***** Technical Analysis (for February 5)*****
The roller coaster ride of the stock market indices ends with a loss on the major indices, and the Dow closed below 8,000 again. Meanwhile the S&P 500 is showing relative weakness, and if it cannot get back above 864 on a close in a hurry, it will break down badly as will the Dow and Nasdaq. Don't forget the Nasdaq has a magnet at the 1221 and 1166 gaps, as gaps below current prices in a bear market after a technical rally is almost a slam dunk to be filled.
The Nasdaq gap above at 1318 was filled today and it reached a high of 1332 so the reversal to close below the gap is a negative signal. The reversal for the Dow and SPX was also bad news for the bulls.
The Nasdaq, Dow and SPX have all set a new series of lower highs and lower lows in recent weeks. For example the Nasdaq highs were 1521 and then 1467 while the lows were 1327 and 1292.
The VIX is below both the 200 and 50 day moving averages and its MACD is still crossed up, very bearish signals. The VXN is acting more negative and its MACD also remains crossed up, working its way up steadily.
Some of the major indices have had 2 outside weeks to the downside and 1 outside month recently. This is a very negative signal as well.
The Nasdaq and NYSE Summation Index are both coming down and are at risk of falling sharply unless the market can engineer a major move up. The odds of a sharper break starting very soon is high.
As mentioned before, the majority of technical indicators are negative or very negative as are the chart patterns, daily, weekly, monthly and quarterly. The quarterly stochastics are scary if you are long stocks.
Gold has also had a roller coaster ride and reached 389 before dropping sharply to around 370-372. Gold stocks still seem to be lagging and are not out of the woods but if gold holds up, they should make another run in February. And the U.S. dollar should have another sharp decline after its current technical rally ends.
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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