***** Technical Analysis (week ending July 30)****
We have seen a complex topping formation since January and February that how led to a major move down. Perhaps we will see a another 5-10% decline by late August or early September as some cycles are calling for, and then a late year rally to be followed by another decline early next year, as the next stage of the Kondratieff Winter continues for stocks.
The K Winter calls for a rates to rise temporarily and then fall when disinflation and some deflation occurs later. This week bonds rose sharply as rates fell on weak labor numbers, and thus bonds may be firm for a while longer before coming back down. But they are in an intermediate downtrend as rates are likely to continue their rise in the months to come.
Real estate is showing signs of weakening after 7 strong years, and the K Winter calls for disinflation and some deflation to eventually make real estate assets decline in value.
Blue chips are starting to show signs of cracking and if they join the Nasdaq and more speculative stocks to the downside and get oversold enough, then we could see a tradable bottom.
The Nasdaq technical indicators are oversold (e.g. DMI, CCI, RSI, McClellan Oscillator and 10% component) and the index is parabolic from its moving averages, and thus a technical bounce is likely early this week. The strength of buyers will determine how long the bounce will last.
But the breakdown technically for the major indices portends significantly lower prices ahead. The support levels have either been breached or reached, and the path of least resistance is down for the next few weeks, technical bounces notwithstanding.
We shall see if we get climactic selling (on heavy volume) following at least 3 days of severe selling pressure. We got one day last Friday. But that bottom will lead to a technical rally, not a new leg up because the Elliot Wave count is currently a primary wave 3 down, which lasts many quarters at a minimum.
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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