***** Technical Analysis (for October 9)*****
The Dow and S&P 500 dropped sharply today while the Nasdaq held on better. The S&P 500 closed one point above the July 24 low at 776, so that support is very tenuous and if we close below it in the next day or two, it will confirm the break already experienced by the Dow and Nasdaq.
The Nasdaq up/down volume was much better than the a/d (1/1 vs. 9/25), indicating mild accumulation but with very few stocks and a pause in the distribution selloff we've seen for many weeks now. The ROC indicates that the sell off is not over as the selling pressure remains strong by that indication. The other technical indicators remain negative. The RSI dropped to 32 and it has room to go lower before a bottom occurs.
The McClellan Oscillator dropped to an extreme level at -51 and its 10% index is more extreme, so these imply a technical bounce or rally is imminent unless we can get a capitulation now. The monthly stochastic is at 0% as is the weekly.
The NYSE TRIN closed at .99, with a/d and up/down volume at 1/6. The Dow monthly stochastic is 0% again as is the weekly.
The VIX/VXN rose to 49.5/62.4, as they approach to the extreme readings of July, but they are not there yet. The put/call ratio was little changed at .92. The McClellan Oscillator dropped to -76 but its 10% index is not extreme yet.
This bear market is taking many prisoners, as some major Dow 30 stocks are being hammered, such as SBC and GE. When we can see more of the technical indicators at very extreme readings, parabolic, climactic capitulation, and a heavy volume bullish reversal, we may have reached at least a good trading bottom.
Dr.Bob's commentaries are not to be construed as recommendations to buy or sell stocks, options, or index vehicles. 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 or forecast.
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