***** Technical Analysis-August 18,2000******
The “Ask DrBob” board provides Technical Analysis (also known as TA) for each trading day and is usually accompanied by new articles of interest related to TA and Market Analysis, such as TA Trading Rules and Strategies, Technical Indicators, Monetary Analysis, Market Psychology and Sentiment Indicators, Charting Techniques, among many others. The articles will begin later in the week as the transfer of new SI subscribers is not yet complete. Additionally, charts will be an added feature to the daily Technical Analysis articles in the near future.
Technical Analysis for August 18, 2000:
The Nasdaq missed my resistance area of 3982 by two points, and then declined to have a small loss for Friday. The a/d (advance/decline) was 9/10 and up/down volume was 7/6 on overall volume of 1.45 billion shares. Strong rallies that are successful in holding usually have average daily volume of near 1.7 billion shares per day. The TRIN was a mildly positive .80, which is encouraging for bulls as it did not rise more during the intra-day sell-off from the 3980 level.
The Nasdaq is now just below it’s hourly and 200 dma (day moving average), but above it’s 10 day EMA (exponential moving average). MACD, rate of change, OBV, Williams%R, CCI, and weekly and daily stochastics are all positive.
The DMI(ADX) is neutral, while Chaikin Money Flow and Acc/Dist (Accumulation/Distribution) indicators are negative still. The Nasdaq Summation Index shows weakness as well, in comparison to the NYSE Summation Index which is very positive. My interpretation of the Nasdaq technical data is that we could get whipsawed once again, as the index and indicators have rallied from the key reversal at 3521 in a weak manner. I don’t like that the breadth and volume have been mediocre at best, and that the Money Flow and DMI(ADX) indicators are still negative on the heels of a 400 point rally.
The Dow was also down marginally, but the blue chips have relative strength against the Nasdaq. The NYSE TRIN was a positive .82. The NYSE Composite is still in an up trend, and the Dow remains above it’s 200 dma by a large margin. The Dow weekly stochastic is 69% going sideways, daily 81% going up, hourly 63% going up, so it’s technicals are more positive than the Nasdaq.
Overall we have had a two-tier market since March, wherein the blue chips of the Dow and NYSE have performed fairly well, while the Nasdaq has suffered a bear market where the index declined 40% from it’s high of 5132 to a low of 3048, and since has had a technical rally to 4280 and a decline to 3521 to fill the gap at 3582. The key reversal has resulted in the Nasdaq trading in a narrow range and it has met resistance at 3980.
If the Nasdaq does not take out the 3980 resistance level in the next few days on better breadth and volume, it may print that as the new high of this trading range and have to trade at least near the 3700 support level and perhaps in the lower end of the range near 3521.
Some other indications which support the idea that this recent rally is not the beginning of a new bull market for the Nasdaq are the put/call ratio, which is too much in favor of calls options and the investment advisors bullish, which is 47% for Investor’s Intelligence and over 50% in Investor’s Business Daily.
The tone of the media has been decidedly bullish over the past few weeks, citing the high probability of the Federal Reserve Board being done raising rates and the positive price action of most NYSE stocks.
All of which makes me less inclined to be bullish from a contrarian point of view, in addition to my technical analysis. I reserve the right to change my TA if the Nasdaq’s breadth and volume improve, along with the DMI and Money Flow indicators.
All posts and articles by Dr.Bob are commentaries and opinions, and should never be construed as recommendations to buy or sell stocks, options, index vehicles, bonds, or futures contracts, as he is not a registered investment advisor or stock broker. Information contained in Dr.Bob posts and articles are believed to be reliable but cannot be guaranteed. Always do your own research before investing/trading.
Dr.Bob has studied and utilized Technical Analysis for 25 years, and he wrote TA articles for about a year for a popular internet site prior to joining Silicon Investor. He has a large following of new and experienced traders, some with high levels of expertise in TA.
Dr.Bob holds “Stocktimers” private chat room meetings at AOL on Sunday nights 5-6:30 pm PST, and Voice Chat on Excite for one hour, immediately following. During these meetings, he summarizes TA of the past week and gives an overall Market Analysis.
Dr.Bob can be reached at: Drbob512@msn.com |
