***** Technical Analysis (for April 21)*****
"Never short a dull market" is an adage the bulls like right now due to the narrow range of today's session.
The McClellan Oscillator gave another signal that there will be a large move within 4 sessions (sometimes it occurs in the next 1-2 sessions) due to the Nasdaq reading moving only from +35 to +33 and the NYSE reading from +49 to +45. Gene Morgan, one of if not the first media technical analyst, found that a move of less than 5 would portend a very large move within 5 sessions but I have noticed that lately it occurs within 4 sessions.
The signal does not say which direction, however. The case for a large move upwards can be made by the Summation Index moving up above the zero line today for the Nasdaq and a +537 reading for the NYSE Summation, by the indices all being above their 200 dma's, weekly stochastics crossed up, and several indicators remaining positive (e.g. MACD, Williams%R, CCI, DMI, Aroon). Also, the VIX/VXN MACDs are crossed down. The RSI is above 50 at 62 (Nasdaq).
The bearish case for this next big move includes the Money Flow's negative reading, the lack of overall volume which should be heavy for most rallies to be successful, the put/call ratio MACD giving a negative reading along with Investors Intelligence's bullish vs. bearish advisors, the 3 year bear market which has not been invalidated by a heavy volume breakout above 9077 yet, and the large e-wave count which does not yet have the final down wave established.
The Dow could rally this week to at least 8522 (towards 8800 resistance is possible though it may not get there) and the Nasdaq did take out 1430 by 2 points today (and closed below it at 1424) and has a good chance of taking it out on the way to the 1460-1470 resistance level this week, barring bad news.
Also, earnings reports have given the market a lift recently as most companies are beating estimates. The guidances are not very encouraging, however.
As always is the case, there are mixed signals for the short and intermediate term. Market internals this week should give excellent clues as to the direction and any key reversal could give us a trend signal for a few days.
As discussed many times in my column here, the longer term is bleak from a technical and fundamental standpoint, while the short-term may see some action in the higher part of the range, and the short-intermediate term of 2 weeks to 2 months may see the earlier part firm and the latter part very weak, as the next few months may see a retest of 7416 and 7197 on the Dow.
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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