***** Technical Analysis (for January 21)*****
The Dow, S&P 500 and the Nasdaq suffered their fourth day in a row of declines, and are getting closer to the low end of the recent range. The Dow, S&P 500, and Nasdaq may find support in the 8250, 860, and 1327 (prior recent low) levels as there is more declines in the next few weeks, technical bounces and very short term rallies, notwithstanding.
The Nasdaq McClellan Oscillator dropped to -22 while the NYSE Oscillator reading is now -32, as they both are in real danger of accelerating to the downside for the Summation Index. It will take a very strong rally in the next few days to prevent this bearish acceleration to the downside now on these indicators, especially the Summation Index. The Nasdaq one is now below the zero line. The 10% indexes for both are below their 5% indexes and the zero lines, a bearish development.
Another problem is that there was no strong bearish sentiment or panic during the December decline. The advisors remained quite bullish during that month and the put/call ratio's MACD never got to a positive reading. The VIX and VXN did drop and they did crossover to the downside, a positive sign, but then they never got to low levels of a few months ago, which was bearish divergence.
There has not been much of a bounce in the last two sessions despite the moderately oversold near term condition as as occurred at other times in January, which is a bearish sign. It shows that the institutions are not buying on the dips and that they are doing more distrubution than accumulation.
The Nasdaq TRIN closed at a neutral 1.00, as the a/d was 3/5, up/down volume 5/9, on 1.4B shares, and this index outperformed the Dow and S&P 500 today, after having taken a larger percentage drop on Friday. The MACD finally crossed down after about 3 weeks of being crossed up and it will take a strong rally to cross it back up. If not, then it usually portends several weeks if not months of a downtrending market.
The Nasdaq RSI dropped to 42.9, while the Williams%R, CCI, and Aroon remained neutral, though the first two did get weaker and could turn negative if there are another 1-2 days of weakness.
The Nasdaq weekly stochastic finally crossed down at 61% and it could be portending many weeks of weakness. The daily is at 26% crossed down and the "d" is still high enough for at least 1-2 more weeks of weakness before a major bounce occurs.
The Nasdaq did not fill that gap at 1420, nor did the index reach Friday's high of 1401 either, which has bearish implications as it should fill the next day or risk not filling until trading much lower.
The NYSE TRIN closed at a negative 2.57, with a/d of 10/23, up/down volume 1/6, on 1.3B shares. The Dow weekly stochastic is nearing a crossover now as well.
The VIX MACD has crossed up, a bearish signal, while the VXN MACD is uncrossed. The put/call ratio dropped to .53, interestingly, possibly signalling a near term bounce. The advisors are still too bullish.
The Nasdaq had a weekly bearish engulfing stick last week, which implies that most of the next several weeks could be down. Also, the slow stochastics have plenty of room to go down, and that is even without a stochastic "drag."
The U.S. dollar is falling apart technically once more, as it is trading at 100, which can give it a bounce now but 98 support is the next likely major move.
Gold was about flat today but in next day trading it has traded at 360, which improves the chances of an ascending triangle breakout above 359 on Wednesday. Spot/comex gold may yet reach 375 in the next 2-3 weeks, as support has held above 348 despite the stochastics resetting.
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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