***** Technical Analysis (August 11)****
This is an new TA update.
Friday saw a mild decline on light volume.
The NYSE a/d finished at 11/21 and the u/d vol was11/28, on light volume of just under 2.0B shares.
The Nasdaq a/d ended at 9/19 while the u/d vol was 2/5, on light volume of 1.64B shares.
The Nasdaq McClellan Oscillator declined -14 while the NYSE Oscillator also worsened, to -8.
The majority of daily stochastics are crossed down, bearish, while their daily MACD's are still crossed up and positive but their 60 minute MACD's are mostly bearish. The Nasdaq daily stochastic remains crossed up as that index has had relative strength for a few days and the stochastic never reached the high levels that the other indices did.
The announced cease-fire in the Middle East along with the very ST oversold conditions of the market portend a bounce on Monday early.
Rallies have not been able to extend more than a day or a a day and a half, during the past couple of weeks, so that will be the challenge of any bounce on Monday or Tuesday.
Below is a link to the DMI(ADX), slow stochastics and StochRSI:
stockcharts.com
They are mostly pointing to a lower prices trend. For the ADX dark line, you will notice that while the market has been rising the past 3.5 weeks, the line has not been rising, thus indicating the rally has been a countertrend, not a major move.
The Dow resistance is at 11,368 (S&P500 at 1293/Nasdaq at 2119) and soon a rally needs to take those out or risk a bearish reversal that will be an intermediate term one.
Support to watch for are 11,085, 1258, 2055 for the Dow/Spx/Nasdaq, respectively, and a close below those could usher in a decline to test the recent lows, and ultimately a breakdown.
See the indicators below:
stockcharts.com[m,a]waclyyay[pc30!c20][vc60][iud20!ua12,26,9]
Be sure to use the advantages of the "top-down" approach, a paradigm in technical trading. The bottoms-up approach refers to the idea that market timing is not used and that the goal is to select strong companies from a fundamental standpoint to buy and hold.
The "top-down" approach refers the the idea that one first ascertains the trend of the market, the strongest or weakest sectors for that trend, and the strongest or weakest stocks within those sectors, to trade, all with the trend. For example, recently the oil sector has been among the strongest while the semiconductors have been among the weakest. So when you see the market trending up, you would select the strongest oil stocks to go long, and when the trend is down, you would short the weakest semiconductors.
For breadth momentum charts, see the chart link below and modify it:
stockcharts.com
(change this chart to $compx, weekly charts, and change the lower settings to slow stochastics, macd, and Williams%R to get the best chart)
The Nas weekly Summation-related charts are below:
stockcharts.com[m,a]waclyyay[pc30!c20][vc60][iud20!ua12,26,9]
The Nasdaq McClellan Oscillator and Summation Indexes are linked below:
stockcharts.com
Odds still favor a lower trading range this year, if not an outright cyclical bear market. If one believes in Elliot Wave theory, it is probably hard to make a case that Wave 3 (down) has not started now. It started in early May.
Fundamentally and from a macro-economic viewpoint, the technicals imply that China's growth may slow temporarily at least from an average of 9% to perhaps 7-8%, and India's growth may slow from an average of 7 1/2% to 6%, and the US economy may slow from an average of 3.5-4% the past year to 2-3% for the next quarter, and may become a recession within the next 6-9 months.
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. There are many other TA structures, strategies and systems.
Dr.Bob no longer hosts Stocktimers meetings on Sunday nights at AOL.
I can be reached at drbob512@msn.com. |
