***** Technical Analysis (for January 16)*****
Microsoft's better than expected earnings along with options expiration could provide a technical bounce on Friday, especially since options expiration day can have the opposite trend from that of the week. And we have gotten oversold on the hourly stochastics.
The action on Thursday was not decisive as the indices were modestly lower while the market internals were mixed. The Nasdaq TRIN was a very negative 2.73, with a/d of 14/17, but up/down volume was quite negative at 4/13, on light volume of 1.6B shares. The NYSE TRIN was a negative 1.47, with a/d being positive at 17/15, while up/down volume was only mildly negative at 4/5, on moderately light volume of 1.5B shares.
The Nasdaq MACD and DMI (not ADX) are still positive, while the Williams%R and CCI worsened to neutral and the Acc/Dist worsened from positive to negative. The Money Flow and Aroon remained neutral, but the former did weaken a bit. The RSI dropped to 53.6, and the index fell to below its 200 and 10 day moving averages by a tiny bit, so that is not a decisive signal yet.
The Nasdaq McClellan Oscillator dropped to +6, from +13, so it was not a strong drop because the breadth was not very negative today. The 10% index is just barely above the 5% one and the zero line. The weekly stochastics are still crossed up at 76% while the dailies are 68% and barely crossed up and the hourly is 9% and close to crossing up, so a bounce Friday would not be unexpected.
The NYSE McClellan Oscillator dropped to +6 as well, while its 10% index is stronger than the Nasdaq's. The Dow weekly stochastic is 81% crossed up and the daily is 72% barely crossed up and the hourly is 16% going up.
The VIX was almost unchanged at 27.6 and its MACD is flat, waiting to cross over. The VXN rose slightly to 44.8. The put/call ratio was little changed at .87. Investors Intelligence has 50% bullish advisors vs. 27% bearish ones, a negative reading.
The market does not yet seem ready to fall off of a cliff, but while Friday and/or Monday could see a bounce or rally, the signs are there that a top has been made this week. It will take heavier volume rallies now to penetrate the highs of the last 2 weeks as the technicals have worsened, and if we do not get the penetration, then we should see a signficant downdraft over the next several weeks, with only technical bounces along the way, some lasting hours and others lasting up to 2 days or so, if I am reading the charts and indicators properly.
After the close, the market got good news in the way of earnings reports, but the market's 2 week to 2 month trend may be inexorable, thereby overriding good earnings news and instead focusing on fair guidance and negative geopolitical news on its way down.
The U.S. dollar seems to be in a serious leg down in its new bear market and gold had a sharp rally today and may be threatening to break out above resistance at 359, which would be validation of an imperfect ascending triangle, a very bullish formation.
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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