***** Technical Analysis (July 28)*****
Bearish divergences are increasing while rallies are appearing to be laboring, including today's attempts. While the Dow is holding up pretty well but the Summation Indexes, MACD, CCI, VIX/VXN MACDs and RSIs are giving bearish divergences. Also, rallies have been on light volume.
The institutions control the direction of the market and have given signs that they are no longer accumulating many stocks in the past month. While news such as the upcoming elimination of Saddam Hussein may rally this market it may be temporary as it is expected, and the big money is probably looking ahead to the future prospects for stocks, valuations, and the economy.
The Nasdaq has still not had a major move after the McClellan Oscillator went from -18 to -20 on Thursday, and may yet have that big move. The Nasdaq oscillator is at -1 while the NYSE reading is -30, a move of only 3 from Friday.
The market indices need to take out the prior highs at 9352, 1015, and 1776 very soon, and on heavier volume, or risk a major reversal. The Summation Index is still high enough to signal only moderate declines, but once it falls below zero, then it can accelerate.
Gold has shown good strength technically and spot appears poised to retest $375/oz in August, at a minimum. Bonds fell again, taking the 10 year to 4.3%, but if stocks fall in August, there could be a flight to quality and safety, which could help bond prices. Also, the FOMC meeting comes up in August as well.
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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