***** Technical Analysis (July 7)*****
The market rallied sharply with the Nasdaq leading the way as volatile stocks made the largest moves up. The Nasdaq closed above 1700 for the first time in about a year and the Dow and S&P 500 seem poised to retest their highs of 9352/1015 this week.
The question is whether this is another leg up with more to come. The a/d line and new highs/new lows have held up well during any pullbacks while the Summation Index and MACDs weakened more.
For today, the McClellan Oscillator finished at +9/-4 for the Nasdaq/NYSE, respectively. The overall volume was only 1.85B on the Nasdaq and 1.4B shares on the NYSE so bulls will want to see volume pick up on future rally days to signal major accumulation and a lasting rally.
Bearish divergences appear to have a good chance of showing up as we rally to the highs. Earnings reports in the next 2-3 weeks may be the excuse to rally this market once again into late July or early August, though it won't be straight up.
I see some negative divergences now but we shall see if they disappear during this rally or not, or if more indicators will join them.
The price/earnings ratio for the S&P 500 has risen to above 30 again, fundamentally a negative sign.
Gold dropped slightly today and needs to hold up in the next few days to allow for support and then another rally. Bonds have continued to be very weak and may have a little more downside to be followed by a rally though the lows in interest rates may have been put in.
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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