***** Technical Analysis (June 2)*****
After an early sharp rally, the market experienced a reversal back down, with the S&P 500 closing just above the resistance level of 965 and the Dow paring its gains after having risen just above 9000 intra-day.
The Nasdaq was the index that was down but only by 5 points, which is not much considering its recent huge runup. The TRIN closed at a neutral .93 with a/d of 17/15, up/down volume 13/11, on very heavy volume of 2.5B shares. The question is whether stocks were being accumulated more when rising or if they were being distributed more when the market came back down. We won't know the answer to that question for a few days probably.
The technical indicators were little changed with the Williams$R, a very fast moving momentum indicator being the only one to change, becoming neutral to positive from positive.
The Nasdaq McClellan Oscillator dropped to +31 from +37 while the NYSE Oscillator closed up to +39 from +36, as the NYSE a/d was 21/11. The up/down volume there was 2/1, on moderately heavy volume of 1.65B shares.
The market could see a follow through of weakness in early Tuesday trading and if the internals are pretty negative, then it could last, but if the up/down volume is not very negative, then it could reverse back up.
The Dow 9000 level has a very good chance of being taken out after this pullback which may last only a few days. The 9077 level has a good chance of being tested and we shall see at that time if the internals and volume is strong enough to break out or not.
The main reason why this rally could reassert itself after a pullback and after having reached a very overbought condition is the overall volume has been heavy for 5 sessions in a row on the Nasdaq and has also been heavier than usual on the NYSE. While the Nasdaq index has gone up 80 points in that time, many stocks there have done even better.
A top will eventually be formed but the daily charts imply that 9077 should get tested and that the Nasdaq could rally above 1620 in the month of June and the S&P 500 might reach 1000.
Support is at 8522-8600 and 1560 for the Dow and Nasdaq, and if they hold during the pullback, they could reverse back up strongly, especially if the volume stays relatively heavy.
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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