***** Technical Analysis (for April 30)*****
There have been several narrow trading range days recently without a lot of movement in the indices. The question is whether the rally is losing major momentum and making a toppy distribution formation or if it is resetting for another major move upwards with the adage, "never short a dull market."
The major technical indicators are positive, including the breadth and breadth momentum indicators, such as the McClellan Oscillators for the Nasdaq and NYSE, which by the way did not move today (Nasdaq +32 was unchanged) or barely moved (NYSE +36 from +34), thereby implying a large move within 4 sessions. The positive readings might imply the move is up while there are technical indicators with negative divergences (CCI and Money Flow), which might imply the move will be down.
The Nasdaq TRIN closed at a negative 1.91, with a/d of 17/13, up/down volume 2/3, indicating mild distribution, on moderately light volume of 1.6B shares. The MACD, Williams%R, DMI, CCI, Money Flow, Acc/Dist and Aroon are positive while the ROC and OBV are neutral. The RSI dropped to 63.6.
The NYSE TRIN closed at a negative 1.30, with a/d of 19/13, up/down volume 8/7, indicating neither accumulation or distribution, on moderately light volume of 1.6B shares.
The VIX and VXN were virtually unchanged once again at 23/32, respectively, while the VIX MACD is uncrossed after having been crossed down for some time, so it has improved, and the VXN MACD is a little less crossed down. The put/call ratio dropped to .69 and its 50 dma dropped to .78, so along with its MACD, this is giving a slightly negative reading. AAII and Investors Intelligence surveys indicate most are too bullish.
There are some more earnings reports coming out in the next week and in the next few weeks but the majority of them are out. Seeing how the market reacts to reports and guidances may give a clue as to whether the rally will continue in earnest or if the market is discounting any more good news.
The Dow has tried to breakout above 8522 several times and if it cannot do so in the next week or so, the risk will increase for a decline of some magnitude. But a heavy volume rally could delay any major profit-taking decline.
Thus, a high level distribution pattern may be forming but more upside action in the near term could delay the subsequent decline. The Dow has major resistance at 8800 next, the Nasdaq has it at 1521, and the S&P 500 at 968.
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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