***** Technical Analysis (Sept 21)****
This is an new TA update.
On Friday the major indices declined moderately.
The NYSE a/d was 3/5, u/d vol 8/13, on moderate volume of 2.2B shares, which was lighter than yesterday, a distribution day for the NYSE and S&P500.
The Nasdaq a/d was 9/20, u/d vol was 1/3, on light volume of 1.65B shares, while its TRIN was well above 1.00, unlike the NYSE.
The daily stochastics are crossed down for the second day in a row, while the hourlies are now going up from 0%, but not yet crossed up. The daily MACD's are mostly barely crossed down for most indices.
The Nasdaq McClellan Oscillator dropped below the zero line to -17, for the first time in several weeks.
The NYSE Osc reading spent the second day in a row below zero, now at -21, and the question now is will it rise right back up as it did a couple of weeks ago, or will this breakdown last a few weeks. How many more times can these readings fall just below zero or to just above zero and then rally again?
Other breadth measures such as the a/d line have improved in the past two months from their lows, but are lagging the indices.
The new highs/new lows show highs and lows being very numerous, and may be approaching or have been at Hindenberg Omen levels, that is, when both highs and lows are very numerous, indicating that the market is probably making intermediate term highs or nearly so, while the overall breadth of stocks and sectors is lagging badly. The leaders are powering ahead while leaving most of the other issues behind. The result: bearish divergence and profit-taking correction. See another bearish divergence comment a few paragraphs below.
The bullish case is that the indices have made new recent highs, the tape has been bullish for them the past couple of months, and if the breadth can improve, then another leg up can occur.
Thus, market is at another crossroads, where it could reverse back up and break out above the recent highs, such as S&P500 near 1328, or break down below 1290 support, and start a downtrend lasting weeks.
Below is a link to the Nasdaq/NYSE McClellan Oscillators and Summation Indexes and its 10% components. The Nasdaq Summation Index has turned down very near its zero line, and the 10% index component is now below its neutral line:
stockcharts.com
On the weekly NASI charts that include CCI and MACD, it shows that these are overbought but could allow for more upside action if strong buying can come in:
stockcharts.com[m,a]waclyyay[pc30!c20][vc60][iud20!ua12,26,9]
On the daily SPX charts, the CCI and MACD appear toppy:
stockcharts.com
Below these charts show bearish divergences on the ROC and CCI, as they did not reach prior high levels during the highs of this week:
stockcharts.com
A technical bounce is in process right now as the hourly stochastics are moving up from zero, but they are not guaranteed to rise enough to turn the dailies back up, and if not, then a major decline could follow.
Watch for the S&P500 resistance at 1328 while support is at 1290, and a close below or above today's range (1318/1310), to signal the next major move from this trading range.
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.
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. |
