***** Technical Analysis (August 11)*****
It appears that the Nasdaq and Dow/NYSE have flip-flopped relative strength now. Last week the Nasdaq was weaker and today they were stronger and now it may be its turn for strength. But the intermediate short-intermediate term of 2 weeks to 2 months may be down for all indices, especially after this rally fails (if it fails, of course).
The modest rally today improved the NYSE McClellan Oscillator to -11 from -24 as it tries to cross over the zero line and turn the Summation back up. The Nasdaq Oscillator reading rose to -26 from -44.
The fast stochastics are resetting now after having reached the bottom a few times while the weekly stochastics are still appearing toppy and likely to trend downward.
Despite the rally today, the major technical indicators remain negative. This early week rally may be a resetting one rather than a strong, lasting one, and was expected in the Monday to Wednesday timeframe as the McClellan Oscillator and hourly stochastics were at extreme oversold levels as was the daily "k."
Unless this rally can gain steam and overall volume (today the NYSE had only 1.0B and Nasdaq 1.2B shares traded), it is doomed to fail and to set up a substantial decline in the vast majority of stocks.
While the Dow has held up well, mostly due to relative strength of heavily-weighted MMM, the majority of stocks on all exchanges have lost price and technical momentum.
While it is possible that a more bullish scenario could occur, the bulls have much to prove technically in order to reassert the up trend.
Sentiment indicators remain mostly negative and the fundamentals also remain negative, such as the price/earnings ratio and the ratio of total market capitalization to GDP.
Gold stocks acted well again (but gold's HUI and XAU went parabolic today so a correction may be imminent) while bonds didn't do much and can't seem to muster up a bona fide rally yet. But if stocks do enter a downtrend soon, then bonds may get a benefit after a few weeks. The US dollar remains toppy-looking at the 96-97 area, and is likely to retest 92 in the months to come.
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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