***** Technical Analysis (June 22)****
This is an updated TA update.
Today Thursday saw the markets fail to follow-through on Wednesday's rally as the major indices were down all day as were the internals.
The Nasdaq a/d ended at 2/3, with u/d vol worse at 4/13, on moderately light volume of 1.7B, which was the only positive. It is more bearish to have negative internals on heavy volume.
The NYSE a/d was 1/2, with u/d vol worse at 3/7, on moderate volume of 2.1B shares.
The daily stochastics and MACDs are still crossed up, but another day or two of weakness will jeopardize that.
If there is to be a sustained uptrend, the market needs to rally tomorrow or by Monday at the latest.
Selling pressure has not been overwhelming on down days this week, but demand for stocks has been intermittent and not on heavy volume. The signals are very mixed for both the ST and the S-IT now, after having been more positive for the S-IT.
We remain extremely oversold on most technical measures.
Choppiness is likely for the indices and overall market but the favored sectors will likely continue to outperform.
The McClellan Oscillators have stalled out after a large move yesterday and are neutral.
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 are slightly negative and could go either way now:
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. |
