***** Technical Analysis (week ending August 27)****
The market rallied modestly this past week on very light volume which will need to pick up if it is to be successful as we reach resistance levels.
The Dow appears to have some resistance at 10,250 (the fibonacci retracement levels are at 10,225=50% and 10,337=61.8%), S&P 500 at 1120 and the Nasdaq at 1875 and sronger resistance at 1900. Two to three rally days this week is expected again. It would benefit the bulls more if they were late in the week with some weakness early to work off the overbought near term technicals such as the hourly stochastics. In any case, the rally would last longer if the overall volume increases to over 2.0B/1.8B for the Nasdaq/NYSE, respectively, on rally days.
The Nasdaq monthly stochastic is 67% crossed down, weekly 33% going up, daily 76% crossed up, hourly 90% crossed up but going sideways now and with a high "d." The McClellan Oscillator rose to +52, and its Summation is rising now at -596, giving bulls evidence that this rally has legs.
The Nasdaq MACD, Williams%R, DMI (ADX) and rate of change are positive while the CCI , Money Flow (worsened), and Acc/Dist are neutral, and the Aroon improved to near neutral. As I mentioned last week, by the time the Aroon improves to neutral or positive, the market may be ready to reverse back down.
The Dow monthly stochastic was 83% going sideways, weekly 52% crossed up, daily 96% crossed up, hourly 92% crossed up but going sideways, with a high "d." The NYSE McClellan Oscillator was virtually unchanged from last week at +48 and its Summation is rising at +481.
The Nasdaq is still operating with the "cross of death" and is well below its 200 dma of 1973.
For now the bulls have the edge and yet they have a lot to prove technically for the longer term. This week will likely see some more strength but technically the longer term has not been proven to be positive.
We are now overbought and a few more days of rallying will get us to very overbought and then the true test will occur.
Crude oil crashed this week from its high of $49/barrel and finished the week at about $42. It should stabilize but perhaps at slightly lower prices though it is unlikely to rise sharply at this time, barring some negative geopolitical development.
Bond rates remain stable in the lower part of their trading range of 4.2% to 4.3% for the 10 year notes. They may be in a range between 4.1% and 4.4% until a breakout to higher levels later this year, as foreigners reduce their purchases of bonds and dollars.
Precious metals have acted pretty well the past few weeks and now are overbought according to stochastics themselves so the risk of taking on long positions may be increased now.
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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