***** Technical Analysis (for December 12)*****
While the "Santa Claus" rally sometimes visits Wall Street, there is no guarantee of it, and the technical indicators are not supporting that idea at this time. We could get lower prices before a mild Santa rally.
The Dow has resistance at 8770, which is fairly formidable, and then strong resistance at 9043-9077, and the odds of reaching that right now are not good. Technical bounces occur more frequently at the early stage of a decline after a top has been put in, and thus far, the Dow and S&P 500 have a double top.
The Nasdaq was leading the way from the October 9 bottom but has since weakened and now is lagging the Dow. The Nasdaq a/d line is weak and its MACD is decidedly negative and its McClellan Oscillator is lagging the NYSE one. The Nasdaq has resistance at 1420, 1480 and 1521. Additionally, the S&P 500 has been lagging the last few days and that is indicative of institutions not accumulating blue chips strongly.
For Thursday, the market was mixed, with the Dow down over 50 points while the Nasdaq was up 3 points and the S&P 500 down 3 points.
The Nasdaq TRIN was a positive .62, with a/d of 1/1, up/down volume 4/3, indicating very mild accumulation, on light volume of 1.4B shares. The TRIN 60 and 30 minute stochastics are crossed up, which implies weakness early Friday. The u/d vol had been much better intra-day, so the late action was not very positive.
The MACD remains decidedly negative, while the Williams%R and Acc/Dist are slightly negative. The DMI (ADX) and CCI remained neutral while the Money Flow and Aroon remain positive. The rate of change continues to be usually negative, with the bearish divergence intact from the recent highs.
The Nasdaq McClellan Oscillator only changed by 1 point to -15, which implies a large move within 4 sessions. The monthly stochastic is 23% crossed up, weekly 70% crossed up but weakening, daily 34% crossed and going down (with a high enough d to warrant 2-4 more weeks of weak activity), and hourly 66% crossed up.
The NYSE TRIN closed at a neutral 1.08, with a/d of 17/15, with up/down volume of 1/1, on light volume of 1.2B shares. The McClellan Oscillator closed at +5 as it has barely moved. The monthly stochastic is 32% crossed down, weekly 71% crossed up, daily 32% crossed down, and hourly 41% crossed down.
The VIX and VXN were almost unchanged while their MACDs are still crossed up, a bearish sign, but the gap is narrowing so it is less bearish today. The put/call ratio was virtually unchanged at .77 and its MACD is still negative.
The biggest story today was the strength in gold stocks as spot gold rose sharply to $333 after breaking out above the ascending triangle at $329/oz. The daily stochastics for gold stocks and the index $hui still have more room but profit-taking can occur any time so the risk has increased for new long positions in the short term.
Gold may now be in a higher trading range because of its bull market status and recent acceleration of positive momentum. Support may come in now at $329, the prior top, initially, and then $323, a recent low. Resistance may come in at $335-$339, but a stochastic pop could change all that.
The US dollar could break support at 104 ultimately but it has held up above that so far but any bounce may just be a reset.
Stocks are holding on for dear life right now and bulls are hoping that the adage "never short a dull market" will hold true this time and rally this market. The position of the daily stochastics and MACD say otherwise.
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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