***** Technical Analysis (for February 14)*****
The Dow had fulfilled it test of the 7600-7633 level on Thursday, resulting in a strong rally into the close, and into trading on Friday. All in all, the Dow rallied about 300 points from its Thursday low and could continue rallying into the early part of the next week. Perhaps the rally could achieve 2 out of the first 3 days on the upside, but the overall volume will have to pick up substantially before signalling that a strong intermediate term rally will occur.
The Nasdaq has actually done better than the Dow recently and it closed at its highs on Friday after reaching a low of 1261 on Thursday. It never filled the gap at 1221 and may do that if and when this rally fails.
For Friday, the Nasdaq TRIN closed at a very strong .26, with a/d of 5/3, up/down volume 6/1, indicating accumulation, but on only 1.3B shares. The MACD and DMI improved to only slightly negative readings while the Williams%R, CCI and Acc/Dist improved to neutral. The Money Flow and Aroon remained decidedly negative. The RSI improved to 44.
The Nasdaq McClelan Oscillator rose to -16 and may get to the zero line or slightly higher if the rally continues early in the week. The Summation Index is at -597 while the 10% index is still quite negative. The monthly stochastic is at 17% crossed up, weekly 48% crossed down decisively, daily 25% crossed up, and hourly 100% on the "k" but the "d" is still low enough for more upside action. The slow stochastics enjoyed a "drag" for a few weeks but we are now in the strongest rally of the past month.
The NYSE TRIN closed at a very positive .48, with a/d of 20/11, up/down volume 10/3, on 1.35B shares. The McClellan Oscillator rose to -29, with the Summation at -222. The monthly stochastic is at 17% crossed down, weekly 38% crossed down, daily 23% crossed up, hourly 99%.
The VIX and VXN dropped and their MACDs are uncrossed, so their readings are not negative for the moment. The put/call ratio fell to .98 and also has a neutral reading. Advisors are 40% bullish vs. 31% bearish, a trend in the right direction but only giving a mildly negative reading rather than a positive reading.
The market couldn't accelerate to the downside in panic selling on Thursday, so it rallied instead as sellers dried up and short covering occurred, extending into Friday's action.
But the technical deterioration of the past 5 weeks is not likely to allow for a major trend reversal now, rather, only a technical rally for a little more. The only change in this scenario would be heavy volume rallies occurring.
The U.S. dollar has rallied recently but it is probably a technical rally and due to fail in the next 1-2 weeks. Gold is declining more as it is overshooting to the downside as it does to the upside on occassion. London spot gold has not held support at 359 or 355 and now may have it at 339 to 344, while gold stocks were lagging when it rallied to 389 and have held up fairly well as of Friday during the sharp correction. At this time, it appears that gold has not reversed its long term bull market trend but may need to consolidate at a lower trading range for a while.
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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