For the week ending June 13, 2014, three CI Market Dashboard indicators were bullish, three were bearish and three were neutral.

The market took a breather this week, as the increasingly unstable situation in Iraq spooked investors and drove up oil prices. As a result, the energy sector was the only one of the nine S&P sectors to post a gain for the week.

The Dow Jones Industrial Average (DJIA) lost 0.88%; the S&P 500 Index (SPX) lost 0.68%; the broad market Wilshire 5000 (W5000) dropped 0.62%; and the Nasdaq Composite (COMP) slipped 0.25%. The tech sector was buoyed by strong performance among chip makers, specifically Intel (INTC), which raised its guidance based on stronger-than-expected business PC demand.

I am keeping an eye on the Nasdaq Composite index for a possible cup with handle pattern. Since its March intermediate high, the index has formed a pronounced “cup.” After peaking near 4,350 on an intraday basis on June 9, the Nasdaq Composite has retreated, potentially forming the beginning of the handle. It will be interesting to see how this patterns plays out over the next few weeks. If this is a cup with handle pattern, it points to a strong rally if and when the breakout comes.

In terms of the CI Market Dashboard, the iShares Dow Jones U.S. Index Fund (IYY) lost 0.64% this week to close at $98.02.

Market Dashboard indicators worth discussing this week are:

  • IYY remained above its 100-day simple moving average, so the iShares Dow Jones Index Fund indicator also remains bullish. The difference between IYY’s closing price and the moving average narrowed to 4.04%.
  • The MACD on IYY stayed bullish for the fourth week in a row as the MACD line of IYY (+0.876) remained above the signal line (+0.853), although the differential was slight.
  • The percentage of NYSE stocks trading above their 50-day moving average remained bearish this week. In addition, a confirming bearish signal was generated after the reading fell back below the 75% bearish threshold to 74.95%. In doing so, the indicator reset the “stale date” on which the signal will revert back to neutral without another bearish signal for six months to December 12, 2014.
  • The NYSE Bullish Percentage P&F chart rose to 72.54%, remaining above the 70% bearish threshold for a second straight week. If and when the reading falls back below the 70% level, the “stale date” on which the signal would revert back to neutral without another bearish signal for six month will reset.
  • The NASDAQ Summation Index Moving Average Crossover with MACD Confirmation indicator remains bullish for the fourth straight week. The $NASI (+10.36) closed the week above its five-day exponential moving average (-45.62). The second half of this bullish signal is the MACD line of $NASI (+85.35) being above the signal line (+34.229).
  • The AAII Investor Sentiment Survey Bullish Percentage indicator remained bearish even though bullish sentiment rose to a new high for 2014 at 44.69%. Meanwhile, bearish sentiment fell to its lowest level in 15 weeks to 21.25%. The indicator will remain bearish until the bullish percentage falls below the bullish threshold at 25% and begins to rise, or no subsequent bearish signal is generated prior to June 26, 2014. At which point, the signal will go “stale” and revert back to neutral.

Visit the Market Dashboard page for individual charts for all nine indicators as well as more in-depth commentary regarding each indicator and the overall market action for the previous week.


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Wayne Thorp

Wayne A. Thorp, CFA, is a vice president and the senior financial analyst at the American Association of Individual Investors (AAII). His primary responsibility is to oversee AAII's content strategy. He is also the program manager for AAII's Stock Investor Pro fundamental stock screening and research database program and is on the advisory boards of AAII's Stock Superstars Report and Dividend Investing newsletters. He holds the Chartered Financial Analyst (CFA) designation and is a 1997 honors graduate of DePaul University in Chicago. Wayne's interests include stock screening, technical analysis and charting, social media and tech gadgets. However, in the summer he'd prefer to be hip-deep in northern Michigan's Manistee River fly-fishing for rainbow trout. He is also a rabid University of Michigan and Detroit Red Wings fan.

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