I don't generally study Fibonacci retracement levels, but today while writing the DP Diamonds report, I realized that off "V" bottom moves, the first level at 38.2% can be the make or break level of the pattern. Typically, "V" bottoms are bullish patterns that have an expectation of a full retracement to the top of the pattern and further when the 38.2% level has been leapfrogged. Ah! Don't forget "Bear Market Rules"! In a bear market, we are to expect bearish conclusions to bullish chart patterns. Therefore, I would consider this level as strong resistance. Take a look at the Fibonacci levels on this chart.
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CURRENT BROAD MARKET DP Signals:
TODAY'S Broad Market Action:
Past WEEK Results:
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.
One WEEK Results:
IT Trend Model: NEUTRAL as of 2/28/2020
LT Trend Model: SELL as of 3/19/2020
SPY Daily Chart: I note that the sectors that led today's rally were defensive: Utilities, Health Care and Real Estate. However, the results for the past week show all sectors up, but defensive sectors aren't leading. We are finally seeing a curling PMO. The typical range for the PMO on the SPY is between +1.5 and -1.5. I would say a reading of -6.9 is extremely oversold. The OBV and volume overall aren't supporting this rally to the degree they should be. Now we are reaching an important resistance level.
Climactic Market Indicators: Notice that the Advance-Declines are losing a bit of steam. I also do not like the activity on the VIX. We've had three strong rallies and yet the VIX is hasn't changed much. We are now at an important level for the VIX as well. It is up against its EMA. Technically it is in a rising trend on the inverse scale. Positive climactic readings on breadth coming on a rally generally indicates a buying exhaustion.
Short-Term Market Indicators: The ST trend is UP and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. These indicators are bullish, no denying it. It does suggest a bit more upside. I did notice that the %Stocks with PMOs rising is at 97%, a very overbought reading that waves a caution flag. On the flip side, we do need to see momentum shift to get a bear market reversal. It may be too much too soon, a climactic change that could spell an exhaustion.
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 declining. The SCI is curling, but it is near zero. It was going to have to curl as it approached zero. We see some deceleration on the GCI, but not a bottom yet.
The IT trend is DOWN and the market condition is EXTREMELY OVERSOLD based upon all of the readings on the indicators below. I like the new positive crossovers on the ITBM and ITVM. We want to watch for the SCI to get on board. It lags behind slightly. Additionally, we should look for a powerful upward thrust like we saw out of the 2018 low if we have truly put in a bear market low.
CONCLUSION: The ST is UP and IT trend is DOWN. Market condition based on ST and IT indicators is OVERSOLD. An important Fibonacci level has just about been reached. This could be a stumbling block for the current short-term rally. Indicators are rising which is quite bullish, but we aren't seeing volume patterns that back them up.
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IT Trend Model: NEUTRAL as of 3/9/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: Price has now descended below support at the February top, but more support is available at the October top. The PMO suggests more downside and I'd have to agree. Notice that volume is increasing on UUP as price declines. Very bearish.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: I very much like Gold right now and full disclosure, I purchased GLD early today. Yesterday's pullback made it too enticing. Now we see a possible very short-term bull flag. The PMO just triggered a BUY signal. I suspect we will see the correlation to the SPX move negative should Gold become the safe haven it typically is.
GOLD MINERS Golden and Silver Cross Indexes: Price could not close above the 200-EMA and consequently a LT Trend Model SELL signal on the death cross was triggered. While I'm a fan of Gold, I plan on avoiding the Miners simply because they are subject to the bearish winds of the overall market. While I think they do look positive, I prefer GLD.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 1/27/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: The symmetrical triangle continues to form. These are typically continuation patterns so it is likely to break down not up. The PMO is decelerating but the OBV on USO is still negative.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: It looks like a short-term symmetrical triangle is appearing on TLT (visible in thumbnail). As noted above, these are continuation patterns and suggests bonds will break out here. The PMO BUY signal supports that supposition.
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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.
Helpful DecisionPoint Links (Can Be Found on DecisionPoint.com Links Page):
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)