***** Technical Analysis (for December 19)*****
The markets were down modestly on light volume as we head into "quadruple witching," which is triple witching plus the expiration of the new stock futures contracts. The sellers couldn't accelerate the decline late in the session so we could get a bounce on Friday, and depending on the market internals, it could be an impressive one. But the intermediate and long term outlook for the market appears bearish.
For Thursday, the Nasdaq TRIN closed at a mildly negative 1.39, with a/d of 15/18, up/down volume 3/5, on slightly higher volume than we've seen in the past 2 1/2 weeks at 1.65B shares. The MACD, ROC, OBV, Williams%R, CCI, and Acc/Dist remained negative with the DMI getting more negative. The Money Flow finally turned slightly negative while the Aroon remained neutral. The RSI dropped to 43.5.
The Nasdaq McClellan Oscillator actually rose to -39 from -41 as the breadth was not very negative. The 10% index is well below the 5% one and the zero line but not yet at extreme levels that would indicate a tradeable bottom. The daily stochastic is 4% crossed down and its "d" is now below 40% but has a bit more room to go. The hourly is 12% crossed up, indicating a possible rally on Friday.
The NYSE TRIN closed at a very negative 2.02, with a/d of 15/18, but the up/down volume was 2/5, indicating moderate distribution, on light volume of 1.35B shares. The Dow has held above 8350 thus far, and that may be a critical area. The Dow daily stochastic is 5% crossed down and the hourly is 12% crossed up, so it too may enjoy a bounce on Friday.
The VIX and its MACD are giving a bearish signal while the VXN is neutral. The put/call ratio rose to .96, so it too indicates a bounce may occur, but the intermediate term remains slightly negative. Advisors are 50% bullish vs. 25% bearish, which gives a bearish signal.
The Nasdaq is just below its 50 dma after having been above it for a few weeks and another close below current levels would increase the odds for a new downtrend. The Dow is fighting for its technical life as is the S&P 500.
Bonds remain firm and the US dollar appears to be in another leg down while gold could go up more after a pullback from its current parabolic levels.
Thus far there has been no panic selling of stocks nor an oversold condition that is extreme, which leads me to believe we have another technical bounce or two before serious selling occurs for several days in a row. But make no mistake about it, technicians like me have a high confidence level that the next major move will be down.
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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