***** Technical Analysis (June 28)****
This is an updated TA update.
Today Wednesday saw early weakness and then a later rally to provide the market with positive internals. The NYSE a/d was 3/2 and the u/d vol was almost 2/1, on moderate volume of 2.1B shares. The Nasdaq ended with a/d of 15/13 after being negative most of the session, and its u/d vol was also almost 2/1, on moderate volume.
The McClellan Oscillators got whipsawed as they improved to neutral today after having turned negative yesterday, and positive the day before. This market continues to be very choppy.
Once again the major indices may be at risk of testing their recent lows, with the possibility of breaking down.
But today's late rally has also placed it in position to rally, especially in light of the fact that the IT indicators are extremely oversold and it will take extreme selling pressure to start a new leg down.
The sentiment for investment advisors has been steadily become more bearish, which is bullish from a contrarian view.
For breadth momentum charts, 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 or IT bottom.
The Nasdaq McClellan Oscillator and Summation Indexes are linked below:
stockcharts.com
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.
Thus, the expectation is that the overall market trend will be up but choppy, and like much of 2004 and 2006, the energy sector will outperform most others, especially oil E&P's, refiners, drillers, and oil equipment/services companies.
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. |
