*** TA Update ***
The McCllelan Oscillator is Nas -53 and NYSE -38, so it has decidedly turned the Summation back down again, but the action on Friday with a quasi-capitulation in the first few minutes of trading, after the futures were lock limit down prior to the opening, and with the majority of stocks closer to their HOD than their LOD, implies we could have a bounce on Monday morning.
The market can bounce at any time due to the extremely oversold condition and yet can fall at any time due to the enormous amount of redemptions and bad news overseas, along with short-selling which has been reinstituted for those 800 companies. It seems that the market alternates every day, and sometimes every few hours, with 500-700 point swings in the Dow.
The Spx fell to as low as 852, and closed at 876, so some are calling that a successful test of the prior bottom in the 839-865 area on October 10th, for a double bottom reversal formation. It is however, too early to call that, and most double bottoms are spaced by more than 2 weeks apart, such as in Oct and Dec 1974, and Oct '02 and Mar '03.
But it could indeed mean that a bounce is going to occur imminently (resistance at 896/899 and 951 probably won't be reached) and we shall have to see then if we won't go back down to test and possibly break 852 and/or 839 at a later time.
The Spx daily stochastics are crossed down but not yet very oversold and below 20%, which also makes me wary of a bounce or rally early this week.
I am not saying that it is not possible that a tradeable bottom is now in for a multi-week rally, but I am skeptical. The quasi-capitulation so soon after the opening on Friday might allow for a bounce but it would be unusual for it to precede a major move up in light of this being a secular bear market.
And crude oil's breakdown below $68 also implies that there could be lower prices ahead, after a possible bounce early this coming week, for both crude oil and the stock markets.
Add to that the deleveraging that is occurring in the int'l stock markets, which is behind the leveraging of the U.S. stock market, so there could be more shockwaves coming from offshore markets in Europe and/or Asia.
Looking at the daily charts, many indices broke out of symmetrical triangles to the downside last week, which is very bearish. I still believe it is possible or perhaps likely we will see Spx 783 and/or 768, and crude oil in the $60 or in the $50's/bbl, in the weeks ahead.
jmho,
drbob |
