***** Technical Analysis (for October 15)*****
The market finally had four rally days in a row, but the overall volume was not consistent with the huge 4-5% Dow, S&P 500, and Nasdaq rally today. The Dow had one of the largest rallies in history but the volume on the NYSE was only 1.8B shares, thereby not indicating very strong accumulation.
The Nasdaq itself had a huge rally from the opening, thereby leaving a huge gap at 1221, which could provide an island reversal gap if it cannot sustain the lows of the day for tomorrow. It has another gap at 1166 from last week, as well, which I had remarked would probably get filled in the next 1-2 weeks.
This rally looks better than it is. The Nasdaq a/d was 3/1, up/down volume 9/1, but on only 2.0B shares rather than the projected 2.1-2.2B shares from my intra-day TA Update. And if the rally had been really convincing, it would have had volume closer to 2.4 or 2.6B shares as it did a year ago after the 9/21 lows. The McClellan Oscillator rose sharply to +37 and its 10% index is above its 5% one.
The Nasdaq Williams%R and MACD remained positive while the DMI (ADX), CCI, and Acc/Dist improved to positive while the Money Flow and Aroon remained negative. The RSI rose to 59.2.
The NYSE a/d was also 3/1, with up/down volume 7/1, on 1.8B shares. The McClellan Oscillator rose sharply to +21, and its 10% index is above the 5% one.
The VIX/VXN dropped to 39.7/56.7, respectively and their MACD's are crossed down, a positive sign. The CBOE put/call ratio dropped to .78 and its 50 dma is at .86, a relatively high reading.
The stochastics for the weeklies and dailies are crossed up while the hourlies are very overbought, so we should see some weakness imminently. The market may just be resetting from a very oversold condition that was established last Wednesday, but we did not have a selling climax or capitulation, thereby hinting that the bottom is not yet in.
The Dow broke above the 8000 resistance level and is 5 points above the 8250 resistance level. The Nasdaq broke through the 1270 resistance level and the next one is at 1320.
We are likely to see a correction back down on Wednesday and then we shall see if the market can reassert the bullish momentum by the close of Wednesday or by Thursday's action, otherwise, the market will signal a reversal back down in earnest.
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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