I continue to watch the negative divergence between the NYSE and the SPX, as well as the SP600 and the SPX. It isn't resolving. The SPX continues to make new all-time highs while both the NYSE and SP600 are in declining trends. Notice the divergences with the NASDAQ as well. The Silver Cross Index for the NYSE shows that less than 2/3 of components are on IT Trend Model BUY signals and it continues to move lower. The Silver Cross Index for the SP600 is at an abysmal 47.5% of components on IT Trend Model BUY signals. Bifurcation between small and large-caps generally is a precursor to a decline.The NASDAQ despite making new all-time highs is showing a declining Silver Cross Index as more components find their 20-EMAs below their 50-EMAs. This tells me that the 'big guys' are running the show right now and they aren't sharing the wealth.
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: I redrew the rising bottoms trendline on the 4-month candle chart. We still have a bearish rising wedge in play. As I noted yesterday, the minimum downside target of the pattern would only take us to about 325. I suspect we will see a short-term decline soon that will test the 50-EMA, just as it did at the end of last month. Volume was low as the SPX set a new all-time high.
Climactic Market Indicators: Again today, New Highs are continuing to be elevated, but no other climactic readings. The Bollinger Bands on the VIX are beginning to squeeze again which means we should see an upper band penetration soon. Those generally precede declines.
Short-Term Market Indicators: The ST trend is UP and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. Another new all-time high and another drop for the STOs. This negative divergence continues to bother me and suggests a short decline on the horizon.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) and the Golden Cross Index (percent of SPX stocks 50EMA > 200EMA) are flattening. Given the rally continuation, I should be seeing them rising, but I'm not. In fact, both are in declining trends.
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/Golden Cross Index readings. The ITBM/ITVM are attempting to top, but so far they have averted a negative crossover. I still think these indicators are overall positive for the intermediate term.
CONCLUSION: The ST and IT trend are UP. Market condition based on ST and IT indicators is NEUTRAL to MODERATELY OVERBOUGHT. A new short-term rising wedge has materialized as we see negative short-term indicators. I am looking for price to breakdown by Friday or Monday. Overall I'm comfortable with the intermediate term so I'm not looking for a big breakdown.
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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: The Dollar continues its meteoric rise. This has made the short-term rising trend vertical. That is nearly impossible to maintain so I would look for a pullback soon. The PMO looks extraordinarily overbought, but if you look at the second chart below, you can see that the typical range for the daily PMO is between 1.25 and -1.25. So while it is overbought, it still has room to move higher.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Despite a rising Dollar, investors are happy to buy Gold. The breakout from the symmetrical triangle suggests more upside. Currently it is ready to do battle with overhead resistance at the early January top. With the PMO BUY signal and an intensified interest in Gold, I am looking for a breakout.
GOLD MINERS Golden and Silver Cross Indexes: The symmetrical triangle (possible complex handle) finally executed today. I'm still suspect of the rally given the 56% Silver Cross Index, but I suspect we will see that change as more components benefit from rising Gold prices.
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 does appear to have found an intermediate-term price bottom. The PMO has triggered a BUY signal in oversold territory. While the chart looks quite positive technically, I still think the coronavirus issue is a concern. A breakout above the 20-EMA is very bullish though.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: It appears the TLT is in a short-term trading range. The PMO is looking to move higher, but has been thwarted thus far in February. Overall the chart is neutral.
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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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