***** Technical Analysis (for October 8)*****
On Tuesday the market was able to sustain a modest rally which was not unexpected; however, it was not impressive enough technically to overcome the evidence that it will probably reverse back down after a few more hours or 1-2 days. The technical indicators are oversold enough to warrant this technical bounce to continue for a short time but the market has a lot to prove technically before becoming bullish.
The Nasdaq traded as low as 1109 as it tries to hold above 1100, which probably won't hold support ultimately. The TRIN closed at a mildly negative 1.23, with a/d of 16/17, up/down volume 4/5, on moderate volume of 1.8B shares. The RSI rose to 34.3 while the MACD, ROC, Williams%R, DMI (ADX), CCI, Money Flow, Acc/Dist and Aroon remained negative.
The McClellan Oscillator rose slightly to -37 and could reset for another 10-20 points without changing the down trend. The 10% index has gotten extreme and is also resetting back up a bit.
The Nasdaq monthly stochastic is resetting at 1%, the weekly is 3% going down, and the daily is 8% going up, indicating the bounce can continue.
The NYSE TRIN was a very positive .65, with a/d of 15/17, up/down volume 11/8, on moderately heavy volume of 1.9B shares, indicating some accumulation but not for many stocks. The Dow monthly stochastic moved up to 4% from 0%, resetting before perhaps making new lows on the Dow, but the hourly and daily stochastics are crossed up, signalling further upside.
The VIX/VXN dropped to 46.4/61.1 and has yet to get extreme enough to tip the balance to the bullish side. The put/call ratio dropped to .90 while its 50 dma rose to .85 but its MACD is still neutral.
The Dow appears to be confirming the descending triangle that the Nasdaq already has confirmed, while the S&P 500 closed above its 775 July low after flirting with it at 780 mid-day.
The markets may be consolidating their losses again by resetting, and any market rally could fail in a day or two. Technically there are a few bullish divergences but they could disappear with 2-3 days of negative action.
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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