***** TA Update *****
Today Friday was options expiration and thus the action was skewed by it.
Nonetheless, the market was very choppy today as it has been for a couple of weeks now, with very wide swings.
The SPX has support at 918 now (today's low), 865 a prior low, and 839, the low of this year which was attained last Friday. The Spx was down just over 1/2 a percent, less than the Dow.
It appears that some selling pressure has dissipated this week overall and if the market can avoid bad internals and hold support next week, the recent bottom may be intact for now and we could see a bona fide technical rally lasting weeks, not just days or even just hours.
The NYSE Summation is extremely oversold and one or two more rally days could turn it back up:
stockcharts.com
The weekly Summation (weekly NASI) is at very extremely low levels as well:
stockcharts.com
On the dailies, the Spx has a MACD that may be losing downward momentu, while the weeklies indicate an inside week with oversold stochastics so it is finally neutral after having been so negative.
New lows are not as plentiful as in its selloff last Friday and if it can remain that way on any weak days this coming week, it could portend a trend change.
The VIX is at extremely high levels and it will take a ton of selling pressure to keep it that high and to crash this market even more. So it has become more risky now to short the market from these technical levels.
Sentiment as measured by Investors Intelligence and others indicate that we are at historically high bearish and low bullish opinions, so as a contrarian indicator, it is very positive.
Most technicians have been expecting a retest of 839 if not another leg down, including myself. But one has to always reasess depending on what the tape is saying.
While an eventual retest of 839 Spx still remains possible in the future, the odds for it to occur soon may have dropped in the last couple of days and if the market can't test it early next week, the market might have a short-intermediate (2 wks to 2 months) term rally.
Crude oil dropped to the 68 area yesterday and has not yet turned more positive, but it has been highly correlated with the price movements of the U.S. stock market for some time now, so if the benchmark Spx trends upward for a while, then crude oil and oil stocks should do the same.
Crude oil doesn't have to rally strongly for oil stocks to rally but it needs to stop dropping, and a range from the mid to high 60's to the high 70's would be all right for oil stocks, such as PBG SU CNQ as long as the stock market rallies some. Unfavorable seasonality for crude oil may be a factor now but it would have been more of a factor if the price hadn't crashed over 50% from 147/bbl in the past few months.
Ag/fert stocks, such as POT MOS CF AGU have been crushed along with oil stocks and are trying to get washed out, as their valuations appear very cheap, too, and farmers can still make money from planting and will need some fertilizers, especially if grain prices recover some.
Leading technology stocks such as AAPL RIMM GOOG also appear to be overdone on the downside.
The next few sessions may be critical for the trend of the market, imho. Will enough redemptions and short selling occur to crush the market again or will some of the enormous cash on the sidelines be put into the market, causing it to rise?
regards,
drbob |
