Attention: your browser does not have JavaScript enabled!

For full functionality of this site it is necessary to enable JavaScript.
Click Here to learn how to enable JavaScript.

decision point logo
  • Home
  • About Us
  • Subscriptions
  • Blogs and Links
New around here? Subscribe now! Forgot password?

Manage Account

  • HOME
  • ABOUT US
  • SUBSCRIPTIONS
  • BLOGS AND LINKS

We Were Warned

Published on February 24, 2020 at 04:32 PM by Carl Swenlin

DecisionPoint Alert

I have often thought of using technical analysis as being somewhat like being the pilot of a paddle wheel steamer on the Mississippi River in the 1800s. He watched for eddies, roiling, churning and waves to warn of the possible dangers and help guide the boat safely to its destination. The lead article on Friday's DecisionPoint Alert Weekly Wrap illustrates the concept. Let me emphasize that this is not an "I told you so" commentary. We had no idea that there would be a down day like we just experienced, but we did see clues that warned of probable weakness. The following is a reprint of the lead to Friday's commentary. (The chart has been updated to include today's market action.)

DecisionPoint.com maintains a chart list for our subscribers that is composed of the 11 S&P SPDR Sectors, and every day I review and update the annotations to those charts. One thing I noticed in the last few weeks is the negative divergences developing in the Technology Sector (XLK) chart. To begin, there was a small pullback after the January price top, then there was another short rally to new, all-time highs this month; however, we can see that four of the indicators declined during that rally: (1) OBV showed that volume was drying up; (2) the Silver Cross Index showed a -22% decrease of stocks with the 20EMA above the 50EMA; and (3) the percentage of stocks above their 20EMA and 50EMA decreased about -25% each. These were concrete signs that participation in the Technology Sector rally was fading, and that some kind of correction was likely.

These negative divergences are a gift that we don't always get. Note how the indicators behaved during the rally from the December price low -- all they did was confirm the rally by moving higher themselves, and the January correction appeared without warning, at least not from these indicators.

The negative divergences are a strong hint that something untoward is probably about to happen, but they are not infallible. Participation can narrow, but the large-cap stocks may still be able to support the rising trend. Nevertheless, those divergences will nail it more often than not.



As investors we want to accomplish two basic things: (1) Determine the trend and condition of the market, and (2) select stocks that will ride that tide. The DecisionPoint Alert helps with the first step, and DecisionPoint Diamonds helps with the second. Go to DecisionPoint.com and SUBSCRIBE TODAY! (Charter Subscriber Discounts Available!)


Happy Charting! - Carl


Technical Analysis is a windsock, not a crystal ball.


Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking



Blog Archive
Previous Article
Next Article

Contact Us

Email: support@decisionpoint.com

© Proudly created by Alamo City Marketing Solutions

Socialize With Us

DecisionPoint logo

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. None of the DecisionPoint newsletters or web site materials should be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

DecisionPoint does not represent or endorse the accuracy or reliability of any of the information, content, or advertisements contained on, distributed through, linked from, downloaded or otherwise accessed from any of the services contained on this web site or in our newsletters, nor the quality of any products, information or other materials displayed, purchased, or obtained by you as a result of an advertisement or any other information or offer in or in connection with the materials. You hereby acknowledge that any reliance upon any Materials shall be at your sole risk. It is your responsibility to verify from other sources, such as your broker, critical elements of a decision to act. DecisionPoint reserves the right, in its sole discretion and without any obligation, to make improvements/changes to, or to correct any error or omissions in any portion of the Materials.

THE SERVICE AND THE MATERIALS ARE PROVIDED BY DECISIONPOINT ON AN "AS IS" BASIS, AND DECISIONPOINT EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICE OR ANY MATERIALS AND PRODUCTS. IN NO EVENT SHALL DECISIONPOINT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER WITH RESPECT TO THE SERVICE, THE MATERIALS AND THE PRODUCTS.