***** Technical Analysis (October 14)****
The Money Flow and Aroon have not improved much in the past few days so the question is whether a strong rally will do so, or if their lack of strength may portend a correction soon. The rate of change has improved after having been negative for most of the last few months, giving bearish divergence signals which were not predictive.
The MACD has improved as have the DMI (ADX) and CCI and Acc/Dist in the last couple of days. The Nasdaq RSI rose to 64.7 and has room to go substantially higher with a bona fide rally.
Today the Nasdaq led the way with up/down volume of 3/1 along with a/d of 5/3 and a TRIN of .59 on moderately volume of 1.8B shares.
The Nasdaq McClellan Oscillator rose to +30 and its 10% index is decidedly positive, appearing like the MACD. The monthly stochastic is 99% with a low "d" which leaves room for more strength and the weekly is 99% with a stochastic pop.
The NYSE quarterly stochastic has just crossed up which could mean we are in for a few months of strength. The NYSE McClellan Oscillator declined by only 3 to +33, so it is again giving a major move signal within 4 sessions. Barring a major negative shockwave, the next move is more likely to be up than down it appears, judging by the technical indicators and chart pattern.
The NYSE TRIN was a neutral 1.02 which may be more a reflection of a very positive breadth of 18/13 than a lagging up/down volume figure of 7/5 on 1.2B shares.
The Dow is now within spitting distance of 10,000 just as the Nasdaq is closing in on 2,000. Only the S&P 500 is lagging a bit towards 1,080.
The Dow may fail in its first attempt to close above 10,000 when it tests that psychological resistance level but appears to have a good shot at 10,300 in the next 1-2 months as the market does not appear to be able to avoid choppy trading. Much higher volume could change that to the delight of bulls.
Some catastrophe such as geopolitical turmoil that is unexpected or a precipitous decline in the US dollar or some other event could cause a major correction, but for now the odds favor the bullish scenario.
Gold stocks rallied modestly as spot rose 2 dollars but its short and intermediate term direction is unclear. Lately greater interest in traditional equities has perhaps reduced the interest in precious metals and their stocks.
Bonds dropped today and has not been able to reassert itself in the daily charts after retracing about 50% of its decline, and therefore could continue its downtrend that started after the June highs.
The energy complex has looked more constructive in the past few weeks and the pundits may be wrong once again. Most of them asserted that the expected Iraqi oil would most assuredly cause crude oil to drop into the low 20's or into the teens this Fall. Instead they appear to be in a range from the mid-20's to the low to mid 30's.
Some research has posited that crude oil production will be lagging consumption now or very soon due to the limited amount of the commodity on the planet and the many years of exploration and development/production. Thus, for the longer term, prices will likely rise.
The US dollar will continue its downtrend and may have already done so recently. In the futures market, it may drop to 88 before some support is found once it declines again.
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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