***** Technical Analysis (August 23)****
This is an new TA update.
Wednesday saw a down market with moderately negative internals.
The NYSE a/d was 5/11, u/d vol 6/13, on moderately light volume of 1.9B shares. The Nasdaq a/d was 1/2, while u/d vol was better at 5/8, on light volume of 1.5B shares. The TRIN's were not above 1.00, so there was not strong distribution today, a mildly positive sign.
The technical indicators worsened today, such as McClellan Oscillators (+13/+5 for Nasdaq/NYSE), stochastics and MACD's. The 30/60 minute stochastics reached very oversold levels today and have turned back up but the daily stochastics are in danger of crossing down, giving a sell signal if that occurs.
Thus, the market is at another crossroads wherein it needs to reverse back up by the close of tomorrow or risk a trend reversal as it has been on a buy signal since a week ago Tuesday, a strong accumulation day that turned many indicators positive.
The weekly NASI Summation indicators including MACD in the second chart below, indicate that there could be more upside for stocks as it has been rising from extremely low levels.
But the market needs to rally soon or risk a bearish reversal, as we have mixed signals at the moment, for the short term and the short-intermediate term.
Crude oil was down sharply today on the higher than expected gasoline inventory data, while gold and silver were mixed. Both are very oversold from a technical standpoint.
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. |
