***** Technical Analysis (for November 15)*****
Double witching was dull as the Nasdaq was flat while the Dow and S&P 500 were up very modestly. The bulls were given the chance to throw in the towel last Monday but they bought the dips instead and have prolonged the rally, though the Dow and SPX are not that near their highs in comparison to the Nasdaq, which is knocking on the doorstep.
The Nasdaq TRIN closed at .58, with a/d that was negative at 15/17 but up/down volume was positive at 5/3, indicating moderate accumulation, on light volume of 1.7B shares. The MACD has turned just barely positive while the others are all positive except the ROC which is negative, and usually is a good leading indicator for a bearish trend reversal. The RSI was unchanged at 62.5.
The Nasdaq McClellan Oscillator dropped to +23, a reflection of the lackluster breadth. The 10% index remains positive as does the Summation Index. The daily stochastic is at 94% and the hourly is 97%, with high "d" stochastics as well.
The Nasdaq stochastic, McClellan Oscillator, CCI, and overall volume on rallies, are at risk of bearish divergences. This index is stronger than the other major indices and that could end up being another bearish divergence.
The NYSE TRIN closed at a very positive .63, with a/d of 19/13, up/down volume 9/4, on light volume of 1.4B shares. The McClellan Oscillator was +33 and its 10% index is positive.
The VIX/VXN dropped to 30.8/49.7, respectively and their MACDs are neutral to negative. The put/call ratio dropped to .57, and its overall reading is neutral to negative. Advisors are much more bullish than bearish in number according to Investors Intelligence, which is negative.
The Nasdaq has a gap at 1371, and as we saw from the 1360 gap, it is likely to get filled and probably soon. The next gap below is at 1221, and then 1166. The question may not be "if" these will be filled, but "when."
The media and many analysts are quite bullish or at least positive right now in their view of the market for the next month or two. But remember that their sentiment can change quickly when the trend changes. Recently the market has rallied so many are trend followers and extrapolating that this is a new bull market or at least a very long-lasting technical rally.
I see a moderate technical rally rather than a long-lasting one and definitely don't see a new bull market now. In fact, I doubt that this rally will end up as long-lasting or as powerful as the one from September 21 last year. Perhaps we will see a more pronounced downdraft starting in late November or in December. But in any case, the next quarter or two could see a retest of the October lows and possibly a lower low.
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.
Dr.Bob's mission is to teach Technical Analysis and demonstrate a structured approach to Market Analysis, for position, swing, and daytrading.
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