***** Technical Analysis (for February 18)*****
As mentioned in the intra-day TA Update, the very strong up/down volume figures implied a firm or strong close today, and those internals did not weaken much during the mid-day countertrend dips, leading to a firm close. That is the good news for the bulls, while there are some caveat-type signs. One of them is the 2 gap days in a row for the Nasdaq on light volume which brings up the question whether the current rally is indicative of a breakaway gap formation or an exhaustion-type gap formation. Last October we had breakaway gaps forming though we may have a different situation this time.
It should be remembered that we have had highs of 9077, 9043, and then a much lower high in the past few months, and that the Dow had fallen over 1400 points so a rally of about 410 points so far (from 7628 to 8041) does not provide for a new bull market or even a strong intermediate term rally. The Dow has resistance at 8150 and may reverse back down anywhere from current levels, 8150, or at 8250, where it has significant resistance.
The Nasdaq TRIN closed at a very positive .28, though now its 60 minute stochastic is flat and uncrossed and its 30 minute stochastic has just crossed up. The a/d was 2/1, up/down volume 7/1, on light volume of 1.3B shares, which takes some of the luster off of the rally day. The Nasdaq weekly stochastic rose to 59% crossed down, daily 60% crossed up and the hourly is 100% with a high "d."
The Nasdaq McClellan Oscillator rose sharply to +5 from -16, and that move upwards was not unexpected, and now the test is whether it can continue its move by getting to +40 in the next couple of days on heavy volume. If not, then it will portend another downdraft. The 10% index did rise above the 5% one but is still below the zero line.
The Nasdaq MACD, Williams%R, DMI and Acc/Dist improved to positive while the ADX, Money Flow and Aroon remained negative. The CCI, OBV and ROC were neutral and the RSI rose sharply to 52.7.
The Nasdaq has gaps below at 1310 and 1281, not to mention 1221 and 1166.
The NYSE TRIN closed at a very positive .42, with a/d of 23/9, up/down volume 6/1, on light volume of 1.2B shares. The McClellan Oscillator rose to -1, with its 10% index nearing the 5% one.
The VIX MACD crossed down while the VXN MACD did not, giving mixed signals. The rally has occurred from VIX and VXN readings that were not extreme, thereby bringing into question the staying power of this rally. The put/call ratio fell back to .81 as did its MACD, giving a neutral reading. Advisors are not as bullish as in recent weeks but there are still more bullish advisors than bearish ones, so it is slightly negative.
The bulls need for this market to rally this week on much heavier volume such as 2.2B shares or more per day, otherwise, there will not be enough committed accumulation by the institutions to make this rally last, and we will reverse back down with conviction.
The U.S. dollar's rally may have stalled out now, and gold may be in the process of finding support in the 339-344 area, leading to a basing period and an eventual rally.
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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