Saturday, July 5, 2008

Index Technical Analysis

Follow Me on Facebook Follow Me on Tweeter

The past week the Nasdaq 100 pushed the stock market deeper down, while the DJI and S&P 500 indexes struggled to recover from the oversold levels (one of the scenarios mentioned in my previous "Nasdaq 100 is behind" post).

If I take a look at my standard chart setting I still see mixed picture:

  • The DJI index shows strongly oversold levels. McClellan Oscillator, MVO, RSI Stochastics and other technical indicators on the 60-day chart point to the higher probability of a recovery. As we saw that during the last two trading session the attempts of the Dow Jones Industrials to start a recovery.
  •  Taking look at the same 60-day technical indicators applied to the S&P 500 index I see that on one side McClellan Oscillator, RSI and Stochastics points to the recovery and on the other hand the SBV still decline and MVO is still below zero line. Yet, the S&P 500 the same as DJI is heavily oversold.
  •  The Nasdaq 100 index is less oversold than DOW and S&P. The SBV still declines and MVO is still below zero by pointing on the possibility of the further slide. The Stochastics is still negative while the RSI is positive. The McClellan oscillator is almost flat, yet, I may say could be considered positive as well.
As I see from my 60-day index technical analysis the market is still mixed and in spite of the oversold Dow Jones and SP the Nasdaq 100 still has room to push market lower.

If I look at 1.5-year chart I see very nice, very huge volume during the index slide in the S&P 500 and DJI sectors. These volume surges are heavier than those that reversed the stock market in March 2008. Based on these volume surges I would say that we could be on the edge of the recovery. On the other hand, the same 1.5-year Nasdaq 100 chart shows almost flat volume during the Nasdaq 100 slide.

So, what I would expect from the market…. Personally I would bet more on the recovery than on the further market drop. Even if we are in the long-term stock market crash, on my opinion the market has to make at least a correction and move up before dropping further down.

If you read my blog, please, keep in mind, that I analyze 1.5-year and 60-day chart not to define mid- or long-term trend. I need more this technical analysis to adjust my short-term trading system to the odds of the general market trend.

No comments: