***** Technical Analysis (for February 3)*****
The technical signals can be interpreted as being quite bearish for the short-intermediate term of 2 weeks to 2 months, as they have been virtually every time there has been a 1-3 month rally during the past 2 years, 10 months.
Either bearish divergences show up or negative chart patterns such as double tops or lower highs as the market rallied on moderate or light volume.
Currently the most bearish signals include the quarterly and weekly stochastics (and monthly stochastics on the Dow), Summation Indexes, declining moving averages, Money Flow-Acc/Dist, and sentiment.
While the market rallied modestly today, it once again closed quite a bit from its intra-day highs and on very light volume and has not been able to penetrate its resistance levels of 8250/8600, 895, and 1380 (Dow, S&P 500, Nasdaq).
The Nasdaq McClellan Oscillator changed by just one to -22, thus signalling a likely very large move within 4 sessions. Unless the Oscillator can turn up above zero very soon, it will likely get very negative once again as the market makes the second impulse wave down since the December 9 top.
The DMI, ADX, Williams%R, and CCI are all negative while the Aroon keeps worsening and is flirting with becoming negative as well. The RSI was little changed at 40.4.
The VIX and VXN MACDs remain crossed up, a bearish signal. The put/call ratio did get up to 1.18 though but its MACD is neutral. The advisors remain too bullish.
The a/d lines and new high/new lows are giving negative readings, to join the McClellan Oscillator and Summation Index to round out the breadth indications.
It is impossible to predict day to day fluctuations with any high degree of accuracy, but the primary trend still appears to be bearish. We may be consolidating the sharp declines before the market experiences a very sharp drop in the next 2-4 weeks. Using a top-down approach, most successful traders are probably short selling more than they are buying stocks.
The U.S. dollar remains in a downtrend while gold has either stalled out or is having a high level consolidation. Gold remains in a long-term bull market but will have large corrections from time to time. It may hold support above 359 and 363, and then retest 379 or possibly take it out, in February. But the gold stocks have not been acting well of late, and need to reassert their up trends this week probably, or risk a sharper correction.
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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