***** Technical Analysis (week ending August 13)****
The market had the technical bounce early this week on Tuesday but saw no follow-through and by Thursday, was headed back down. Once again we are very oversold.
Blue chips are starting to show signs of cracking and they may be joining the Nasdaq and more speculative stocks to the downside and get oversold enough to get to a tradable bottom. However, we are so oversold and could get another technical rally without a selling climax or capitulation first, which would delay a tradable bottom that lasts for at least a few weeks.
The Nasdaq technical indicators are oversold (e.g. DMI, CCI, RSI, McClellan Oscillator and 10% component) and the index is parabolic from its moving averages, and thus a technical bounce may occur again early this week. The strength of buyers will determine how long the bounce will last if we can get it.
But the breakdown technically for the major indices portends significantly lower prices ahead. The support levels have either been breached or reached, and the path of least resistance is down for the next few weeks, if not the next few months, technical bounces notwithstanding.
We shall see if we get climactic selling (on heavy volume) following at least 3 days of severe selling pressure. We got one day last Friday. But that bottom will lead to a technical rally, not a new leg up because the Elliot Wave count is currently a primary wave 3 down, which lasts many quarters at a minimum.
Some cycles indicate a bottom in the first week of September but the main indicator of a bottom will be climactic selling.
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.
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