***** Technical Analysis (January 28)****
The stock market was mixed this past week after a sharp selloff for 2 1/2 weeks. As mentioned in daily TA Updates, this rally may turn out to be just a technical one from oversold conditions, and unless it could gain momentum on Friday or Monday, from the mid-week strength, it is likely to reverse this coming week.
The Nasdaq Summation Index has now fallen to below the zero line and if it makes a lower high during the next rally, it could portend a major decline in the next 2-3 months. The NYSE Summation is now below +500 and it too could make a lower high during the next rally.
Stochastics and MACDs are all looking weak 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 much 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 only sector that looks positive right now is the energy sector and some of the basic materials stocks. Crude has held above $40/barrel despite several attempts to break and now has risen to 48, closing above the important 44 support level. Some backing and filling may now occur and then another leg up to test 50 may ensue late in January or in the first half of February.
Crude oil has held a lofty trading range despite higher inventories and expected warmer NE temperatures. Energy stocks will keep reporting positive earnings as long as spot crude stays above $35/barrel and natural gas above 4-5.
Gold continues to be rangebound, mostly in reaction to the swings of the USD, which is trying to continue its technical 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. There are many other TA structures, strategies and systems.
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