***** Technical Analysis (December 24)****
Happy holidays to everyone! And wish all a great 2004!
The markets were unremarkable today and the Nasdaq continues to lag the strength of the Dow and S&P 500 blue chip companies.
The blue chip stocks remain technically strong while the Nasdaq technical condition is neutral. The Dow should be able to reach at least the top end of the projected range of 10,300-10,500 by January, and with heavier volume, could take it out, while the S&P 500 should have little trouble reaching its top end of the projected range of 1125 or so by January.
The Nasdaq has struggled to keep up and has been unable to reach its prior resistance high of 2098 or even close above 2,000. This divergence, if it continues well into the first quarter, will not bode well for the overall market, and could ultimately be resolved with a top for all indices in the first quarter.
Topping formations can last a few months as occurred for the Dow in the year 2000, in which it had tops in Spring and then again in Summer, while the Nasdaq made lower lows.
Until proven otherwise, this rally is a cyclical bull market within a secular bear market.
Gold remains very resilient each time it appears ready to have a 5-10% correction, but thus far, has held above $400/oz, the psychological support level, and if it can hold above it for the next couple of weeks, it probably represents a high level consolidation to be followed by a breakout above $415/oz.
If it falls below $408/oz in the next week, it could test the $400/oz level. A 5% correction would be equivalent to about $384/oz price. Support is fairly strong at $388-394/oz, which was previously its resistance level. If the USD finally has a technical rally over the next few weeks, gold could have this correction.
The USD has been overdue for a technical bounce for 2-3 weeks now, so when it has one, it could be rather sharp. But while it could bounce from the futures reading of 87 to 90-92, it remains in a bear market and will likely test the 80ish area in 2004. If so, then gold could experience another 10% gain, to near $460/oz.
Bonds apparently have ended its bull market that started in 1983 at the rate highs, and the 10 year note will likely approach or meet the 5% level in 2004 from its current 4.2% level. It may be nearing the bottom of range now in terms of rates, with 4% providing a low estimate, and then a steady increase through next year.
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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