***** Technical Analysis (June 4)*****
Usually when many of the technical indicators are at extreme levels as the RSI, DMI, CCI, and when the indexes are parabolic from their moving averages, the market is going to experience at least a retracement correction of 38.2% or 50%. But the wild card is the heavy volume as the Nasdaq has now had 6 sessions in a row over 2B shares.
The Nasdaq RSI at 75.5 is very extreme but the heavy volume could delay a major correction for a few more days or another 3-4% in the major indices.
The McClellan Oscillators are moderately positive and actually have room to go somewhat higher and as long as the market internals remain so positive, stocks can go higher.
The S&P 500 seems poised to reach the 1000 level where it should meet resistance and the Nasdaq has some resistance at 1700-1750. The Dow is now within spitting distance of 9077 and if the internals, especially the up/down volume and overall volume is quite heavy on the next rally day, we could break out above it.
A reversal near 9077 would be a possible multiple top reversal but could also just be a temporary pullback.
Odds seem to favor strength in the days to come as there has been good accumulation for most of the last 6 sessions. But after some more upside action, and possibly a retest, the market could reinstate the bear market. In the meantime, many will make more gains on the long side.
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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