Today's giant drop in the Energy Sector (XLE) was enough to negate a very young Long-Term Trend Model (LTTM) BUY signal. The LTTM SELL signal was generated when the 50-EMA sunk below the 200-EMA. With oil and gas producers, Exxon-Mobil, Chevron, ConocoPhillips, Phillips and Occidental Petroleum taking up over 50% of the capitalization on XLE, I wasn't surprised to see the drop. USO dropped .75% and I'm sure this could have affected these big companies. With price dropping well below the 200-EMA, I am expecting this LT Trend Model SELL signal to remain in effect. I would look for price to drop to test the November/December lows. Notice the confirmations on all of the major indicators to the downside.
Things were really looking up for XLE. A declining trend was broken and price had managed to overcome resistance at the 43-week EMA. The weekly PMO was just entering positive territory. Today the PMO has topped and price dropped below both the 17/43-week EMAs. I would look for a test around $55.
TODAY'S Broad Market Action:
The DecisionPoint Alert Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil, and Bonds. Monday through Thursday the DecisionPoint Alert daily report is abbreviated and covers changes for the day.
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Each S&P 500 Index component stock is assigned to one, and only one, of 11 major sectors. This is a snapshot of the Intermediate-Term (Silver Cross) and Long-Term (Golden Cross) Trend Model signal status for those sectors.
IT Trend Model: BUY as of 9/6/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: Price pulled back somewhat, but still remains above the bearish rising wedge pattern. It may become time to redraw this into a rising trend channel. Volume was heavy, but slightly lower than Friday. It should be noted that Friday was option expiration day and probably accounted for the high volume number.
Climactic Market Indicators: New Highs remain climactic but pulled back somewhat. I'm thinking Carl's hypothesis that this could be a buying exhaustion is right on. I continue to worry about the squeeze on the VIX and the likelihood it will bring lower prices.
Short-Term Market Indicators: The STOs topped today but both remain in rising trends. I am not happy with the STO-V as it shows a negative divergence.
Intermediate-Term Market Indicators: Another volume indicator that doesn't look so hot is the ITVM. It is in a negative divergence with price. The ITBM is positive and making new highs, so what's the problem with the ITVM? A top below the signal line on the ITVM is also negative. My thought is that volume (based on these indicators) is not behind this move, even though breadth is. A dichotomy like this makes me nervous.
As far as the Golden Cross and Silver Cross Indexes, they are confirming the rally. Readings above 83 on both is healthy and not particularly overbought.
CONCLUSION: The trend of the market is up and the condition is overbought. Overall I feel like the indicators are behind this rally. I don't like the negative divergences on some of the volume indicators and the VIX Bollinger Band squeeze could be a problem in the shorter term. Full disclosure that I give my Diamonds readers is that currently I am 35% cash.
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IT Trend Model: NEUTRAL as of 12/11/2019
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: UUP is one hundredth of a point away from an IT Trend Model BUY signal as the 20-EMA creeps ever closer to an upside crossover. The PMO has moved into positive territory. So where is the breakout from this bullish falling wedge? I believe with patience we will see it.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold is forming a new trading range. The good news is that it remains above not only the 20-EMA but also support at the October/November tops (purple dotted line). The PMO is flat. Today we saw a premium on PHYS. This suggests sentiment is very bullish on Gold. Sentiment being contrarian, we should expect lower prices. If the Dollar starts to breakout that would certainly add to the gravity pull downward for Gold.
GOLD MINERS Golden and Silver Cross Indexes: The cup and handle on Gold Miners is executing beautifully. Today GDX was one of the big winners today among ETFs. This group is looking very bullish and it has the numbers on the SCI and GCI to support a rally. The big drawback is the negative crossover on the GCI, but a reading of nearly 85 is bullish.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/6/2019
LT Trend Model: BUY as of 12/16/2019
USO Daily Chart: The 200-EMA is holding up as support but the rising trend is deteriorating. The PMO suggests more downside and plenty of supply in oil and natural gas could put even more downside pressure on USO.
IT Trend Model: NEUTRAL as of 12/12/2019
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: We got another break out from the declining trend. We will see if this one sticks. The PMO suggests that this upside breakout should continue into a rally for TLT. I'm watching for a 20/50-EMA positive crossover that would trigger an Intermediate-Term Trend Model BUY signal.
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Technical Analysis is a windsock, not a crystal ball.
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NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically, the DecisionPoint Trend Model. They 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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