of 10-Day Price Channel (1832.15 through Friday) 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 87.59% Thursday and into “Overbought” territory. VBVI remains “Overbought” on larger Intermediate Cycle (94.47%).
  • Daily MAAD was negative Thursday with 9 issues lower, 11 higher, and 1 unchanged. Indicator remains 2 net positive issues from equaling its December 31 bull market high, a level that was also equaled Wednesday before Thursday’s slight MAAD weakness. Daily MAAD Ratio was marginally “Overbought” at 1.13.
  • Daily CPFL was positive by 1.28 to 1 Thursday and eked out slightly higher high and 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 shrinking. Daily CPFL Ratio was “Overbought” at 1.97.

Market Overview – What We Think:

  • With market continuing to fuddle around on edge of short-term negative, plot thickens. Time is nonetheless running out on short-term uptrend initiated December 18. Index pricing must either get a move on by rallying to new highs, or there is likelihood short-term will turn negative and pressure could be brought to bear on larger trend in effect since November 2012.
  • If market does turn negative on Minor Cycle, extent to which that new negative might then affect larger intermediate trend could then determine whether or not advance since March 2009 might be in jeopardy.
  • Put another way, nothing but new highs will re-assert uptrend in bull market that is on verge of entering its fifth year.
  • Burden of proof is on both bulls and bears, considering relatively “Neutral” current market stance. But since 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 modestly 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

SELL1816.29

SELL1822.76

SELL1828.67

SELL1830.74

SELL1832.15

SELL1759.65

SELL1551.80

Dow Jones Industrials

SELL16210.08

SELL16282.68

SELL16347.78

SELL16381.91

SELL16409.65

SELL15656.09

SELL14355.21

NASDAQ Composite

SELL4102.44

SELL4115.56

SELL4129.35

SELL4135.28

SELL4137.79

SELL3910.11

SELL3288.16

Value Line Index

SELL4291.05

SELL4309.50

SELL4325.96

SELL4334.87

SELL4340.24

SELL4147.41

SELL3527.53

Russell 2000

SELL1142.63

SELL1147.59

SELL1151.81

SELL1152.57

SELL1153.55

SELL1097.49

SELL933.67

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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