***** Technical Analysis (August 4)*****
Mid-day the technicals, especially up/down volume figures on the Nasdaq, were not very negative, and gave way to a modestly accumulative rally, but the underlying technicals remain negative.
Unless there are heavier volume rallies in the very near future, this market could see accelerated selling. Some of the indications are setting up similar to other bear market rallies, so longs may consider being cautious here.
The Summation Indexes continue to fall while the MACD and DMI worsened. The sharpest declines occur when the Summation falls below the zero line. Also troublesome for bulls are the readings for Money Flow, Acc/Dist, BP index, and sentiment indicators.
To the bulls it seems almost inconceivable that the market could suffer anything more than a mild to moderate correction because the economic recovery appears to be strengthening and long-lasting.
Technically and fundamentally (e.g. p/e's in the high 20's for the S&P 500) anything is possible in terms of a decline. As a technician, I have to wait and see how the technical signals develop, and am not making presumptions or having any expectations.
Always let the market tell you day by day, and stay flexible and objective in your interpretations.
The market is oversold enough to have a moderate rally if the institutions decide to accumulate stock on positive news, but the bulls have a lot to prove technically now.
Gold is holding firm despite being in a corrective mode, while bonds can't seem to rally, as it has had the second worst decline over 6 weeks. At least a retracement rally should occur in bonds but the question is when because the "trend tends to persist."
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.
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