***** Technical Analysis (for April 23)*****
The markets rallied to the resistance levels as expected and closed indecisively at 8515/1466, but the volume was heavier on the Nasdaq than yesterday. The momentum has been positive lately and the market will likely need even heavier volume for this rally to be extended for any significant amount of time. I like the rule that because the resistance levels were reached today, the indices need to clearly take them out on Thursday on the close in order to prevent a substantial correction at a minimum.
It is interesting that there is some controversy over the allegations that NYSE specialists are acting improperly due to conflicts of interest when Richard Ney in his writing had exposed the manipulations by NYSE specialists over 25 years ago.
Anyway, the market is overbought and needs strong market internals to take out the resistance levels successfully because the levels can be taken out on light volume but that would portend a false breakout.
The Nasdaq TRIN closed at a positive .79, with a/d of 19/12, up/down volume 2/1, on moderate volume of 1.8B shares. The MACD, Williams%R, DMI, CCI, Acc/Dist and Aroon remained positive while the Rate of Change improved to neutral and the Money Flow remained neutral as did the OBV. The RSI rose to 69.2, an extreme level which needs strong volume to keep it there for a while.
The Nasdaq McClellan Oscillator rose to +51, an extreme level, and its 10% index is quite extreme, so the question is whether they can stay up in a high range for more than a day or two. The daily and hourly stochastics are very overbought as is the slow stochastic.
The NYSE TRIN closed at a positive .76, with a/d of 5/3, up/down volume 2/1, on 1.6B shares. The McClellan Oscillator was unchanged at +59, implying a big move within 4 sessions. The 10% index is very extreme now.
The VIX/VXN were unchanged at 23/33 and their MACDs are still crossed down but both are at extreme levels. The put/call ratio fell to .65 and its MACD is slightly negative.
The breadth and breadth momentum indicators such as the a/d line, new highs/new lows, and McClellan Oscillator are giving positive readings but it would seem that the market would be stronger given these positive readings. Now we are seeing extreme readings without heavy volume but on the other hand, the bearish divergences have lessened recently.
Thus, the market will tell us if it is ready to extend this intermediate term rally or if we are nearing a top.
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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