***** Technical Analysis (June 24)*****
The market technicals have worsened so badly now that the next rally could be a technical one only, if we retest the recent highs or even take them out, and there is a good chance that we won't take them out. Thus the market may finally be forming a topping pattern, and at the most recent top, there were some negative divergences (e.g. overall volume, rate of change, McClellan Oscillators). If a trend reversal is to take place, then the there should be as many if not more bearish divergences during the next rally.
The market is very oversold on a short term basis, so a rally is expected for the next week, or possibly two. If it is not accompanied by heavy volume, then it could set up a substantial decline that could last for 2-3 months. The Summation Indexes look toppy and may form a series of lower highs and could drop to at least the zero line on the Nasdaq and +500 on the NYSE if there is indeed a trend reversal.
The MACD has turned negative along with the Summation Indexes in the last few days and most of the other indicators are either neutral or more mildly positive.
While it is unlikely that we will fall sharply at this time and a rally from oversold levels is likely very soon, it will be very interesting to see how the next rally shapes up. If it is not impressive technically, then we might see an acceleration to the weakness.
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.
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