***** Technical Analysis (for October 11)*****
The market's strong rally on Friday was probably more due to the extreme oversold condition than from the start of a new bull market or even a 3-4 month technical rally that we saw from last Sept. 21 to early January, 2002.
The rally has made a big gap at Nasdaq 1166, which will get filled in the weeks to come unless we are in a new bona fide uptrend. The overall volume was not indicative of the start of insttutional accumulation, though we have to see if that volume picks up dramatically early next week.
If we see 4 session with strong positive breadth, then it would be a more bullish signal, but it should be accompanied by heavier volume than we have seen thus far. The volume on the NYSE actually decreased by .15B shares despite the much larger gain on Friday. And the volume was only 100M higher on the Nasdaq.
The Nasdaq TRIN was a positive .53, with a/d of 23/10, up/down volume 9/2, on 1.9B shares. The RSI rose to 49.9 and the MACD and Williams%R improved to positive. The DMI and CCI improved to neutral and the former should turn positive with any kind of a rally on Monday. The Money Flow, Acc/Dist and Aroon remained negative so it is too early to be singing a bullish tune.
The Nasdaq McClellan Oscillator turned positive at +1 but its 10% index is still below the zero line. The stochastics improved as the weekly and daily are now crossed up.
The NYSE TRIN closed at a very positive .41, with a/d of 25/7, up/down volume 9/1, on moderate volume of 1.8B shares.
The Dow weekly and daily stochastics crossed up. The NYSE McClellan Oscillator improved to -12.
The VIX/VXN dropped to 43.4/58.8 and their macd's crossed back down for now. The put/call ratio was little changed at .93. Advisors have been about even between bullish vs. bearish.
The Dow has significant resistance at 8000, and again at around 8250, while the Nasdaq has it at 1220 and 1270. It would not be surprising to see more strength next week, but it could be choppy, and unless it is accompanied by heavier volume, it should peter out in the next week or two. If so, then a retest of the recent lows is a minimum expectation, with a substantial chance of even lower prices.
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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