***** Technical Analysis (for December 16)*****
While gold blasted past my $339/oz resistance level, the stock market enjoyed a sharp rally after becoming oversold enough on Friday. But from a technical standpoint, nothing has changed and a bear market still reigns supreme in all likelihood.
Today, the Dow powered ahead 193 points but on light volume of 1.2B shares, which belies the strength of the rally and sets up another reversal within 1-2 days to at least the 8350 level and possibly 8250 support. Resistance comes in at 8770 since the 8600 resistance was taken out today. Less likely is the Dow retesting the 9077 area where it failed before at 9043.
The Nasdaq McClellan Oscillator rose to -16, but its 10% index is still below the 5% one and below the zero line. The MACD remains quite negative and the DMI (ADX) remains negative as well. The Williams%R and CCI improved to neutral as expected as they are very short term indicators and the Acc/Dist also improved to neutral. The RSI rose sharply to 56.5. The daily stochastic is 23% crossed down and the hourly is 75% is crossed up so there could be a few more hours of strength to 1-2 days. Resistance comes in at 1420, 1480, and 1521.
The NYSE TRIN closed at a very positive .44, as the blue chips have regained relative strength over Nasdaq stocks. The NYSE a/d line has reached the prior high that was a triple top and it could take it out Tuesday, but the Nasdaq and Amex a/d lines are lagging badly.
The McClellan Oscillator rose to +7 as the Summation Index has been going sideways for a couple of weeks now. The 10% index is doing better here than on the Nasdaq. The daily stochastic is 34% crossed down while the hourly is 99%.
The VIX and VXN dropped and their MACDs are no longer crossed up but have their fast and slow breaking even, a neutral reading. The put/call ratio rose to .98 interestingly considering the strong rally day.
Today, the market regained the losses it suffered on Friday and more, but it has a ways to go before making up the losses of the last two weeks. The Nasdaq needs to get above 1521 in order to make a higher high and if it does not, then a lower high will have taken place. The Dow has its high at 9077 and the S&P 500 at 965.
The question right now is whether this is the beginning of a strong "Santa Claus" rally, or just another technical bounce of short duration. The follow through on Tuesday in terms of market internals should answer that question. The strong close today implies a strong opening on Tuesday.
For the Nasdaq, there are bearish divergences and bearish signs while the Dow and NYSE and SPX are not as weak technically. The institutions have not thrown in the towel yet as evidenced by the strong rally by the SPX today, but that does not mean it won't happen or that it hasn't started two weeks ago.
Spot gold enjoyed a huge rally today, taking out $339 resistance quite easily and it finished strongly as well. The price is parabolic so it gets more risky now than after significant pullbacks.
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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