***** Technical Analysis (week ending June 4)****
The markets were mixed this past week with most of the internals and technical indicators improved modestly. But the technical damage of the past couple of months is not likely to reverse and this rally may turn out to be a technical one rather than the start of a successful new leg up. The path of least resistance is down for the short-intermediate term of 2 weeks to 2 months.
The McClellan Oscillator declined for the week to +35 and the Summation has risen to -460 but is far from the zero line and could cross back down in the next week or two as it would take a Herculean effort to turn positive above the zero line. The overall volume has not risen during the rally even though the index has risen above +30.
Some believe that mid-June is a cycle turn so if we continue to rally into it, a sharp decline could ensue afterwards in late June to at least August and that may now be the more likely scenario as opposed to a bottom cycle turn.
The Nasdaq monthly stochastic is 83% and not sigificantly crossed. The weekly declined to 39% and bulls need to see it rise more on heavy volume, daily is overbought already at 85% crossed up and starting to near a possible crossover.
The Nasdaq has prevented the "cross of death" for now as the 50 dma did not cross over the 200 dma as could have occurred if the market was down last week. The RSI declined to 54.
The MACD, Williams%R, CCI, and Money Flow are positive while the Acc/Dist worsened to neutral and the Aroon improved to neutral.
Favorable seasonality has ended (April) and the time period of May to October is typically weak, especially after a multi-quarter rally leading up to it, hence the expression, "sell in May, and stay away."
The Dow monthly stochastic rose to 85% crossed up, weekly rose to 43% crossed down, daily rose to 85% crossed up, hourly 46% crossed down. The NYSE McClellan Oscillator declined to +56 from +91. The Summations did reach the -600 to -800 levels discussed previously and have turned up from there, but they could turn back down after a technical rally on light to moderate volume.
The USD was flat this week. Bond rates ended within their recent higher range and rose on Friday to their highest week close in a very long time. Gold was a bit weak this past week and gold and silver stocks are definitely weak.. Crude oil was weak this week.
The way the market is acting, the blue chips will probably need to have sharp declines before we have a tradeable bottom. Also, intermediate term indicators will need to get more oversold and there is a possibility of a selling climax after the market trades lower. Those will be some of the signs I will be looking for before considering the market is due for a trend reversal.
In the meantime, this rally should be watched carefully, and some signs of a top might be found in the McClellan Oscillators, stochastics, macd, and chart patterns. Overall volume has been light during rally days, a negative technical sign.
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.
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