I'll admit to breathing a sigh of relief today. The markets finally showed some strength. However, I hope you are able to remember the few rallies we have seen over the past few weeks and the sinking feeling when the next day took out those profits and then some. I will tell you what I told my Diamonds readers today, don't get sucked into relief rally euphoria. The market has lost over 30%. We don't need to find the exact bottom. It is better to exercise patience. There is a lot of ground to make up, you'll be able to profit even if you miss some of the initial rise. Note the push and pull on the 4-month chart. We've seen days like today and they have been followed by crushing losses so keep your head.
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: BUY as of 2/26/2019
SPY Daily Chart: Today's rally brought us back somewhat, but we are still well-below Friday's close. The PMO is still declining with little deceleration. It is extraordinarily oversold. Typically the PMO on the SPY ranges from -2 to +2. Oversold conditions haven't been the best signal. I find it positive that volume rose on a rally day. OBV bottoms were about even but are nearly in a positive divergence with price lows. The VIX is reading at 75. Volatility is still a risk.
Climactic Market Indicators: New lows contracted today but are still coming in at very high levels. Breadth was positive, but not as climactic as we've seen during this bear market decline. The VIX is hugging the bottom Bollinger Band but that hasn't really signaled a bottom.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is SOMEWHAT OVERSOLD based upon the Swenlin Trading Oscillator (STO) readings. We do have a positive divergence on the STOs, but notice that readings are decelerating despite today's rally.
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 in oversold extremes. Only 5% of SPX stocks have a 20-EMA above the 50-EMA. That's significant. We now see that more than half of the SPX stocks have 50-EMAs below 200-EMAs. While that is oversold, we saw even lower readings during the 2018 correction.
The IT trend is DOWN and the market condition is EXTREMELY OVERSOLD based upon all of the readings on the indicators below. These indicators are decelerating slightly in extremely oversold territory. This is a good sign. Note that we will want to see an accelerated move to the upside when prices begin to rally more than decline.
CONCLUSION: The ST and IT trends are DOWN. Market condition based on ST and IT indicators is VERY OVERSOLD. If we see higher prices again tomorrow, that will be encouraging. I can't even consider looking for a market bottom until I see indicators responding to a rally. We didn't see the response we needed in my opinion.
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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: The Dollar was up today and UUP closed on the February high. The PMO is suggesting a sustained breakout move.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold made a comeback today. I was glad to see the 1450 level hold and price has now closed above the 200-EMA. We need to see it rejoin the rising trend or close above short-term support at 1535. I note that discounts are at a high. That suggests bearish sentiment. Sentiment being contrarian, this is positive for Gold.
GOLD MINERS Golden and Silver Cross Indexes: Excellent rebound today, but overhead resistance hasn't been tested. The SCI is oversold and suggests this is possible, but the GCI needs to unwind more.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 1/27/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Oil and USO are falling to historic lows. The weekly chart under the daily chart, suggest that $25.40 is the next stop for $WTIC and we're just about there. Supply and demand is out of whack (great technical term) for Oil and I don't see it calming until we have more data on demand. Supply is plentiful and that will continue to put pressure on Oil.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: The breakdown from the parabolic was very constructive for TLT. It is swinging up and down wildly right now, but this is something that we will see when these patterns break down. I would look for support to hold at the August top, but likely more volatility and chop sideways.
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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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