***** Technical Analysis (July 1)*****
The market rallied Tuesday to no surprise as selling pressure had waned and an oversold condition had been present, plus the major breadth and breadth momentum indicators were too elevated to warrant a sharp and sustainable decline at this time.
The rally should continue to retest the prior highs of near 9350 and 1686 for the Dow and Nasdaq. The S&P 500 could reach the 1015 area as well, and then we shall see if the market tops out or not.
There will not be a sharper and more sustainable decline until the market has formed a topping formation and is accompanied by many bearish divergences. Also, sustainable declines are present after prices are already down substantially from their highs and then they accelerate. The Summation Indexes are too high for that to be likely now but in 3-6 weeks from now, it might set up that way as far as the longer lasting decline and then in 2-3 months from now, it could accelerate.
But before getting ahead of ourselves, the short term trend is probably up and we may retest the highs or even take them out a bit, but there is much complacency out there and extreme bullishness. Thus, sentiment indicators are bearish from a contrarian viewpoint and they will eventually and ultimately be vindicated as they are leading indicators and not great timing tools.
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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