***** Technical Analysis (June 21)****
This is an updated TA update.
Today Wednesday saw the markets rally strongly from the opening, trade stronger mid-day, and then mild profit-taking in the last hour.
The a/d today was very strong for most of the day at 3/1 for the NYSE and Nasdaq while the u/d vol was even more positive as the Nasdaq u/d vol was better than 11/1 and NYSE was better than 8/1 at one point, but ended at 9/1 and 5/1 for those indices, still very positive for accumulation, on moderately heavy volume.
The daily stochastics and MACDs for the major indices are crossed up clearly now and suggest more upside in the short term.
Many sectors performed well today including transportation/parts, aerospace and aerospace suppliers, oil-related companies, retailers, brokers, and technology. Even gold stocks rallied, so the breadth of the rally was very good indeed.
One might expect the internals to be positive more than 2/3rds of the upcoming sessions while there may be some days or intraday when the Dow or other indices will be down while the internals will be more favorable, which is a form of bullish divergence.
Choppiness is likely for the indices and overall market but the favored sectors will likely have more steady uptrends now.
The McClellan Oscillators rallied strongly after having changed by less than 5 yesterday, implying a large move was coming within 4 days or less, and it came today.
IBD would consider today's action as the follow-through day that was needed after last Thursday's breakout day, so the trend is likely to be up now, for the ST, and perhaps in the short-intermediate term.
The sentiment was bearish in the latest report as Investors Intelligence has 38% bulls and 34% bears, so that is bullish from a contrarian view.
See the chart link below and modify it:
stockcharts.com
(change this chart to $compx, weekly charts, and change the lower settings to slow stochastics, macd, and Williams%R to get the best chart)
The Nas weekly Summation-related charts are below:
stockcharts.com[m,a]waclyyay[pc30!c20][vc60][iud20!ua12,26,9]
The lowest chart, the weeklies, has finally reached the -800 area that frequently indicates at least a ST bottom.
The Nasdaq McClellan Oscillator and Summation Indexes improved today and the oscillator could turn positive above the zero line with one more rally day:
stockcharts.com
The Summation Index has reached a very extreme intermediate oversold reading, and could correct back up for a while, even if we are in a cyclical bear market now.
The indicators from IBD are little changed from last week, with sentiment negative and the NYSE specialists remaining more short than the public.
For now, the best way to trade is to ignore longer range forecasts and to trade the short term and short-intermediate term swings based upon your technical analysis.
Odds still favor a lower trading range this year, if not an outright cyclical bear market. If one believes in Elliot Wave theory, it is probably hard to make a case that Wave 3 (down) has not started now, but perhaps it is possible that it will be delayed one more time in an extended corrective move up, and that will be signalled if we break above the resistance levels mentioned earlier, and if we then make a higher low.
Fundamentally and from a macro-economic viewpoint, the technicals imply that China's growth may slow temporarily at least from an average of 9% to perhaps 7-8%, and India's growth may slow from an average of 7 1/2% to 6%, and the US economy may slow from an average of 3.5-4% the past year to 2.5-3% for the next few quarters.
Precious metals and basic metals, such as copper, may have reached their top when gold was over $700/oz and copper was about $4/lb, and will trade in a lower range for a while, but can rally along with oil and growth stocks and the major indices. Zinc and other minerals will also trade in a lower range than their lofty ones this year. But the stocks that are in these sectors can still make good money, and their stock prices may recover some in the weeks to come.
Because the technicals of the market are so damaged, it is probably not wise to assume that it was just a severe but normal correction within a cyclical bull market, but to remain flexible within a swing trading style, and be aware that we could be in the early stages of a cyclical bear market.
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.
Dr.Bob no longer hosts Stocktimers meetings on Sunday nights at AOL. |
