* 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.

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.

Next page: Indicator review

We are also updating the daily chart of both the Call/Put Dollar Value Flow Line (CPFL) and Most Actives Advance/Decline Line (MAAD) indicators every day and providing the most recent raw data so you can begin to plot the indicators on your own (see below). The weekly equity index indicator summary provides longer-term commentary based on these indicators.

The definitions of the indicators along with links to the original stories provide helpful background. Also, Robert describes these indicators in a recent I-Trade show presentation available online.

*Note: Unchanged issues are not counted.