NASDAQ Composite (.IXIC) have finally regained control
The bulls have finally regained control of this market. But like a tennis match between two top-seeded players, there’s no telling when the back-and-forth is going to end. The good news is, the market just received some bad news — the type that all but assures the Fed will intervene when things go sour.
Stocks closed higher Friday, capping their strongest week since November, driven by a weaker-than-expected jobs report, which fueled the odds that Federal Reserve will adopt easier monetary policy. The market has priced in as much as three interest rate cuts, according to several analysts, who believes the Fed will in fact take action to stem a decelerating U.S. economy, especially as trade tensions between the U.S. and China persists.
The bad news: The U.S. economy created 75,000 new jobs in May, well below 185,000 economists were looking for. Notably, it’s the second time in four months that jobs growth was under the 100,000 benchmark, which also revealed slowing wage growth. If that weren’t bad enough, job estimates for both March and April were adjusted lower by a total 75,000, pushing the three-month moving average of monthly job gains 38% lower (from 245,000 in January to 151,000 today).
The good news: This type of weakening employment and wage growth data suggests the Fed could cut interest rates (the first of three) at its policy meeting later this month (June 18-19), if not in July. Stocks were already in rally mode, owing to comments made Tuesday by Fed Chairman Jerome Powell saying, the committee would “act as appropriate to sustain the expansion.” Translation: A rate cut could be an appropriate solution to weakening economic data and uncertainty over trade.
The upbeat comments drove all the major indexes higher for the week. During which the Dow Jones Industrial Average was the big winner, gaining 4.7%, while the S&P 500 Index returned 4.4% and the Nasdaq Composite climbed 3.9%. Both the Dow and S&P 500 notched their best weekly gain since November.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 7,730.85.
The projected upper bound is: 7,983.29.
The projected lower bound is: 7,504.86.
The projected closing price is: 7,744.08.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 5 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.2960. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.75. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 3 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 82. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed up 126.548 at 7,742.101. Volume was 9% below average (neutral) and Bollinger Bands were 19% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 7,560.58 7,855.82 7,517.58
Volatility: 24 20 26
Volume: 570,742,592 540,908,992 587,456,768
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
NASDAQ COMPOSITE is currently 3.0% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 20 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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