***** Technical Analysis (for April 11)*****
Some possible scenarios:
1) A continuation of the recent rally and the October lows holding, as the Dow and Nasdaq trade in a higher trading range, either indicative of a new bull market or more likely, indicative of a temporary up trend for the next few months. TA data which suggests this possibility are that the breadth and breadth momentum indicators (e.g. McClellan Oscillators, a/d lines, new highs/new lows) have been improving for the past few weeks and few months, with the Summation Index, ratio-adjusted, making 2 higher lows since July, 2002, one in October and one last month,
2) A trading range market whereby the first range is 7950 support to 8522 resistance, and then spending some time in a larger range of 7416 support to 9077 resistance, but not breaking out of the ranges for the next several months at a minimum. TA data which supports this idea is the lack of volume on both up and down days and the whipsawing nature of the last recent months of trading wherein the market starts to get oversold and then selling dissipates, and wherein the market gets overbought but cannot follow-through on the upside, and indices above their 50 dmas but below their 200 dmas (except the Nasdaq which is above both),
3) A lower trading range, with a series of lower highs and lower lows, with the major indices eventually retesting Dow 7416 and then 7197, over the next few months. Bearish divergences in the MACD, RSI, Rate of Change, OBV, and slow stochastics support this scenario.
For Friday, the market was modestly lower while internals were more neutral as the TRINs were at about 1.00 for the Nasdaq and NYSE.
The Nasdaq and NYSE McClellan Oscillators were a little lower at +9 and +16, and their 10% indexes were just above their 5% ones. The NYSE weekly stochastic is 48% going sideways while the Nasdaq weekly is 39% crossed down.
The Nasdaq RSI dropped to 48.6, while the MACD, ROC, OBV and Acc/Dist are negative, and the DMI and Aroon are positive. The Williams%R and CCI remained neutral while the Money Flow worsened to neutral.
The sentiment indicators remain mixed with the VIX and VXN at low levels while their MACDs are still coming down.
The selling dissipated late in the week and that implies the market could try to rally once again early this coming week. Watch the market internals closely to see if the rally will stick for a few days or if it will likely fail quickly as there are several negative divergences now.
We are likely to continue this trading range for a while longer and while a large downdraft is likely in the next few months, the bulls may be able to hold this market up for this week.
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.
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