***** Technical Analysis (for April 1)*****
While the market bounced up today right on schedule after Monday's selloff, the question is how much more the "war rally" has in it as traders and investors are wising up to the fact that they can get whipsawed each time they get too long. Additionally, the market technicals have lost momentum and bearish divergences are starting to show up along with some lower highs on the indicators.
Unlike March 12 when the market was oversold and started a sharp rally on the 48 hour "ultimatum," by the President, this current market is not oversold. While it can rally somewhat more on good "war news," the technicals and internals are not looking very positive.
For Tuesday, the Dow rallied to the resistance range between 8050-8150, closing at 8069. It would be impressive to rally enough to close above 8150 but it really needs to close above 8250 resistance, or risk a reversal back down to at least 7950 in the next week.
The Nasdaq TRIN closed at a mildly positive .86, with a/d of 3/2, but up/down volume was only 7/5, indicating a lack of strong accumulation, on light volume of 1.4B shares. The MACD was more negative than yesterday and the DMI (ADX) remained negative. The Williams%R, CCI, ROC, OBV and Aroon remained neutral while the Money Flow and Acc/Dist remained positive. The RSI was little changed at 48.
The Nasdaq McClellan Oscillator rose to +17 as it has for now prevented a reversal below zero, but it has much work to do before it can resume its recent bullish breadth momentum. The 10% index rose just above the zero line and is above the 5% component. The weekly stochastic is crossed down at 35% while the daily is 55% crossed down and the hourly is 24% crossed up as it lagged the Dow and S&P 500.
The NYSE TRIN closed at a neutral .90, with a/d of 11/5, up/down volume of 5/2, indicating moderate accumulation on light volume of 1.4B shares. The Dow weekly stochastic is 40% crossed down and daily is 59% crossed down. The McClellan Oscillator rose to +30 as blue chips were stronger today.
The VIX/VXN MACDs are crossed down, a positive reading, while the put/call ratio is giving a neutral reading. The advisors are much more bullish than bearish, a negative reading. Thus the sentiment indicators are mixed.
The Nasdaq is a little above its 200 and 50 day moving averages and the two days gapped below the prior sessions is needing to be resolved by either filling by rallying or by a continuation of the down action. The gaps are above at 1367 and 1403.
The markets may have topped out at Dow 8522 and are in a lower trading range until proven otherwise. A follow-through rally on Wednesday morning is likely but the market internals will indicate whether the rally will have lasting power or if it will peter out.
Since I believe the odds do not favor 8521 being taken out any time soon, the next major Dow move of over 500 points may be down even if we bounce up more on Wednesday. Dow 8150 now seems a likely target but the technical indicators appear to be making some lower highs now.
The U.S. dollar has been weak in the past week or so, while the bonds have rallied after having fallen sharply from March 12 to March 21 as it retraces about 50%. Gold has been firmer recently after having fallen from $389 to the $320's, and gold stocks have stopped lagging gold prices in the past week.
I still expect the second quarter to see a sharply lower stock market with Dow 7416 being tested and then 7197 being next, but it won't happen in a straight line. Thus, it appears the upside is limited while the downside is less limited for the weeks and 1-2 months ahead. Any light volume rallies now will be very problematic for bulls.
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.
NEW TIME Announcement: Dr.Bob hosts Stocktimers meetings on Sunday nights to discuss the end of week Market Analyses, especially Technical Analysis, at AOLs private chat room, from 6-7 pm PST. The Stocktimers AOL meeting is in the private chat room. Or you may Instant Message Drbob512 to locate him.
|
