***** Technical Analysis (August 16)****
This is an new TA update.
Wednesday saw another huge rally on outstanding internals again.
The NYSE a/d finished at 3/1 and the u/d vol was 4/1, on heavy volume of 2.5B shares, which is heavier than yesterday, it implies more upside potential for stocks in the days ahead although it won't be straight up.
The Nasdaq a/d was 2/1 while the u/d vol was better at 5/1, indicating very strong accumulation, and on heavy volume of 2.14B shares.
The Nasdaq McClellan Oscillators for the Nasdaq and NYSE improved strongly to +44/+51, respectively. It is rare for these to come right back down immediately, so expect the readings to range between +50 or so and +20 for a while as the majority of stocks rally in the days ahead. Eventually it will unwind back down unless we see heavy volume rally days consistently.
The daily and weekly stochastics and daily MACD's are now crossed up, bullish.
The last two days have to be considered strong accumulation days and for the time being, this bullish momentum has changed the trend to an uptrend.
The path of least resistance is up for most stocks. The leading sectors today were retail and technology stocks although many sectors have rallied this week.
The CPI numbers were benign and crude oil futures continue to fall, resulting in some excuses for buyers to step in today.
There could be a pause tomorrow sometime as the 60 minute stochastics are overbought and profit-taking takes place, but later tomorrow or on Friday the market could rally again.
Below is a link to the DMI(ADX), slow stochastics and StochRSI:
stockcharts.com
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. |
