***** Technical Analysis (December 16)****
The blue chip stocks are stronger than smaller, growth stocks, as evidenced by the Nasdaq lagging the other major indices that include mostly large cap defensive or blue chip stocks.
The divergence that has been occurring needs to end in the next few weeks or it will likely portend a topping formation for the overall market.
The Dow and S&P 500 may continue their relative strength and rally to new recovery highs, perhaps near 10,300-10,500 and 1100-1125, respectively, but a double top reversal formation may occur after that, perhaps in the first quarter, unless the Nasdaq catches up or the overall volume for the NYSE increases significantly.
The choppiness of the rallies and the non-heavy volume indicates we are in a cyclican bull market within a secular bear market, portending a top in the first quarter or first half of 2004, leading to a weak second half of the year, to be followed by a continuation of the bear market in 2005-2006, and a possible retest of the 2002 lows.
But for now, the place to be from the long side is in blue chips and defensive stocks until there are signs that the Nasdaq is joining the rally.
Gold remains strong and while the US dollar could have a technical rally soon, gold stocks are probably only going to have modest to moderate pullbacks. Next year spot/Comex gold could rally to $460/oz, with a low end of $390-$400/oz.
Bonds remain in a downtrend but in the short term they could rally a bit more. Next year the bonds could suffer a major decline with the 10 year note rate rising to the 5% level or a bit higher by the 3rd quarter.
I am very busy with other matters and may only update Technical Analysis once a week. Thank you for your understanding.
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.
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