***** Technical Analysis (for December 5)*****
The very important McClellan Oscillator, MACD, CCI, Money Flow and Acc/Dist worsened significantly today on the Nasdaq and the RSI dropped to 51.2, which is in danger of turning below the neutral 50 level. The stochastics are short term oversold and in conjunction with the weak action this week, Friday should see a technical bounce, and the question will be if it can hold all the way to the close.
The bearish reversal on Monday (wherein the Dow retested the 9077 level by reaching 9043 as did the S&P 500 at 965/954) is now providing risk for bounces and rallies for all major indices. If the next rally does not take those levels out in the very near future, we are likely to make a series of lower highs and lower lows for quite a while.
The Nasdaq TRIN was a negative 1.58, with a/d of 13/20, up/down volume 2/5, on 1.5B shares, as the market had the usual mid-day countertrend bounces on a distribution morning but those bounces failed to turn the internals positive and thus the market sold off late. The index is now below the 200, 50, and 10 day moving averages and the hourly. The 10% index is not only below the 5% one but also below the important zero level for the Nasdaq McClellan Oscillator.
The NYSE TRIN closed at a very negative 1.74, with a/d of 13/19, up/down volume 4/9, on 1.2B shares, which is light.
The McClellan Oscillator dropped to -1, and its 10% index fell below the 5% one finally.
The VIX rose to 34 from 32 and the VXN rose slightly to 54. The put/call ratio was unchanged at .89. Advisors are very bullish, which is bearish from a contrarian view.
The Nasdaq had filled the gap at 1419 yeterday and closed above it but today it closed below that gap by 9 points. The Dow is at support just above 8600 and may see a bounce above that level temporarily, but could break soon after.
Thus, I would expect a rally Friday but it should be a technical one only and fail to follow-through for more than a day or two and then lower prices are likely as we start the distribution phase which can take a few months to complete after the market's topping formation mostly ended on Monday.
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.
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