***** Technical Analysis (week ending February 13)****
The markets were up strongly mid-week and then profit taking and the Friday reversal rule took effect at the end of the week.
The Nasdaq on Friday had an a/d of 1/2, while up/down volume was 5/13, indicating moderate distribution, on moderate volume of 1.8B shares.
The Nasdaq RSI declined to 50.5 this week, while the MACD remained negative, crossed down. The Williams%R, ROC, OBV, DMI (ADX), and CCI were neutral. The Money Flow and Aroon worsened to negative.
The Nasdaq McClellan Oscillator declined slightly to -21. The Summation Index is at +322, and the 10% component is below the 5% one and below its zero line, both negative readings. The Nasdaq index is approaching the 50 dma but remains above it for now.
The NYSE a/d was 3/5 on Friday, up/down volume 4/9, on only 1.3B shares, so distribution was on light volume. The McClellan Oscillator closed at a -18 with a Summation reading of +951, so it has a chance to turn back up in very positive territory.
The Nasdaq and Dow 200 day moving averages are well below current index values, so the up trend has not been violated so far. Also, the a/d lines and new highs/new lows are still in up trends, and they have yet to have a series of lower highs or lower lows, so the market may continue to be firm into March.
At least a retest of the recent recovery highs is likely, with a good chance of higher highs if the volume is heavy or moderately heavy. Thus far, the recent decline may be resetting the supply/demand balance and the technical indicators, with continued mutual fund inflows needed in the weeks and months ahead to drive this market higher.
Some believe the all-time high for the Dow near 11,722 will be reached this year, but for now, the important level is the recent high near 10,750 and then psychological resistance at 11,000.
The Nasdaq has reached 2153 and may retest that level in the first quarter while the prior high of 2328 will be harder to attain.
Gold and silver prices had fallen for 3 weeks until Friday, with gold falling from about $432/oz to as low as $394, or about 10%, with the next support level at $388. Spot gold has closed above $405 for a few days in a row, so it may not need to retest $394 or the $388 support levels. The HUI level that has support is 205, and has held up above that level so far.
Silver closed above the 6.49 level, which is an important near term pivot point, thus providing extra odds for another runup soon, as silver has relative strength over gold now. The spot gold pivot point may now be 310.
The USD had traded from 86-88 over the prior two weeks as it has rallied modestly from the lows near 85, but traded in the 85's this week. It has failed to close above 89 or even above 88. If the USD closes below 85, it may see the 83 level and ultimately work its way down to 79-80 from February to March. In the meantime, it could trade between 85-86.5.
Energy complex has been weak in the past few weeks, with crude oil dropping to $32/barrel recently from $35, but has held above $30/barrel and rallied this week to 34 again, and it should retest $35 again in later February or early March, while $38-$40/barrel is still the expectation in the March to June timeframe.
Bonds have traded between 3.95% to 4.3% in the past several weeks for the 10 year note. It does remain well above the June, 2003 low of 3.07%, and most of the evidence indicates bonds and interest sensitive instruments are in a new and long term downtrend. There is still a fairly good chance that the 10 year note yield will increase to or towards the 5% level later this year, but for the time being, it may stay rangebound between 3.9% to 4.3%.
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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