***** Technical Analysis Oct. 22)****
The markets were down this week with the exception of the Nasdaq which was slightly up. As I've mentioned in the past week or two, the market is not likely to suffer a sharp decline if the Nasdaq continues to outperform the blue chip indices.
On Friday, the Nasdaq fell more sharply for the day than did the Dow or S&P 500. If that were to continue for another day or two early this week, it could portend the beginning of a major downdraft for all the indices. If it stays stronger, then we probably remain in a trading range.
The Nasdaq monthly stochastic is unchanged at 73% crossed down, weekly rose ever so slightly to 53% crossed up, daily is 52% crossed down, hourly is 1%. The McClellan Oscillator rose to -15, and its Summation declined to +15.
The Nasdaq MACD and Williams%R are negative while the DMI is positive though its ADX is not indicating a major up trend, and the Money Flow improved to modestly positive. The RSI barely dropped to 50 as it is right at the cusp.
The VIX and VXN MACDs continue to be slightly crossed up and are indicating lower prices may be likely in the short term.
The Dow monthly stochastic worsened to 70% crossed down, weekly fell sharply to 1% crossed down from 21% last week, daily is 1% crossed down, hourly is at 2%. The NYSE McClellan Oscillator worsened to -27 and its Summation is now declining substantially at +676. The Dow closed below the psychological support level of 10,000 for the second week in a row.
The Nasdaq is still operating with the "cross of death" but is above its 50 dma and after surpassing the 200 dma, it is now below it. A crossover in the weekly stochastic would indicate severe selling pressure and momentum, but that has not occurred yet.
Crude oil went up more this week and appears poised to stay in a very high range. On the charts the ascending triangle is confirmed, which is bullish for higher prices.
The risk for a mini-crash for the next 2-6 weeks remains high. A mini-crash is at least a drop of Dow 5%, S&P 500 5-6%, and Nasdaq 8-10%. Most of the major indices still show a series of lower highs and lower lows in their daily charts, with the last major extreme being a top a few weeks ago. Thus, to maintain the pattern, a lower low is necessary in the weeks to come.
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. There are many other TA structures, strategies and systems.
Dr.Bob no longer hosts Stocktimers meetings on Sunday nights at AOL.
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