***** Technical Analysis (week ending May 28)****
The markets were up this past week with most of the internals and technical indicators improved modestly and the rally was strong enough to carryover into early this coming week. But the technical damage of the past couple of months is not likely to reverse and this rally may turn out to be a technical one rather than the start of a successful new leg up, and then come back down, as the path of least resistance is down for the short-intermediate term of 2 weeks to 2 months.
The McClellan Oscillator rose sharply to +47 and the Summation has risen to -610 but is far from the zero line and could cross back down in the next 2-3 weeks as it would take a Herculean effort to turn positive above the zero line. The overall volume has not risen during the rally even though the index has risen above +30.
Some believe that mid-June is a cycle turn so if we continue to rally into it, a sharp decline could ensue afterwards in late June to at least August and that may now be the more likely scenario.
The Nasdaq monthly stochastic rose to 84% crossed up and may be in a before falling sharply later this year. The weekly rose slightly to 42% and bulls need to see it rise more on heavy volume, daily is overbought already at 95% crossed up though it could take a week or two so before the "d" rises enough for a crossover.
The Nasdaq has prevented the "cross of death" for now as the 50 dma did not cross over the 200 dma as could have occurred if the market was down last week. The RSI rose to 58.
The MACD, Williams%R, CCI, Money Flow, Acc/Dist improved to positive while the Aroon remained negative..
Favorable seasonality has ended (April) and the time period of May to October is typically weak, especially after a multi-quarter rally leading up to it, hence the expression, "sell in May, and stay away."
The Dow monthly stochastic rose to 84% crossed up, weekly rose to 37% crossed down, daily rose to 63% crossed up, hourly 78% crossed down. The NYSE McClellan Oscillator rose very sharply to +91 while the market has not risen very much. The Summations did reach the -600 to -800 levels discussed previously and have turned up from there, but they could turn back down after a technical rally on light to moderate volume.
The USD closed lower this week as its rally has stalled. Short term it may have a little more downside, then the real test will take place. Bond rates ended within their recent higher range as rates can not go straight up without a correction or pause. Gold rallied again this week but may be stalling nw. Crude oil was weak this week and energy stocks on average have lagged worse, perhaps a bearish sign.
The way the market is acting, the blue chips will probably need to have sharp declines before we have a tradeable bottom. Also, intermediate term indicators will need to get more oversold and there is a possibility of a selling climax after the market trades lower. Those will be some of the signs I will be looking for before considering the market is due for a trend reversal.
In the meantime, this rally should be watched carefully, and some signs of a top might be found in the McClellan Oscillators, stochastics, macd, and chart patterns.
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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