***** Technical Analysis (for December 27)*****
Technically not too much should be made from the decline today, Friday, because the volume was extremely light for the second day in a row. The more important issue is that the market technicals have been deteriorating for the past 3 weeks and the fact that the market couldn't rally this week when there was extremely light volume.
The Dow dropped 128 points and its monthly stochastic is 26% crossed down, weekly 58% crossed up but not by much anymore, daily 2% crossed down and the hourly 5% crossed down, so at least a bounce is due Monday or Tuesday.
The NYSE TRIN was very negative at 3.41, with a/d of 1/2, up/down volume 1/7, indicating distribution, but on very light volume of 748M shares, typical of Christmas week. The McClellan Oscillator dropped to -18 and its 10% index dropped below the zero line for the second time in the last two months and this time it could be more ominous.
The Nasdaq TRIN closed at a negative 2.19, with a/d of 11/21, up/down volume of 1/4, on 807M shares. The Williams% and CCI worsened to negative today which was anticipated, while the Money Flow, Acc/Dist and Aroon remained very negative. The Acc/Dist had stayed mostly negative while the Money Flow was neutral a couple of weeks ago, thereby warning of distribution. The DMI and ADX are negative and the RSI dropped to 42.9, well off the neutral 50 level now.
The Nasdaq McClellan Oscillator declined to -26, with the Summation Index at -125 and the 10% index is very negative but not at an extreme level consistent with market bottoms. The monthly stochastic is 19% crossed up, the lowest level in two months, weekly is 58% barely crossed up, daily 1% and hourly 3%, so a bounce is due Monday or Tuesday. The index had broken below support in the 1360-1365 level last week, bounced back up towards 1400 but failed and now has entered a new downtrend.
The VIX MACD crossed up today while the VXN MACD is still crossed down, giving mixed signals. The put/call ratio rose to .94, with the MACD giving a negative reading. The advisors are almost twice as bullish as bearish.
The NYSE a/d line has maintained a high level in recent weeks and any rally could take it to new highs but if the market remains weak, then it will form a triple top reversal. The Nasdaq and Amex a/d lines are in new downtrends.
The US dollar as measured by the March futures contract was down sharply as it works its way towards 102 after breaking support at 104 a couple of weeks ago. It is in a relatively new bear market. The bonds have been firm as has spot gold.
These are all working against the stock market and unless the institutions can work some magic next week, it should be another down week. Any rallies now may prove to be precursors to more lower lows later, as the market is very vulnerable to sharper declines now.
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, swing, and daytrading.
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