***** Technical Analysis (for February 12)*****
Grinding down is the watchword for the stock market as it can't seem to accelerate enough to the downside to indicate panic selling leading to capitulation. Technical bounces are not lasting very long and we are making lower highs and lower lows on all major indices as we apparently work our way down to retest the bear market lows set last October. In actuality, the technical indicators were more oversold in July, 2002 and September, 2001 than in October, 2002.
The Dow has very little support from here (7758) to 7197, with a little at the 7600 area. The Nasdaq has gaps at 1221 and 1166 pulling it down, and the S&P 500 has 768 as its bear low.
For today, Wednesday, the Nasdaq TRIN was a very negative 2.40, with a/d of 1/2, up/down volume 4/19, indicating moderate distribution, on light volume of 1.2B shares. The CCI worsened to negative after becoming neutral for only one day, joining all the other major indicators in negative readings. The RSI fell to 34.9.
The Nasdaq McClellan Oscillator dropped to -36, with the Summation Index at -543 as it may be working its way down to the -1,000 area, ultimately. The weekly stochastic is 41% crossed down while the daily is 2%, but experiencing a stochastic "drag."
The NYSE TRIN closed at a negative 1.66, with a/d of 5/11, up/down volume 1/4, on 1.2B shares. The McClellan Oscillator fell to -50 and it should be noted that it can get to -70 and also can have double bottoms down there.
The VIX/VXN rose to 39.1/47.4, but they can rise to the 50/65 levels. The MACDs for them are crossed up.
The a/d lines for the NYSE, Nasdaq and Amex and new highs/new lows are all trending down.
This downdraft is for real and the momentum is very unlikely to change until we get much more oversold on the weeklies and monthlies, with occassional bounces and technical rallies.
Sooner or later the high-priced blue chips like MMM, IBM, and P&G may get hit, and the adage that there can be no bottom until the generals join the others in declining sharply to get oversold usually proves out. That is when you can see them throwing in the towel and finally sellers are washed out.
But for now, there is not sign of a selling climax or capitulation, so we will have to continue this down trend for more weeks.
The U.S. dollar may soon be ending its technical rally while spot gold is now very oversold. The question is whether gold is still in a bull market or if it has reversed trend because it has broken support of 359 and 355 today. Quarterly stochastics imply it is still in a bull market while the monthlies and weeklies are not saying.
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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