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Coolhand's Market Analysis

The Battle Continues

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Last week, I said that there was some key support areas getting tested among the major indexes.

Mean returns & standard deviations for each fund for past 3-5 years-nyse-png

This is the weekly chart of the NYSE that I posted last week. If you look at the red candlestick that depicts the weekly action from 2 weeks ago, you'll see that price settled right at the top of an area that I felt might be a reasonable area to look for support across the broader market. Last week's action produced a large, weekly doji that shows how much of a battle there is between the bulls and the bears. The bulls won last week, but they had to lift the NYSE off a deep low. The action was only modestly bullish on a week over week basis. Note that the 50 dma is where price is currently fighting to stay above. Momentum is weakening a bit on this chart.

Mean returns & standard deviations for each fund for past 3-5 years-compq-png

The Nasdaq paints a somewhat different picture. While the NYSE hit a double top on the last sustained rally, the Nasdaq came nowhere near a double top and in fact was not able to retake its 50 day exponential moving average.

Here is a snippet from my Monday report: "The stock charts showed improvement on Friday as price lifted well off some key support areas, but they are all now hitting resistance. Momentum is trying to turn up. Looking at my intermediate term system I note that NAMO, which is a breadth indicator on the NYSE, is biasing modestly higher. But NYMO, which is a breadth indicator for the Nasdaq, is biasing lower. It’s a mixed picture, but it appears consistent with bottoming action. TRINQ, which is also a breadth indicator, is oversold and remained so after Friday’s rally. This appears bullish to my eye, but TRIN is leaning a bit bearish. Again, it’s a mixed picture between the NYSE and Nasdaq. BPCOMPQ, another breadth indicator for the Nasdaq, is starting to level off, but remains negative, though only barely. It too is suggestive of bottoming action as the signal levels off."

While I tend to see the technical indicators as leaning bullish overall right now, one could easily see reasons to be bearish on my comments as well. But there is more to the analysis than I have posted here.

There is still a battle going on over the direction of price, but if you're bearish, be careful. The potential for a significant move to the upside is building.

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Updated 05-22-2016 at 04:43 PM by coolhand

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