***** Technical Analysis (for January 15)*****
Scenario #2 still has the edge in my humble opinion, as the Dow had reached 8900 last week and got to just above 8550 this week and has a chance to rally once more after we get a little more oversold, to 8900-9000 within the next week. If that becomes the actual scenario with moderately light volume rally day(s), then there should be a bearish reversal to follow.
My prognostication for January was too pessimistic (I expected an early bounce but not as much of a rally as we got) for the Dow as the estimate was for 8350-8450 as the range high, and now I have revised that to 8900-9000, as the index could rally 150-250 points from here (8723) and has already reached 8900 in January. Good earnings reports from IBM and/or Microsoft could provide the excuse to rally this market, but the market appears close to a top now, if Tuesday was not the top.
The Nasdaq TRIN closed at a negative 1.95, with a/d of 13/18, up/down volume of 1/3, which indicates moderate distribution, on light volume of 1.7B shares. The MACD, Williams%R, DMI, CCI and Acc/Dist remained positive but they were less so at today's close. The RSI dropped to 56.8. The Money Flow worsened to neutral after turning positive for one day and the Aroon remained neutral.
The Nasdaq McClellan Oscillator worsened to +13 from +25, but has not turned negative yet. The daily and weekly stochastics are still crossed up while the hourly is oversold at 11%, crossed down.
The NYSE TRIN closed at a negative 1.71, with a/d of 3/5, up/down volume of 2/5, on 1.4B shares. The McClellan Oscillator dropped to +5 as it has lost breadth momentum.
The VIX MACD is not crossed down for today and that has worsened to a neutral reading. The VXN MACD remains crossed down. Both the VIX and VXN are showing bearish divergences as they are not as low as at the last high. The put/call ratio rose to .89 but its MACD remains negative.
The market internals improved late in the session as the a/d was worse earlier, about 1/2 on both exchanges. The market may not be quite ready to decline sharply and steadily as many indicators are still positive or neutral and thus we might get another bounce within the next 2-3 sessions. So we may see a little more weakness early Thursday and then a bounce or rally by late Thursday or Friday. But the next major move is still expected to be down even if we do get another technical rally for 150-250 points.
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.
Dr.Bob's mission is to teach Technical Analysis and demonstrate a structured approach to Market Analysis, for position and swingtrading.
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