Not what you would call an exciting trading day today. Volume was lower on the SPY and the volume on the SPX contracted slightly. The thumbnail is still sporting an island formation. I am concerned about that initial gap being closed. The PMO has topped and is about ready to trigger a SELL signal.
The DecisionPoint Alert presents a mid-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil and Bonds.
BROAD MARKET INDEXES
Mid-caps finally broke above the 2018 high last month, but small-caps continue to underperform and have yet to even challenge the 2018 highs.
BROAD MARKET SILVER CROSS INDEXES (SCIs)
The health of the broad markets is still bullish and the SCIs all broke declining trends. Although they are topping, they remain strong overall. The overbought readings on the SCIs is concerning, but remember that overbought conditions can persist in a bull market. However, with the island formation, I'm getting concerned we are ready for a pullback.
At the end of December, a new Long-Term Price Momentum Oscillator (PMO) BUY signal appeared on the NDX. We haven't seen a monthly PMO upside crossover on the Dow Industrials yet. Below the Scoreboard, I have put in the monthly charts for both the NDX and INDU.
Each S&P 500 Index component stock is assigned to one, and only one, of eleven major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
IT Trend Model: BUY as of 9/4/2019
LT Trend Model: BUY (SPY) as of 2/26/2019
SPX Daily Chart: It looks like we will get that PMO SELL signal should the market not make a thrust higher. There still appears to be indecision. The OBV has been flat, but in the thumbnail we can see the bottoms are still rising which is somewhat positive. Overall, the market is acting "toppy" so I expect at least a test of the rising trend.
Climactic Market Indicators: Nothing climactic to analyze today. The VIX is now in the center of the Bollinger Bands. Given the previous puncture of the lower band, I think we could still see some upside movement tomorrow. We are seeing new highs expanding.
Short-Term Market Indicators: The negative divergence between declining tops on the Swenlin Trading Oscillators (STOs) remains in effect. We saw both STOs turn back up today on a negative close. If we can see them continue higher and not drop below that zero line, it would imply that there is still internal strength in the shorter term. Seeing the continued deterioration of stocks above their 20/50-EMAs is bearish, no arguing that. If we want to see a rally take off, we need wider participation.
Intermediate-Term Market Indicators: The SPY is technically in a somewhat parabolic move. We can see how that worked out for us back in January 2018. All of these indicators are experiencing negative crossovers which tells me to expect the island reversal.
Conclusion: The market is looking weaker given the decline today and the bearishness of our indicators in most timeframes. I still think we could see a move higher this week, but I'm leaning toward more consolidation or sadly an execution of the island reversal.
IT Trend Model: BUY as of 11/7/2019
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: The bounce off the 200-EMA looks solid. The PMO has turned up in oversold territory. I would like to see a close above the 20-EMA and volume on UUP was quite weak on this move today. I believe the Dollar will rise in the short to intermediate term, but I'm not looking for an exceptionally strong rally. I'm thinking it will fail at resistance at the top of the current trading channel.
IT Trend Model: Neutral as of 11/8/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold remains above support at the September top and discounts are still in play. This has been a parabolic move to the upside, but I think it can continue based on the PMO. The headwind will certainly be a rising Dollar if my analysis above is on target. I would look for a less steep ascent.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/5/2019
LT Trend Model: SELL as of 6/4/2019
USO Daily Chart: Oil continued to fall today and price closed below support (previous resistance) at the September top. I am still looking for price to test the April high as the PMO isn't that overbought. Notice that negative volume was far less than the previous two days of positive volume.
IT Trend Model: Neutral as of 10/28/2019
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: The bullish falling wedge remains in play. The PMO shows rising bottoms as well as a BUY signal. If support is lost at the 20-EMA, I would look for another leg down before the wedge executes. If it holds, I'll be looking for a breakout from the wedge.
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Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
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NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically the DecisionPoint Trend Model. These define the implied bias of the price index based upon moving average relationships, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
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