***** Technical Analysis (July 23)*****
The market continued its rally from oversold conditions but remains unimpressive. It could gather some momentum if the internals get much more positive on Thursday or Friday, but if it remains mildly positive on light volume, next week could be much weaker.
The Nasdaq DMI, Money Flow and Acc/Dist improved to positive while the MACD remained negative. The McClellan Oscillator rose to -18 as it moves towards the zero line but the head and shoulders remains intact so far, with bearish implications for the intermediate term.
The NYSE Summation continues downward, now at +648 after having been well over 1,000, and its Oscillator reading remains quite negative at -49. When the Summation goes below the zero line, then stocks fall more sharply.
The sentiment indiators improved somewhat as the VIX and VXN raw readings have fallen and their MACDs have also dropped a little. Advisors are still too bullish.
The a/d line for the Nasdaq is still in an uptrend while the ones for the NYSE and AMEX are not as strong and might be forming a double top reversal.
The market appears to be holding up during this correction while some indicators are telling a more negative story, such as the Summation Index, 10% indexes, and MACD.
We shall see how this sets up in the next day or two, which may be critical for the next major move.
Gold rose sharply today and the worst may be over for it in the short term. Bonds haven't been able to muster up much of a rally in the last 5 weeks and have declined sharply, perhaps portending a top has been put in during the June highs and that we may be in a new bear market in bonds, which will have bearish implications for stocks in the longer term.
But the Kondratieff theory implies that we are nearing a deflationary period after a disinflation time, which tends to imply that rates will stay quite low for a while longer, so the jury is out on the rate market. That is what occurred in the Great Depression, though that scenario is not very likely. More recessions are likely though in the years ahead.
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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