***** Technical Analysis (August 13)*****
There are some real tests coming to the stock, bond, and USD markets now. For stocks, the McClellan Oscillator/Summation Index stalled today after having rallied.
The Nasdaq Oscillator reading changed by only 1 to -4 from -5, thereby signalling a possible major move within 4 sessions. The Summation has fallen from lofty levels to +186 now, holding just above the zero line.
The NYSE Oscillator reading fell to +1 from +9, as it too stalled, and its Summation is at +102, even closer to the zero line.
The Nasdaq TRIN was a neutral .95, with a/d of 16/15, up/down volume 8/7, indicating not much accumulation or distribution, on light volume of 1.45B shares. The RSI closed at exactly 50, so it couldn't be more neutral than that. The technical indicators were unchanged.
The Nasdaq weekly stochastic is 79% crossed down, daily 36% uncrossed, and hourly 80% crossed down, so a negative bias is present here in the intermediate term.
The NYSE TRIN was a neutral .99, with a/d of 7/9, up/down volume 4/5, on light volume of 1.2B shares. The NYSE weekly stochastic is 93% uncrossed, daily 75% crossed up, and hourly 68% crossed down, so signals are more mixed here.
One problem for bulls is that the S&P 500 and its technical indicators are relatively weaker than the Dow, implying that institutions are very selective in buying blue chips now and that they are not strongly accumulating shares of the major blue chip companies of America in a broad sense. That could mean they are not confident or committed to going long stocks.
There have been some lower highs and lower lows on the daily and weekly charts and in some of the technical indicators. Additionally there are bearish divergences.
Overall the market is at a critical juncture from a technical standpoint and there is more risk to long positions than there has been for a few months. That does not mean the bulls can not pull off another rally on some good news, but unless we get heavier volume rallies, the next major move will be down.
The bond market has continued to fall apart and if it can not muster up a rally from near 103-104 on the 10 year note, it could fall to psychological support at 100. The rate has risen to almost 4.6% in the past 7 weeks, and if it is in a new bear market, it will likely affect stock prices in the months ahead. Perhaps a technical bounce will get the bonds back up to the 106-108 level and the rates back down towards 4%, but it appears the best is over for bond holders in the longer term, unless we get deflationary pressures later.
Gold did get parabolic on Friday and Monday but has held up well in a minor correction. But short term traders probably sold some long positions in the past 4 sessions as the risk for a larger correction has risen.
And the US dollar has been fooling around near the 96 level for some time now, with a breakout coming, either above 98, or more likely below 95, in the next 1-2 weeks possibly.
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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