***** Technical Analysis (June 10)****
Not much has changed technically from last week for the overall market and indices. The indicators weakened a little more for most of them and we are continuing the modest decline which may turn out to be a correction. In ewave, it may be corrective with another impulse move up starting afterwards.
The semiconductors have rallied for the better of 6 weeks and the Nasdaq and growth stocks have relative strength vs. value and defensive stocks now, which bodes well for the overall market. The lack of volume on rally days is the reason why we are seeing a correction now and that this summer rally will be choppy. If volume perks up over 2.2B shares per day, then a stronger rally can ensue.
There is of course the risk that the top is in and that this decline is more ominious than just being a correction before another leg up. But thus far the short-intermediate term signals remain positive.
Energy stocks remain constructive and may dip with the market correction but the seasonal factor of summer demand for gasoline and jet fuel and electricity should fuel prices higher, with crude testing the 58/barrel level in June or July. That level could be taken out on the second or third attempt, on its way above 60 by July or August.
Gold is also acting more constructive in terms of the spot price and gold/silver stocks. If the USD tops out soon and starts to weaken, gold will react positively.
Bond yields rose a bit but are still in the range of 3.8-4.2% for the 10 yr note, perhaps indicating a slowdown in the economy and a lack of inflation. The "carry trade" is just about over with the flattening yield curve which should help demand for common stocks.
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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