The market rallied big time today on news that Gilead Sciences (GILD) has produced an anti-viral treatment for COVID-19. In addition, the market seems to be pricing in optimism regarding the measured reopening of America. Technology popped higher again and had a IT Trend Model BUY signal on a positive 20/50-EMA crossover or Silver Cross. The rising wedge is still visible on XLK. This is a bearish formation. Yet, the indicators are quite positive with the possible exception of the Golden Cross Index which hasn't had a positive crossover its signal line and the OBV tops which are in a negative divergence with price highs.
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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: The wedge is getting "long in the tooth". I pointed out that price is getting very close to the apex. If the pattern hasn't executed by then, any price movement will be a breakout or breakdown. We are getting very close to overhead resistance at the July/September 2019 tops and there is still a negative OBV divergence. However, it is hard to argue against a high volume rally day!
Climactic Market Indicators: We have somewhat climactic readings on Advances-Declines. They are trending higher as far as volume so I'm not looking at this as an exhaustion yet. The VIX continues to push against the upper Bollinger Band. It could continue to do so since the upper band simply keeps moving up with it. We are due for a decline, but just because we're "due"...
Short-Term Market Indicators: The ST trend is UP and the market condition is OVERBOUGHT based upon the Swenlin Trading Oscillator (STO) readings. Carl and I noted in our DP show this afternoon (airs tomorrow at 8a EST on StockCharts TV) that the STOs are rising very strongly. They are very overbought, but like before, I'm not going to argue with them. They have been great leading indicators and right now they are leading me to believe the rally will continue. We just need to be mindful when they get this overbought.
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. If we get a top on the BPI soon, we will have declining tops matched with rising tops on price. For now, it is bullish and rising strongly.
The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM. They are rising strongly and are above zero. There is a bullish bias in the intermediate term.
CONCLUSION: The ST is UP and IT trend is also UP. Market condition based on ST indicators is overbought and based on IT indicators is NEUTRAL. I pointed out the problems yesterday with the rising wedge and overbought VIX. Today we add the nearness of overhead resistance at the July/September 2019 tops. Indicators overall are still bullish so I am cautiously bullish going into the rest of the week. The market is getting overbought based on the short-term indicators, but they aren't showing any deceleration or deterioration.
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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. Additionally, I think a double-top is in play right now too. The PMO is bearish so I have to look for UUP to decline further.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold bounced off 1700 and the 20-EMA. We have premiums on PHYS so investors are bullish. The double-top and new PMO SELL signal tell me to look for more decline. The confirmation line for the double-top seems to be an ideal area of support.
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, but it can stay that way for weeks. Miners 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: USO had a reverse 1:8 split today. Rather than have it turn into a penny stock and to give it more leeway to fall lower, the split made sense. It has made it easier for it to decline further. I suspect we are at a low, but I'd not be interested in this just yet. The split has made it less tempting now that I know there is a larger area between the current price and zero.
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Price is holding support along the 20-EMA, but that double-top is still possibility and the PMO shows that momentum is still negative.
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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)