I hate to get too bullish in my titles, but admittedly today's trading action was spectacular. We saw an immediate gap up on the open and prices rose steadily thereafter with the exception of the final 10 minutes of trading which took out today's rising trend. The declining PMO is disconcerting and could be a sign that this is a buying exhaustion rather than initiation. I believe the 291.5 area looks pretty good for support if it does continue lower. It lines up with the May 12th bottoms and happens to land right on the very short-term rising trend line. However, the indicators are looking very positive and suggest a buying initiation, not exhaustion.
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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SECTORS
SIGNALS:
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.
TODAY'S RESULTS:
One WEEK Results:
STOCKS
IT Trend Model: BUY as of 5/8/2020
LT Trend Model: SELL as of 3/19/2020
SPY Daily Chart: Last week was the first time the PMO had topped since the before the bear market crash. Well, it has turned right back up on today's big rally. We are hitting important overhead resistance that could pose a problem if we want to see a follow-on rally here. The VIX is acting bullishly, having turned up above its average on the inverted scale. It hasn't bumped into the upper Bollinger Band yet which suggests a rally continuation.
Climactic Market Indicators: On a big rally it isn't surprising to see highly climactic positive readings. As noted above, the VIX can move higher and the PMO has turned up on high volume. This looks like a buying initiation. Carl mentioned a possible flag formation building.
Short-Term Market Indicators: The ST trend is MIXED and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. The STOs are rising and I like that. I'm not thrilled seeing overbought readings already beginning to arrive on the %Stocks indicators, but fortunately the STOs are not overbought at all.
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 rising. All of these indicators look bullish. The GCI is decelerating, but still technically rising.
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The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM. We've seen these indicators tick up before and then fail, but for now they look bullish.
CONCLUSION: The ST trend is MIXED and IT trend is UP. Market condition based on ST indicators and IT indicators is NEUTRAL. Overall the indicators look bullish and the climactic readings I saw today, I would look at as a buying initiation. The market's foil could be upcoming overhead resistance. I was stopped out of one position today and have two orders in the queue (from my Diamonds Report). I'm working off a likely continuation of the rally, but haven't loosened my stops yet.
DOLLAR (UUP)
IT Trend Model: BUY as of 3/12/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: A trading range continues. The PMO whipsawing into a SELL signal as the 50-EMA was broken. I would look for more sideways movement inside that trading channel.
GOLD
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold pulled back today, but remains in a short-term rising trend that is visible in the thumbnail. The PMO was yanked downward on the drop today creating a top below the signal line. These are generally very bearish, so I am cautiously bullish.
GOLD MINERS Golden and Silver Cross Indexes: The Miners pulled back today but held short-term support. The SCI and GCI are both rising nicely. The BPI is on the overbought side. Overall the chart is still bullish.
CRUDE OIL ($WTIC)
The oil market is under severe pressure due to a lack of demand, and we do not believe that USO is an appropriate investment vehicle at this time. Until further notice we will use $WTIC to track the oil market. Since this is a continuous contract dataset, it doesn't "play well" with our Trend Models, and we will not report Trend Model signals for oil.
$WTIC Daily Chart: Carl noted that Oil could be at $35 this week and I have to agree with him. I do have the advantage of seeing today's action, but I did pick out a bullish flag formation on the chart last week.
BONDS (TLT)
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: My comments from Thursday were spot on: "Well, TLT has decided that we do not have a double-top. I will keep it annotated however. Today's bar/candlestick was a bearish "shooting star" that suggests this is an island reversal in the making." We indeed did see the island reversal today. TLT is holding support, but the PMO suggests we could see a breakdown.
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Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
Email: erin@decisionpoint.com
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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)