***** Technical Analysis (October 3)****
The stock market rallied sharply today and despite closing well off of its highs, the action was decidedly positive from a technical standpoint.
The Nasdaq now has a gap below at 1842 which is also where its 10 dma is at, and there is earlier support at today's intra-day low of 1864. If the index goes down to one or both of those support levels, it will need to reverse back up in order to confirm the up trend that has occurred since Tuesday's lows. Barring unforeseen and extremely negative news, the trend should be up.
The Dow has pretty good support at 9450 now and shouldn't go much below that if it is to follow through to the upside over the next week and next few weeks, as 10,000 remains a good possibility. Ultimately if the technicals strengthen next week, 10,300 would find resistance.
Nasdaq 2,000 is possible if the index remains resilient on dips and pullbacks as appears likely. The Nasdaq McClellan Oscillator rose to +1 from -19, and has moved up 53 points in 4 sessions. This kind of momentum is not usually going to reverse immediately.
The weekly stochastics crossed back up today and the dailies are crossed up strongly so while a dip could occur early next week, it should reverse within a day or two.
The MACD continues to be negative, lagging the other major indicators such as the Williams%R, DMI (ADX), CCI, Money Flow and Acc/Dist which have all improved substantially. The RSI has risen above the neutral 50 level again at 57.5.
This rally has been broad-based as indicated by the a/d line and new highs/new lows. The volume was heavier at 2.0B on the Nasdaq today and that needs to be followed by more heavy action next week if there is to be a powerful leg up to new and much higher recovery highs for all major indices. Otherwise, we could see a choppy up trend.
The gold market fell sharply as the job news was surprisingly positive and safe havens (i.e. bonds and precious metals) gave way to interest in conventional stocks. Bonds also declined sharply and it did so after retracing almost exactly 50% of its June to August decline, so it now may be ready to continue its downtrend.
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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