***** Technical Analysis (for January 3)*****
The market didn't follow-through on Thursday's sharp rally today, Friday, but it appears to have a little more life in it for the bulls. The bears had their chance last week to accelerate the downside action with light volume days but were unable to do so. That's what it takes for the market to stay oversold but since it did not occur, the bulls could rally this market this coming week, especially in light of the weekly bullish engulfing stick.
The Nasdaq TRIN closed at a positive .56, with a/d of 15/16, up/down volume 14/9, indicating modest accumulation for some stocks, but on light volume of 1.15B shares. The MACD and Acc/Dist improved to neutral and the DMI improved to slightly positive, though the ADX remains negative. The Williams%R and CCI are neutral while the Money Flow and Aroon remain negative. The RSI was 51 for the second day in a row.
The Nasdaq McClellan Oscillator was down only 1 to +2 and its 10% index improved. The weekly stochastic is 67% going up again, daily 58% going up, hourly 58% going up.
The NYSE TRIN closed at a negative 1.29, with a/d of 17/14, up/down volume 9/10, indication mild distribution today, but on light volume of 1.1B shares. The weekly stochastic is 74% going up, daily 82% going up, hourly 87% going sideways. The McClellan Oscillator is at +27, as blue chips are outperforming the overall market.
The sentiment indicators are mixed, as the VIX and VXN dropped a point or two each. Their MACDs are slightly crossed down, which is bullish. The put/call ratio's MACD is negative. The advisors sentiment is neutral after having been negative for several weeks.
The market appears to be in rally mode as sellers have lost their momentum. The Dow has resistance at 8650 and 8770, which it probably will reach early to mid-week. The Nasdaq has resistance at 1420 now after having broken and closed above 1380 resistance. So now the question is what the internals will look like on any rallies, especially the overall volume.
Strong market rallies that tend to last 1-2 months usually start with volume that is 30-40% higher than average daily volume preceding it, which would mean that heavy volume would be around 2-2.2B shares. After the capitulation of 9/21/01, the volume on the Nasdaq was 2.6, 2.4, and 2.2B shares on consecutive days as the market rallied sharply.
If we believe that we are still in a bear market, then the market rally will only be a technical one, and it might not be as strong as the one that lasted from October 9 to December 2. But we could see a choppy rally for one week, or possibly two.
The bond market has been in a trading range but recently stopped going down. The U.S. dollar is apparently having some technical bounces or rallies in its 2nd leg of a fairly new bear market that probably will last for at least a year or two more. Gold has been rising steadily for the past 1 1/2 years, and is now very near its high at $355/oz for London spot price and March Comex futures contracts. It will need to break out above it or risk a double top reversal and correction.
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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