Stock Market Technical Review for July 18

   This post begins with my comment on Tony Caldero's Thurs., July 18, 2013 Update on his Objective Elliott Wave (OEW) site. He offered 2 alternative Elliott wave counts and I am presenting my critique of  his first wave count. I then continue with non-Elliott wave market analysis.

   The main issue I see with Tony's first count is that 1685-1672 is too small to be a legitimate minor corrective wave 4. The fact that it does satisfy the theory of alternation in that minor wave 2 was deep and thus minor wave 4 could be flat is the main factor that could give that interpretation reasonable credibility.
    We did have new highs by the DJI, DJT, Wilshire 5000, Russell 2000, S&P Midcap 400, Value Line, and XLF. The Nasdaq barely made a new high, and the related XLK declined a little bit. The NYSE A-D line had a moderately strong day (+1104) but failed to equal it's old high. The Nasdaq A-D line made a new high by a wide margin.  So it looks to me as though a few large-cap Techs are the main weak link in the market. I was especially impressed by the new high in the XLF (Financial ETF) and the strong performance of the DJU (+.90%) in the face of the recent surge in 10-year rates.
    The previous bear market was all about weakness in the financial sector, and that remains, IMHO, the critical sector for the market and the economy. Weakness in technology and other cyclicals just indicates the underlying fragility of business activity, which will give the Fed all the more reason to postpone tapering of QE3.
    It definitely would be reassuring  to see the NYSE A-D line equal and then exceed it's previous high slightly above 78, 000. If it moves up to the vicinity if it's old high and then consolidates, it would be etching out a potential inverted head and shoulders (cup and handle) bottom, which is a quite bullish pattern. The NYSE New Highs-New Lows line, which had been consolidating recently, has moved up to new highs while the Nasdaq NH-NL line has been almost unhesitating in it's upward climb to new highs, including July 18.