***** Technical Analysis (August 15)****
This is an new TA update.
Tuesday saw a huge rally on outstanding internals.
The NYSE a/d finished at 27/5 and the u/d vol was 8/1, on moderate volume of 2.3B shares, which is heavier than yesterday and because it was not light volume for August, it implies more upside potential for stocks.
The Nasdaq a/d was 22/7 while the u/d vol was better at 12/1, indicating very strong accumulation, on moderate volume of 1.8B shares. Its volume was also ahead of yesterday's, thereby also implying upside potential.
The Nasdaq McClellan Oscillators for the Nasdaq and NYSE improved strongly to +30/+31, respectively.
The daily stochastics are crossed up now, bullish, and the MACD's improved to neutral to slightly positive.
Finally the market rally lasted to the close and actually got stronger in the last hour.
Below is a link to the DMI(ADX), slow stochastics and StochRSI:
stockcharts.com
The Dow resistance is at 11,368 (S&P500 at 1293/Nasdaq at 2119) and thus the Nasdaq is the strongest in the ST.
Support to watch for are 11,085, 1258, 2055 for the Dow/Spx/Nasdaq, respectively, and a close below those later on could usher in a decline to test the recent lows, and ultimately a breakdown.
But for now, the path of least resistance could be up, as the McClellan Oscillators/Summation Indexes and the daily stochastics are now bullish in the ST, and we shall see if they are bullish in the Short-Intermediate Term of 2 weeks-2 months, which still seems unlikely. The ST could be 2-3 days or a week or two.
However, the overall volume needs to be at least where it was today on any future rally days or else it risks a bearish reversal and a "double cross" on the daily stochastics in the next few days. The "double cross" is a very reliable and strong signal.
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. |
