***** Technical Analysis (for December 4)*****
The market rallied strongly late in the session only to fall back at the close with most of the technical indicators weakening and some became negative as dip-buyers seem to have lost some of their conviction.
As discussed here the past couple of weeks, the market has appeared tired and making a topping formation. A follow-through to the downside for the breadth momentum and accumulation-distribution related indicators would validate the idea that a top has been printed and that we are in an intermediate term decline. Only a strong rally in the next 2-3 days would likely prevent this, and a bounce or two would precede the downdraft.
The Nasdaq TRIN today was a very negative 3.86, with a/d of 13/19, up/down volume 1/6, indicating moderate distribution, on 1.9B shares which is up a bit. The only good news was that it was worse earlier in the session, and that the index closed just above its opening price and filled the gap already. The RSI dropped to 54.4, while the MACD turned just barely negative. The Williams%R, CCI, DMI (ADX), and Acc/Dist worsened but are still neutral except the DMI which is slightly positive.
The Nasdaq McClellan Oscillator worsened to -5 and its 10% index fell below its 5% index for the first time in a month. The daily stochastic is 55% crossed down and the hourly is 15% going sideways so we could get a little more oversold but a technical bounce is probably almost imminent.
The NYSE TRIN closed at a negative 1.63, with a/d of 15/16, up/down volume 4/7, on light volume of 1.5B shares, so the blue chips are not yet abandoned. The McClellan Oscillator dropped to +11 while its 10% index is above its 5% one still.
The sentiment indicators continue to give a negative signal as the VIX and VXN MACDs are crossed up as is the put/call ratio's MACD and advisors are still too bullish at 48%.
The Nasdaq a/d line has actually a triple top so far and the others are worse. The Dow and S&P 500 didn't get to their 200 day SMAs like the Nasdaq did, but none of those indices have been that impressive technically.
The market can have a 1-2 day bounce but the odds now favor a series of lower highs and lower lows on the indices and indicators. While we won't go straight down right now and there will be intra-day bounces or 1-2 day ones, the odds favor a major downturn at this time.
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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