***** Technical Analysis (February 4)****
Today's strong rally has provided confirmation of the Summation Index positive signal when it rose above the zero line for the Nasdaq and NYSE, and portends strength for several days next week. It will eventually unwind back down and the strength of the volume and technicals during the rally days will provide clues as to the length of the rally and early signs of a top. The Summation appears to be marking a series of lower highs; thus, the longer term has bearish potential.
Stochastics and MACDs are all looking positive now along with moving averages. A "double cross" in these two and the Summation Index (or a failure for the Summation to turn positive as it rallies to the zero line) and more bearish divergences showing up during the next failed rally could confirm that the top is in and that we will see a series of lower highs and lower lows for the next 2-3 quarters.
The a/d line and new highs/new lows are still weaker for the Nasdaq than the NYSE, a negative sign. If they should fail to make a higher high during the next major rally, it could cement the fate for stocks this year.
The sector that continues to look positive right now is the energy sector but it is starting to get parabolic for some. Crude has traded within a narrow range of 46-49 for some time now, and needs to rally strong to break out above 50 or risk another decline to 44 or possibly 40. The longer term trend is bullish of course. Crude oil has held a lofty trading range despite higher inventories and now warmer NE temperatures are expected next week which should put pressure on spot crude and heating oil. Energy stocks will keep reporting positive earnings as long as spot crude stays above $35/barrel and natural gas above 4.
Gold continues to be rangebound, mostly in reaction to the swings of the USD, which is trying to continue its technical rally.
I will be in Las Vegas until Monday afternoon on business so I won't be able to trade or post during market hours on Monday.
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. There are many other TA structures, strategies and systems.
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