***** Technical Analysis (Nov. 19)****
The market finally had a bona fide pullback on Friday after having a sharp rally for a couple of weeks, which pushed the technical indicators to extreme overbought levels.
Some possible scenarios now are:
1) A reversal of the decline within a very short time, perhaps 1-2 sessions, and then a reversal rally to either test the year's highs or take them out,
2) A follow-through of the decline for at least a week and then a lower high than was achieved last week, leading to a series of lower highs and lower lows,
3) An immediate down trend.
The question is whether the overbought technicals will be overidden by the strong bullish momentum next week. The daily internals, especially the up/down volume figures, should signal the trend which is likely to be choppy for a while.
Will those who missed most of the rally start buying the dips or will investors take more profits? We are not likely to obtain the answer for 1-2 weeks.
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.
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