A very interesting trading day that managed to make some of our indicators "pop"! Let me show you why Carl and I think we could be looking at a possible "buying initiation". A buying initiation is an indication that we will see follow-through on a big rally day like today. These typically are shorter-term in nature but can expand into something more.
You'll see in today's Sector Summary that the Utilities sector was the biggest loser, down 1% on the day. What is concerning is that not only did it have a big down day, it was the only sector that declined on a powerful upside rally. This certainly looks like a topping pattern. The PMO has turned down in very overbought territory. Note the %of stocks above 20/50-EMAs all showed a negative divergence going into today. The SCTR is turning over slightly as well. The silver lining is a high Silver Cross Index value above 90 and the Golden Cross is on a step by step rise. Overall this sector has been outperforming and it is now time to correct. The $65 level is strong support, but I wouldn't look for a quick decline to that level just yet; the 20-EMA looks like it should hold up.
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: Price gapped up today and landed itself back on the rising trendline. The PMO halted its descent and volume was above average on the over 1.5% upside move. I will want to see the OBV make a new high if we breakout and set a new all-time high.
Climactic Market Indicators: This is the buying initiation chart. Note the very high positive readings across the board. When I see these types of readings, my next job is to look at the trend that preceded the climactic readings. In this case, it was a declining trend so it tells me this is a buying initiation. It's the first move on a likely follow-on rally. The VIX is supporting this. It is rising and is still reading rather high on the inverted scale. It has room to move higher and that is likely what it will do.
Short-Term Market Indicators: STOs continue higher and today they are paired with a PMO that is beginning to turn. Note that %stocks above 20/50-EMAs is also improving nicely.
Intermediate-Term Market Indicators: I like that the ITBM and ITVM have turned up above the zero line. This is positive for the intermediate term. However, the Silver Cross Index isn't on board yet as it continues to decline. Less than 70% of the stocks in the S&P 500 are on IT Trend Model BUY signals.
The Golden Cross Index has turned up, but not the Silver Cross Index. This is encouraging, but I need to see that Silver Cross Index turn back up.
CONCLUSION: There was a buying initiation today on the climactic indicators. Short-term indicators had already turned up and continue to rise. IT indicators are attempting a turnaround. For now, short term looks good, but I'm not fully satisfied with the IT indicators, so I'm Neutral in the intermediate term.
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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: Dollar continues to rise after a bounce of the declining tops trendline and the 50-EMA. I am still looking for a test of the October top.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: A deep decline in Gold today brought price below the 20-EMA and broke support at the September top. This initiated a PMO SELL signal. Looking at the thumbnail, the short-term rising trend was also broken. Unfortunately, the next likely stop is the 50-EMA which is right about at the January low.
GOLD MINERS Golden and Silver Cross Indexes: The cup and handle pattern is still visible on the Gold Miners, but this is a deep drop on that handle that took price below the 50-EMA. It needs to hold the mid-January low or I would look for a disintegration of this pattern and even lower 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: The slide downward continues. Price has closed at a low not seen since January 2019. It's very oversold, but it sure doesn't appear ready to stop and with a breakdown, I would look for price to test that December 2018 low.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: I expected to see a pullback eventually, I just thought it would test the September top first. The PMO has decelerated and volume pulled back from yesterday. I am looking for support to hold at the 20-EMA.
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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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