***** Technical Analysis (May 15)*****
Objectively the market momentum remains positive and while we can get short term pullbacks every couple to three days that are ephemeral, the resistance levels of Dow 9043-9077, S&P 500 at 968, and Nasdaq 1600-1650, are now within reach.
Today the market internals were modestly positive mid-day and improved, thereby signalling the the market would close higher and near their intra-day highs, which they did.
The Nasdaq TRIN closed at a positive .74, with a/d of 3/2, up/down volume 2/1, on heavy volume of 2.0B shares. The internals indicate moderate to strong accumulation for the day. The ROC remains negative while the OBV worsened but has not yet turned negative and the others are all positive. The RSI rose to 70.1, extreme territory again.
The Nasdaq McClellan Oscillator rose to +26 while its 10% index is extreme again. The weekly and daily stochastics are 99% and the hourly is 90% crossed up.
The NYSE TRIN also closed at .74, with a/d of 5/3, up/down volume 2/1, on light volume of 1.4B shares, as most of the action remains on the Nasdaq. The McClellan Oscillator rose to +24. It should be noted that these Oscillator readings are lower despite most indices closing at or near new recovery highs, bearish divergence possibly.
The VIX MACD is barely crossed up now while the VXN MACD remains clearly crossed up. The put/call ratio declined to .64 and its MACD is starting to get negative again.
The growth and tech stocks on the Nasdaq are getting parabolic, and a little more will make them riskier, especially the more speculative ones, unless we are in a new secular bull market.
The debate is whether we are experiencing a strong bear market rally or if this is a new bull market. The S&P 500 pro forma P/E ratio is estimated at 19-20. The historical average is about 16, and the average at market bottoms is 8-10. If earnings rise sharply in the next year, then the current P/E's might be justified, but if they don't, then we should see more weakness in stock prices in the months or quarters ahead.
But for now, the technical data indicates the momentum remains positive, at least in the near term. That won't change until we make a major negative formation such as a double top key reversal or until we see many bearish divergences in the key technical indicators.
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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