The Financial sector broke out on a solid rally today, up 3.40%! This area hasn't performed well and with the government loan program upsetting the apple cart, I haven't been a fan of this area of the market. However a look at the chart below and I do see many hints that this sector may have a resurgence in the short term. Price broke a short-term declining trend today. I note that all of the indicators are beginning to look quite favorable. The PMO is rising again (although it is still below the zero line). The OBV broke a declining trend along with price. The Silver Cross Index is trending higher. The BPI is having a positive crossover. Intermediate to long term isn't that great with the stocks above their 50-EMA and Golden Cross Index still mostly flat. I didn't see many Financial sector stocks in my Diamonds scans today either.
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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: We've redrawn the rising wedge now that price has been inching higher after bouncing off the 20-EMA. The PMO is rising and in positive territory, but there are a few underlying problems to discuss. First, I never like to see volume taper off during a rally. The other problem is the VIX is very close to crossing above the upper Bollinger Band on the inverted scale.
Climactic Market Indicators: We saw a somewhat climactic number on A-D, but not for A-D volume, so I wouldn't read too much into this. The good news I do see rising positive bars during this rally which suggests a continuation, but as I noted above, we need to be mindful of the VIX getting overbought on the inverted scale.
Short-Term Market Indicators: The ST trend is UP and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. The STOs are continuing to rise so I remain bullish in the short term. These indicators have been very accurate so I'm not going to argue with them.
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 both rising. The BPI had a positive crossover today which is bullish.
The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM. I really like the movement of the ITVM and ITBM into positive territory. I find a bottom above the signal line on indicators to be especially bullish.
CONCLUSION: The ST is UP and IT trend is also UP. Market condition based on ST indicators and IT indicators is NEUTRAL. We still have a rising wedge to worry about and declining volume with an overbought VIX. The market is ripe for a pullback, but I'm not seeing the typical deterioration of the indicators that we get before a decline.
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IT Trend Model: BUY as of 3/12/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: I've annotated a symmetrical triangle. These are continuation patterns. That means we should expect it to break in the direction of the previous trend. In this case, that would be down. A top below the signal line on the PMO suggests at least a test of that short-term rising bottoms trend line.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: I'm still a fan of Gold, but right now it is looking weak. We have a possible bearish double-top developing coming alongside a topping overbought PMO. We also are seeing high discounts. That does suggest positive interest in Gold, but it can also be interpreted as bullish sentiment. Sentiment is contrarian, so excessive bullishness can lead to price declines. I have to say looking at previous discounts, that doesn't seem to be the case.
GOLD MINERS Golden and Silver Cross Indexes: The flag formation executed with a breakaway gap, followed by a continuation gap. I suspect Miners are taking a pause to digest those moves. The indicators are looking healthy. The BPI is overbought which can be a problem, but overall Miners still look good.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 1/27/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: More new lows for USO and Oil. I keep thinking the low may've been hit, but then it just moves even lower! Many probably thought it had finally hit its low, but today, we found out that is not true.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bond ETFs have been making an appearance in my scan results for DP Diamonds. I'm not a fan. The PMO has two tops below the signal line and is sitting in overbought territory. Notice in the thumbnail, OBV tops are declining and price tops are rising. That's a negative divergence.
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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)