***** Technical Analysis (week ending April 16)****
The markets were basically flat this past week with most of the internals and technical indicators somewhat weaker.
The Nasdaq TRIN closed Friday at 2.59, a/d of 16/15, up/down volume 5/13, indicating little conviction on advancing issues and a lack of accumulation, on moderate volume of 1.9B shares. Its a/d line turned back down. The McClellan Oscillator weakened to -18, turning back down as well. Summation is declining and closed at a -99 for the week, and its formation implies that selling could accelerate in the weeks to come.
The Nasdaq monthly stochastic fell to 84% crossed up but the "d" is nearing the "k" making it look toppy, weekly fell sharply to 40% crossed down with "d" still quite high, giving plenty of weeks for this indicator to move down farther, daily 54% crossed down now, hourly 24% crossed up, implying possible near term bounce. The index has risen to above the 50 dma but now is below it again and filled the gap near 2020 but failed to hold above it, a negative technical development. The RSI dropped below the neutral 50 level again to 46. The MACD, OBV, Williams%R, and DMI (ADX) are now negative while the rate of change, CCI, Money Flow, Acc/Dist and Aroon are neutral but they have also weakened.
If this trading range is to hold and to prove that it is a choppy market rather than the start of a major leg down, the next rally needs to have stronger technical signs, otherwise it will be a technical bounce or rally that will fail badly, leading to much lower prices for Nasdaq stocks.
Favorable seasonality is close to ending (April) and the time period of May to October is typically weak.
The Dow monthly stochastic is still 91% crossed up, weekly 73% also for the second week in a row, crossed down, daily 78% crossed up, hourly 91% crossed up, so it is either resetting for another decline or providing a rally to last. Odds favor the former. The NYSE McClellan Oscillator worsened to -35 and the Summation Index continues downward at +205, threatening to join the Nasdaq Summation below the zero line, which would be a confirmation of a new trend.
The question is whether the current rally is another leg up or just a resetting of the supply/demand balance and technical indicators. The week's action support the latter case more than the former. We should know even more in the next week, or two at the latest, by the action of the indices, market internals, and divergences, if any. If any strength weakens or if the rally is on light volume, it would not be positive.
The USD broke out above resistance at 89 1/2 and next resistance is at 92, and it is near term overbought. Bonds fell significantly this week as the bond pits were dominated by traders selling.
Gold fell sharply early in the week and stabilized late and is oversold in the near term so it could bounce this coming week, but has a chance to make at least a retest of the 394 and 388 levels in the weeks to come, with a chance to break below 388 if the USD rallies to or above 92.
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.
Dr.Bob no longer hosts Stocktimers meetings on Sunday nights at AOL. |
