***** Technical Analysis (for January 28)*****
The expected technical bounce occurred today right on schedule as implied by the oversold condition of the slow and fast stochastics, but it was not impressive.
The Dow was up 99 points to 8088, while the S&P 500 was up 11 to 858, and the Nasdaq 17 points to 1342. Resistance comes in fairly strongly at 8250, 895, and 1370 (10 dma) and 1400 (50 dma).
The new high/new low indicator shows that the rise has reversed back down for the NYSE and Nasdaq. The VIX continues to work out of its double bottom (indicative of a top) and the MACDs for the VIX and VXN are crossed up.
The Nasdaq Summation Index improved to -28 from -49 while on the NYSE it rose from -72 to -49. The extreme numbers yesterday implied that we would bounce up today as it takes extreme and panic selling to maintain those levels, which occurs rarely. The 10% indexes for the McClellan indicators are below their 5% ones and their zero lines, thus remaining very negative but not extreme enough to warrant a bottoming sign.
The TRINs for the Nasdaq and NYSE were at positive .51/.61, respectively, but the overall volume was quite light at 1.4B shares for both indices. The Nasdaq MACD, Williams%R, DMI, ADX, CCI, Money Flow, and Acc/Dist remain negative while the Aroon continues to weaken at a weak neutral reading. The RSI rose to 42 from 38.
The weekly stochastics remain crossed down as do the dailies while the hourlies have crossed up and have more room to go but they are probably just resetting before the market comes back down again.
After the State of the Union address by our President, the futures contracts were down modestly which could change by the open. But the Nikkei was down sharply to the 8300's, which is not far from its 19 year low of 8197. The Dow low in October was 7197, interestingly.
The Dow and other indices have apparently broken down technically in the past two weeks and is at risk of having another major move down after some consolidation of the recent fall. Sellers and supply get out of balance temporarily, resetting, and then more selling can take place.
Traders can watch the market internals during the day to obtain a sign of the strength of a countertrend bounce/rally, or of the major trend which is down.
The U.S. dollar may have halted its fall briefly but the longer term trend is down which ultimately hurts stocks and helps gold. Gold keeps resetting without much price deterioration which is bullish divergence, implying that 359 should hold support and that 379 will be tested in the near future, perhaps being taken out on the way to 400 in February.
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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