Most stock indexes climb to new highs

MAAD & CPFL Report

 

Market Snapshot for session ending 1-15-14
 

Last

Net Chg

%Change

S&P 500 Index

1848.38

+9.50

+.52%

Dow Jones Industrials

16481.94

+108.07

+.66%

NASDAQ Composite

4214.88

+31.86

+.76%

Value Line Index

4401.75

+25.02

+.57%

Russell 2000

1171.35

+7.91

+.68%

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:

  • Buying Wednesday pushed S&P 500, NASDAQ Composite, Value Line, and Russell 2000 indexes to new highs. Dow 30, however, failed to make new high.
  • Market volume rose 3.4%.
  • To suggest more negative tone on Minor Cycle, S&P 500 must close below lower edge of 10-Day Price Channel (1830.84 through Thursday). Intermediate Cycle remains positive until S&P seriously challenges lower edge of 10-Week Price Channel (1766.14 through January 17).
  • VBVI, our VIX-based volatility indicator, remained toward “Overbought” territory at 89.82% Wednesday. Indicator remains “Overbought” on larger Intermediate Cycle (96.22%).
  • Daily MAAD rallied to new high Wednesday with 16 issues positive and 4 negative. Plot was best since March 2009. Indicator remains above uptrend line stretching back to November 2012. Daily MAAD Ratio was last marginally “Overbought” at 1.30.
  • Daily CPFL was positive by 2.21 to 1 Wednesday and rallied to best level since October 9 short-term low. Indicator remains below June 11 short to intermediate-term peak, but margin relative to that high has been shrinking. Daily CPFL Ratio was moderately “Overbought” at 1.51.

Market Overview – What We Think:

  • New highs Wednesday were encouraging for S&P, COMPX, VALUA, and TFY, but where was Dow 30? Bellwether blue chip must add another 94.72 points to equal its December 31 closing high. Could that happen? Of course, considering fact Daily MAAD popped to yet another short-, intermediate-, and long-term high Wednesday. But it is puzzling Dow is lagging.
  • Strength to new high by Daily MAAD simply underscores willingness of Smart Money to remain long equities, despite failure of Momentum on all cycles to confirm strength with “Overbought” conditions persisting on all trends.
  • As we have noted repeatedly for some time, ultimately it will be short-term cycle that provides first clues as to staying power of larger intermediate trend and how that trend will ultimately affect uptrend initiated in March 2009.
  • For now, however, the small hesitation/pull back that began after December 31 short-term highs has been largely erased. That sort of action has been case since November 2012 in that each minor pull back has been followed by new highs.

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

1/13

1/14

1/15

1/16

1/17

1/17

1/31

S&P 500 Index

SELL 1831.45

SELL 1831.26

SELL 1831.22

SELL 1830.84

SELL 1830.79

SELL 1766.14

SELL 1551.80

Dow Jones Industrials

SELL 16419.79

SELL 16429.04

SELL 16431.50

SELL 16423.55

SELL 16414.17

SELL 15700.32

SELL 14355.21

NASDAQ Composite

SELL 4133.80

SELL 4132.88

SELL 4134.21

SELL 4134.81

SELL 4135.39

SELL 3934.14

SELL 3288.16

Value Line Index

SELL 4340.40

SELL 4339.13

SELL 4340.23

SELL 4339.55

SELL 4341.34

SELL 4157.21

SELL 3527.53

Russell 2000

SELL 1153.04

SELL 1152.17

SELL 1151.82

SELL 1151.49

SELL 1151.75

SELL 1099.71

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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