Last Thursday, I remarked that the "big guys" really threw their weight into the rally on the SPY. I showed the Equal-Weight SPX ETF (RSP) and noted that taking out the capitalization, you ended up with a decline of 0.03% on a day the SPY rose a third of a percent. The small- and mid-caps lost ground on Thursday as well. Today, the SPY made a new all-time high and yet, we have declining tops on MID and IJR. Before the very short-term top in late January, we saw a negative divergence among these ETFs with the SPY. It was only about a day or two, but it did precede the pullback to the 50-EMA. This is just a heads up that something is fishy.
TODAY'S Broad Market Action:
Top 10 from ETF Tracker:
Bottom 10 from ETF Tracker:
On Friday, the DecisionPoint Alert Weekly Wrap presents an 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: Another all-time for the books on the SPY. We didn't see an actual crossover of the PMO above its signal line, but it is within hundredths of a point so I expect to see it come in tomorrow. FYI, the OEX logged a fresh PMO crossover BUY signal today. We saw a big leap forward today, but volume was a little thin for a new all-time high on a 3/4 percent rise.
Climactic Market Indicators: No climactic readings on breadth. The VIX is interestingly not moving above its average. Generally that means market weakness, and as Carl said in today's DecisionPoint Show, it also means that participants aren't in the "complacency" zone.
Short-Term Market Indicators: The ST trend is UP and the market condition is MODERATELLY OVERBOUGHT. (Carl and I are adding this statement to the Short-Term and Intermediate-Term Indicator sections in addition to the Conclusion.) The STOs are rising but reaching overbought territory. Carl pointed out we have a negative divergence with SPX %stocks above 20-EMA.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) and the Golden Cross Index (percent of SPX stocks 50EMA > 200EMA) rose slightly. I am still waiting on the ITBM and ITVM (as well as the PMO for that matter) to have positive upside crossovers their signal lines.
The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM readings, and SOMEWHAT OVERBOUGHT based upon the PMO and Silver Cross Index. All indicators ticked up slightly today. I am still waiting on positive signal line crossovers on all of these indicators.
CONCLUSION: The ST and IT trend are RISING. Market condition based on ST and IT indicators is OVERBOUGHT given all indicators are rising but getting more overbought daily. I believe the indicators support higher prices, but the question is how long given their overbought conditions. The negative divergences and lack of participation from small- and mid-caps are my issue right now. Might be time for a small pullback.
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IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: Nice pump of volume on today's breakout and trading above last week's overhead resistance. The PMO is getting overbought now, but continues to rise steeply. Until it decelerates, I would expect more upside movement or consolidation to digest the rally.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold is beginning to rally and will likely test the 1600 level this week. The PMO is decelerating which is bullish.
GOLD MINERS Golden and Silver Cross Indexes: The handle continues to develop on this chart pattern. I see rising bottoms from January to now. The Silver Cross Index is now about neutral, but it is still falling. At least it isn't overbought anymore.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 1/27/2020
LT Trend Model: BUY as of 12/16/2019
USO Daily Chart: USO broke down below support again. I know many are counting on a bottom here. It is certainly possible as the PMO is now in oversold territory and trying to turn back up. The $9.25 support level is what I am looking for. I don't think this will hold up. Bottom fishers, you may want to wait this out a little bit longer.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: The PMO has turned back up and price bounced off the 20-EMA. Looks healthy right now. I'm still looking for a test of last year's high.
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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. 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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