***** Technical Analysis (May 6)*****
It appears that we could be within a day or two of at least a temporary top as the Nasdaq RSI rose to 72.7, the +DI and -DI are at very extreme levels, the CCI and ROC show bearish divergences, and the VIX/VXN MACDs are crossed up now (though barely). Also, the most speculative stocks (of companies still losing a lot of money each quarter) on the Nasdaq and NYSE are currently the strongest performers, percentage-wise, usually a sign of "irrational exuberance" that is associated with tops.
But the bullish case can be made by virtue of the fact that the volume increased on the Nasdaq to 2.1B shares today on a rally day and that the resistance levels of 1521 and 8522 (Dow) have been broken to the upside. Also, we have seen a "stochastic pop." Finally, the major indices are above their 50 and 200 day moving averages by a clear margin and those averages are trending upward now.
The Nasdaq TRIN closed at a positive .45, with a/d of 3/2, and up/down volume of 16/5, indicating moderate accumulation. The MACD, Williams%R, DMI, CCI, Money Flow, Acc/Dist and Aroon remain positive.
The Nasdaq McClellan Oscillator changed by only 1 point to +46, thereby once again signalling a large move within 4 sessions. The 10% index is giving a very extreme reading.
The NYSE TRIN closed at a positive .75, with a/d of 2/1, and up/down volume of 3/1. The McClellan Oscillator rose to +49 and its 10% index is giving a very extreme reading.
The VIX and VXN are 23/32, respectively. The put/call ratio rose to .91 though its MACD is slightly negative. The advisors are very bullish.
The support levels are at 8250 and 1430 if we have a correction now, and resistance levels are 8800 and 1580-1600. Ultimately, the Dow 9077 area may get tested this month.
In the short term, there is increasing risk to those getting caught in a correction, and then we shall see if the market will rally strongly again or if the rally has topped out and reversed.
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.
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