***** Technical Analysis (for December 17)*****
The stock market suffered a late selloff that was modest as the buyers took a day off. The lack of volume indicates that the selling does not yet have strong conviction and that bulls could rally this market again tomorrow, but another 193 point rally for the Dow probably isn't in the cards and the next major move continues to be down in all likelihood.
For Tuesday, the Nasdaq TRIN was a neutral 1.08 despite the a/d being negative at 7/10 while the up/down volume was almost the same at 5/8, indicating a lack of strong distribution this time. The overall volume was light at 1.3B shares. The MACD, Williams%R, OBV and ROC remain negative while the Acc/Dist worsened to negative. The RSI dropped to 49.1 as it whipsaws above and below the neutral 50 level. The CCI, Money Flow and DMI (ADX) were neutral.
The Nasdaq McClellan Oscillator dropped to -24 with its 10% index below the 5% one and below the zero line. The Summation Index declined to +64. The daily stochastic is 18% crossed down while the "d" is high enough at near 50% to warrant more downside action in the next week. The hourly is 63% going sideways.
The NYSE TRIN closed at a negative 1.55, with a/d of 12/19, up/down volume 4/9, on light volume of 1.2B shares. The Dow daily stochastic is 20% crossed down and the hourly is 51% crossed down. The McClellan Oscillator broke below zero again at -6 as it whipsaws above and below the zero line. The Summation Index is going sideways mostly from indecision. But the 105 index is below the 5% one.
The VIX and VXN were little changed and their MACDs are neither crossed up or down so the next day or two is critical to signalling the next move. The put/call ratio declined to .76 and it is neutral to negative. Advisors are still too bullish.
The Dow has resistance at 8600 and more at 8770, the latter of which his formidable and the senior index may be making a series of lower highs once again. The Nasdaq has resistance at 1420 and then would have to take out 1521 to provide technical evidence of a rising market, otherwise, the index will suffer another downdraft in the months to come.
The US dollar is in trouble and support not holding at 104 can be disastrous in the months to come. Bonds are firm, and London spot gold is in a bull market, though it is overbought now and due for a correction.
As far as the stock market is concerned, it should be noted that the fundamentals have not changed since the lows of October 9th, just the oversold condition of that time period which allowed for a technical rally two months hence. But valuations, little capex spending, and $27 trillion in debt (corporate, government, and personal) is putting a lid on any rallies. The debt will have to be cleansed out of the system if the 50-60 year economic cycles run their course again, as they have since the industrial revolution started.
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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