Bluer chip stocks flat to down, while lesser blues climb to new highs

MAAD & CPFL Report

 

Market Snapshot for session ending 1-22-14
 

Last

Net Chg

%Change

S&P 500 Index

1844.86

+1.06

+.06%

Dow Jones Industrials

16373.34

-41.09

-.25%

NASDAQ Composite

4243.00

+17.24

+.41%

Value Line Index

4412.57

-.07

00%

Russell 2000

1181.29

+5.57

+.47%

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:

  • Major indexes were mixed Tuesday with marginally positive tone in all except Dow 30 that was down fractionally. NASDAQ Composite and Russell 2000 closed at new highs.
  • To suggest more negative tone on Minor Cycle, S&P 500 must close below lower edge of 10-Day Price Channel (1828.36 through Wednesday). Intermediate Cycle remains positive until S&P seriously challenges lower edge of 10-Week Price Channel (1770.00 through January 24).
  • VBVI, our VIX-based volatility indicator, inched higher Tuesday to 85.60% and remains in lower reaches of “Overbought” territory. Indicator remains “Overbought” on larger Intermediate Cycle (96.82%).
  • Daily MAAD was slightly negative Tuesday with 9 issues higher, 10 lower, and 1 unchanged. Indicator remains below new high made January 15. Daily MAAD Ratio was last marginally “Overbought” at 1.15.
  • Daily CPFL was positive by 1.20 to 1 Tuesday and rallied to best level since early August 2011. Daily CPFL Ratio was moderately “Overbought” at 2.47.

Market Overview – What We Think:

  • Market remains “iffy” on short-term trend. And while new highs Tuesday in NASDAQ Composite and Russell 2000 were encouraging, fact that neither Dow 30 nor S&P 500 has yet to follow suit is a problem to extent quality must validate collective uptrend. Admittedly, S&P could make new high with little effort and only a little bit more buying in Dow 30.
  • Fact that market has been somewhat frenetic for most of new year could prove to be mere indecision in front of further gains, but fact remains that nothing but new highs in all indexes will reassert bull trend.
  • So either “strength” to new highs will occur. Or not. If latter eventuality develops Minor Cycle would be first trend to give definable ground that could then morph into selling on larger trend that has been underway since November 2012.
  • For now Minor Cycle is sort of positive, but unless there is more buying to push all of majors to new highs, we cannot rule out possibility back and forth price action over past few weeks will prove to be longer-term top.

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

1/20

1/21

1/22

1/23

1/24

1/24

1/31

S&P 500 Index

SELL 1827.71

SELL 1826.14

SELL 1828.36

SELL 1830.58

SELL 1831.65

SELL 1770.00

SELL 1551.80

Dow Jones Industrials

SELL 16379.47

SELL 16352.47

SELL 16350.47

SELL 16350.71

SELL 16352.27

SELL 15740.94

SELL 14355.21

NASDAQ Composite

SELL 4128.24

SELL 4127.15

SELL 4139.12

SELL 4151.93

SELL 4160.37

SELL 3951.19

SELL 3288.16

Value Line Index

SELL 4335.16

SELL 4331.98

SELL 4339.42

SELL 4348.31

SELL 4354.42

SELL 4167.82

SELL 3527.53

Russell 2000

SELL 1149.85

SELL 1149.27

SELL 1151.67

SELL 1154.98

SELL 1157.54

SELL 1103.21

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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