***** Technical Analysis (May 1)*****
A late rally today after the market and internals were negative portends more strength from a technical standpoint in the short term. The Dow was down over 140 points intra-day and finished only down 26 points and the Nasdaq ended up.
The technical indicators were mostly unchanged, with the Nasdaq McClellan Oscillator changing less than 4 points for the third session in a row, thereby implying a large move within 4 sessions, and it could be very large. The NYSE McClellan Oscillator changed by more, down 8 points.
The 200 and 50 day moving averages are sloping upward now and the Nasdaq, Dow and S&P 500 are above them, thereby giving Dow Theory positive signals. The test now is to see if the averages will hold above them during the next correction.
The VIX MACD has crossed up by just a little, thereby turning negative while the VXN MACD remains crossed down though the distance is narrowing. The put/call ratio rose to .85 while its MACD is neutral. Advisors and investors are much more bullish than bearish, a negative sign for the intermediate term.
The Nasdaq TRIN closed at a positive .54, with a/d of 8/7, up/down volume 2/1, indicating modest accumulation on selected issues, on light volume of 1.5B shares.
The NYSE TRIN closed at a mildly negative 1.21, with a/d of 16/15, up/down volume of 6/7, on 1.4B shares.
The resilience of the market today and lack of selling pressure accelerating portends more strength in the next day or two, and if so, a retest of 8522-8600 and 1521 may be achieved.
We are entering unfavorable seasonality which places pressure on the bullish camp, particularly because we have rallied for over 6 weeks into this period and are overbought.
Thus, the market will be tested during any rallies to prove that there is technical strength and significant accumulation; otherwise, the market will start a multi-month downtrend in all likelihood.
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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