*** TA Update (Oct.20):
The market rallied from the opening on light volume but breadth was moderately positive.
The NYSE a/d was 5/1, u/d vol 7/1, indicating moderate accumulation, on light volume of 1.2B shares, while the Nas a/d was 3/1 with u/d vol of 17/3, also indicating moderate accumulation, on moderate volume of 2.0B shares.
The Summation Indices turned up as the McClellan Oscillators all rose above the zero line, with the NYSE McOsi being the strongest at a close of +32 while the Nas was at +13.
Now the test will be if the breadth momentum can continue on Tuesday and this week. Usually there needs to be a resetting of the supply/demand balance after such a strong rally and the technical indicators in the short term reset as well, so a pullback early Tuesday would not be surprising.
The Spx closed at the resistance of 985, Friday's HOD, right on the dot. The Dow was up 411 points at 9265.
Crude oil was also up strongly at about 75 3/4.
Very strong sectors today were oil/oil service, coal, gold/silver, utilities, and ag/fertilizer, among others.
Some techs lagged today in sympathy with the weakness in RIMM while others rallied strongly.
The strength of the Spx and the NYSE versus the Nasdaq and small caps is a positive sign but today's volume was light on the NYSE, thus not yet showing strong conviction.
The VIX fell sharply today and if it can stay in a lower range or decline even more, it would likely signal more upside to stocks.
Also, the credit markets have loosened up a bit as Libor rates declined and T-bill rates rose.
It is very possible or likely that profit-taking and shorting will occur on Tuesday, to push stocks down, but if the TRINs are not too negative, then distribution might be mild.
Support on pullbacks might be found at 970 and 955, and then at today's low of 943, the latter of which should not be reached or breached, if this rally is to have legs.
A follow-through would be constructive technically in the way of a decline being contained tomorrow and then an intra-day bullish reversal, or a rally on Wednesday, to highs above today's close of 985, and preferably on heavier volume. So too would a higher high on the McClellan Oscillators in the days to come.
regards,
drbob |
