***** Technical Analysis (for January 14)*****
The market managed a modest gain on Tuesday due to a late rally. Negative retail sales news did not deter some buyers and then after the close, Intel reported better than expected earnings, which should boost the market on Wednesday.
Possible scenarios are:
1) Strong rally on heavier volume taking the Dow above 9077 resistance and Nasdaq above 1521, in a short-intermediate term rally of 2 weeks to 2 months, which will have started January 2. Look for very strong internals, up/down volume, and much heavier volume, for this to occur. Odds of this appear less than 20% now,
2) A moderately light volumed rally, choppy, but taking the Dow towards or to 9000-9077 but failing to break out, and then followed by a moderate to sharp decline for the next 2-8 weeks. Look for fairly strong closes for this to occur. Odds are higher for this than #1 and would be my best guess for the action for the next week or so,
3) Not much of a rally this week (choppy at best) and this week ends up being down, signalling the end of the rally from Jan.2, and a retest of the 8250/1320 levels). Look for weak closes this week and weak internals for this to occur. Odds of this are medium, perhaps a little less than #2 but more than #1,
4) Almost straight down from here, with a lower downside target than #3, as Dow 8250 and Nasdaq 1320 won't hold in the next 4-8 weeks, and we have the Dow decline to at least 7900 (or below) in the first quarter. Look for bearish signals from indicators with little relief and for the media blaming bad news for the drop. Odds of this occurring are only fair right now, but may be more likely in the next 1-2 weeks when the market is higher and more overbought with more bearish divergences.
Timeframe for these are described for this week but could be pushed out until next week if we remain rangebound between 8600-8900 on a closing basis.
Today, the Nasdaq TRIN closed at a positive .54, with a/d of 19/13, up/down volume of 5/2, on light volume of 1.5B shares, indicating moderate accumulation. The RSI rose to 62 and the MACD, Williams%R, DMI, CCI, and Acc/Dist remained positive while the Money Flow improved to positive for the first time in several weeks. The Aroon remained neutral. The index is above its 200 dma, which fell to 1430.
The Nasdaq McClellan Oscillator rose to +25, with its 10% index above its 5% one and zero line. The weekly and daily stochastics are overbought but their "d" is low enough to warrant more upside action.
The NYSE TRIN closed at a positive .71, with a/d of 20/13, up/down volume 9/4, on light volume of 1.35B shares. The McClellan Oscillator rose to +22.
The a/d line has continued to improve and the new highs/new lows have turned up, giving a short term positive reading:
stockcharts.com
The Nasdaq has resistance at 1480 and then 1521, and the Dow has it at 8900-9000 and then at 9043-9077. It appears that the action today increases the odds of further upside action to the resistance levels, and better than expected earnings may be used as the reason for the rallies, and then perhaps there will be an intermediate term decline (as consistent with the slow and fast stochastics which could form a double top or lower high):
stockcharts.com[m,a]waclyyay[pb50!b200!f][vc60][iUh14,3!Li14,3]&pref=G
Dr.Bob's commentaries are not to be construed as recommendations to buy or sell stocks, options, or ETF's as Dr.Bob is not a Registered Investment Advisor. Information and data provided here is believed to be reliable but cannot be guaranteed to be accurate. Always do your own research and due diligence before investing or trading. Remember that Technical Analysis can change by the day, and as such, one day's TA may not be the next day's TA interpretation.
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