Another decline in the market, but we did see a slight contraction on total volume which is somewhat encouraging, but it is still very high volume coming in on decline. USO's PMO moved to a SELL signal just in time for support to be broken again. We will look at that chart more closely later.
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.
You'll note that we added another Neutral signal to our Sector Signal Table for XLF. You can see the signal generated when the 20-EMA crossed below the 50-EMA while the 50-EMA was above the 200-EMA. Had the 50-EMA been below the 200-EMA it would've resulted in a SELL signal. The drop below the 200-EMA is serious, but we can see it might still have an opportunity to stay at $28.50 which matches July and September tops.
This WEEK SO FAR:
IT Trend Model: BUY as of 9/6/2019
LT Trend Model: BUY as of 2/26/2019
SPY Daily Chart: At this point, I would be ready for price to test the 200-EMA. Everything is very oversold right now, but the momentum is nearly vertical to the downside. It will require quite a lot of strength to turn this around.
Climactic Market Indicators: We are seeing contraction on breadth, but these are still climactic readings. Sure looks like a selling exhaustion in the very short-term, but as I said earlier, this is going to be hard to turnaround. The VIX continues to remain under the Bollinger Band. Generally this means a selling exhaustion.
I thought it would be interesting to look at VIX reading over the past three years since we hit a reading that is showing as the highest for the past 6-months. This is a very oversold reading, but it has certainly been worse and that could be a requirement for the market to turn back up.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is OVERSOLD based upon the Swenlin Trading Oscillator (STO) readings. We now have deeply oversold readings on the STOs, but we could see this persist in a bear market environment.
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 moving lower quickly but they really aren't that oversold. I still believe the Golden Cross Index is still overbought and the Silver Cross Index is somewhat oversold.
The IT trend is still UP when measured by the green rising trendline and the market condition is NEUTRAL based upon the PMO, ITBM and ITVM readings, and SOMEWHAT OVERBOUGHT based upon the Silver Cross/Golden Cross Index readings. The ITBM and ITVM are still holding on to neutral readings. They need to move much lower to get oversold.
CONCLUSION: The ST is DOWN and the IT trend is UP (barely). Market condition based on ST and IT indicators is OVERSOLD to NEUTRAL. A selling exhaustion is lining up in the very short term. Some relief is needed. Unfortunately the other indicators are telling me that we will need to test the 200-EMA before we are maybe out of the woods.
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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: I've annotated a bull flag formation. I'm not in love with it as I think the Dollar is likely going to move lower. With the PMO topping, it appears this will last longer. There is hope at the September top.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold was down again today, but I like this. It gives me an opportunity to get in. With the market struggling and likely going to continue to correct. I like most metals and defensive sectors right now. If we see a rally it is likely going to be on the backs of those sectors along with Gold and Silver.
GOLD MINERS Golden and Silver Cross Indexes: We didn't see much movement on the SCI/GCI, and price managed to close right on support. I like Gold but unfortunately Gold Miners are more subject to the swings of the broad markets so I would stay away for now.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 1/27/2020
LT Trend Model: BUY as of 12/16/2019
USO Daily Chart: As I suspected, this level of support did not hold. Today the PMO crossed below its signal line and triggered a SELL signal. There isn't anything positive about this chart. I'm expecting price to continue lower.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: TLT is consolidating the parabolic move it made up to this point. It could be a reverse island, but I expect higher prices with the PMO rising nicely and not overbought.
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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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