***** Technical Analysis (May 19)****
The stock market became technically negative a week and half ago after having shown some bearish divergences in rallying the past few weeks, such as the divergence between the Dow and other indices.
Many intermediate term indicators as well as short term have turned negative, such as stochastics, MACD, and EMAs. Breadth and breadth momentum indicators have been weakening for a couple of months now and are below:
stockcharts.com[m,a]waclyyay[pc30!c20][vc60][iUd20!Ua12,26,9]&pref=G
Notice the Nasdaq Summation MACD crossing down and the Nasdaq weekly price below its EMAs and heading downward.
Below are the McClellan Oscillator and Summation for Nasdaq:
stockcharts.com
You will notice that the Summation Index is heading down with a vengeance but could get extremely oversold in the next 2 weeks or so.
It appears that we will have a choppy decline in the ST of 1-2 weeks and depending on the quality of a bottom, it will signal whether this decline will be for many weeks or is shorter in length.
Rallies this week will probably be technical bounces, lasting hours, or 1-2 days at the most, before heading back down.
If the decline is a normal correction rather than an extended leg down, the high relative strength sectors, such as energy and metals and minerals, will lead the way out of the bottom.
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. There are many other TA structures, strategies and systems.
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