***** Technical Analysis (for March 17)*****
For the second time in three sessions, the market rose sharply on increased volume, as the Dow rallied almost 300 points while the Nasdaq had an even stronger day percentage-wise. The question arises as to whether this is the early stages of a new bull market or at least an intermediate term rally of 2-3 months.
The Nasdaq and NYSE TRINs were extremely positive at about .20, with a/d of 24/9 on the NYSE and 2/1 on the Nasdaq while up/down volume were around 11/1. The volume on the Nasdaq rose to 1.9B shares and on the NYSE it was 1.7B shares, which can be considered moderate for the Nasdaq.
The Nasdaq McClellan Oscillator rose sharply to +27 and on the NYSE it was +29, so the bullish momentum is strong. The 10% index is not quite above the zero line for the Nasdaq but is above it on the NYSE, and both 10% indexes are above the 5% ones.
The Nasdaq and Dow weekly stochastics are just barely crossed down but rising sharply so one more strong day or two moderately strong days could cross this up. The dailies are 99% while the hourlies have the "d" as well as the "k" near 99%. The slow stochastics are reaching extreme levels and we shall see how much time they spend above 75%.
The Nasdaq RSI rose to 63.8 while the index is above the 200/50 dmas now which are at 1344 and 1350. The MACD, DMI, Williams%R, DMI, Money Flow and Acc/Dist are positive while the Aroon is neutral (but likely to turn positive in the next day or two if the market stays firm) while the OBV could be interpreted as being negative.
The sentiment indicators are mostly neutral except the put/call ratio which is negative.
The Dow blasted through resistance levels of 7700 and 8050, and is just a few points away from 8150 resistance, so 8250 may be the next bona fide resistance level. The S&P 500 was supposed to have major resistance at 865-870, but it is so close to it now that one more strong close will take that out as well.
The Nasdaq has been outperforming the other indices which have not advanced past their 200 day moving averages yet like the Nasdaq has, but they have closed just above their 50 day moving averages for the first time in several months.
Now the bullish momentum will be watched closely to see if there will be a technical rally lasting several weeks or if this one will fizzle out in the next several days. Market internals during the early part of the sessions provide clues as to whether the market is under accumulation or distribution and if the rally has legs or if it will fail soon.
If the market weakens in the days ahead, the media will find something to blame it on, and they can use the same news or data to explain it both ways. Thus far, this rally is both an oversold one and one that has some actual accumulation.
For now and for long term investors, there is still a lack of technical evidence that the bear market is over, in my estimation, and that we will see lower prices in the months and year ahead.
In the meantime, the Dow could rally to or above 8250, which would mean that we could have a trading range for a while between the mid-8000's to 8000 in the next 2-4 weeks. A reversal (close) below 8050 might mean that most of this rally is over.
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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