There was an attempt in the morning to stop the waterfall decline that began yesterday, but no such luck. Just after reaching positive territory, the selling began in earnest. If you want a bright side, support did hold at the May 4th low. That is about as bright as it gets given the bearish indicators on every chart.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
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: BUY as of 5/8/2020
LT Trend Model: SELL as of 3/19/2020
SPY Daily Chart: Remember the support line drawn on the 10 minute bar chart above? That is now a confirmation line for a textbook double-top. We warned today that the PMO had topped for the first time since the bear market low was established. The typical range for the PMO on the SPY/SPX is between +2 and -2, so a top arriving with a reading of 1.72 is dangerous. While volume wasn't that high yesterday (the decline really happened in the last hour yesterday), today the decline started early and we ended up seeing very high total volume.
Carl made an excellent point during out taping of the DecisionPoint show today about rising trend channels. Note that when we don't see a test of the top of the rising trend channel and instead get a decline, it is usually warning that you will see a breakdown. Zooming in here, you can see the reverse divergence with the OBV. Basically, despite volume coming in (new OBV top higher than previous), price couldn't break out above the April top. Remember price should follow volume. When it doesn't a reversal is likely. I also note that the RSI dropped below 50, another bearish sign.
Climactic Market Indicators: We had even more climactic readings than yesterday. Carl and I agreed on the DecisionPoint Show that these are a continuation of the selling initiation we saw yesterday. The VIX nearly finished the day below its 20-MA. Last time that signaled the beginning of another up leg. The difference this time is it is accompanied by a topping PMO.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. The STO-B is now reading below zero and the STO-V topped below the zero line. While the STOs were slightly late (they didn't turn down until after yesterday's close and initial breakdown), the %Stocks above 20-EMA and %Stocks PMOs Rising had already set up declining tops trendlines. Now all of these indicators have declining tops, readings below zero and our declining.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) continued down today and the Golden Cross Index (percent of SPX stocks 50EMA > 200EMA) continues to rise. The Golden Cross Index is slow to react. I don't expect it to turn down unless we have a serious correction. The BPI has topped below its signal line yesterday and I continue to see that as especially bearish.
Remember DecisionPoint Bundle Subscribers Get the
LIVE Trading Room for FREE ($49.95 value)!
The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM. Declining tops on the ITBM and ITVM confirm this breakdown. They continue lower which is also bearish.
CONCLUSION: The ST is DOWN and IT trend is also UP (barely). Market condition based on ST indicators and IT indicators is NEUTRAL. I think the only positive comment I made today was that very short-term support held today. With the negativity of all of our indicators, I would look for a continuation of this decline.
IT Trend Model: BUY as of 3/12/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: Using the same logic as with the rising trend channel example I gave above, notice that price didn't test the bottom of the bearish descending triangle before heading back up. That's a bullish sign. The PMO has turned up as well. The declining tops trendline at the top of the triangle did hold up however as resistance.
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold was up today and I suspect we will finally get the upside breakout from the pennant or symmetrical triangle. Currently Gold does have a negative correlation to the market and that means if the market moves lower, Gold will likely move higher.
GOLD MINERS Golden and Silver Cross Indexes: I believe Gold will begin rising, but Miners will have to face the headwind of the market in decline. The technicals are still positive.
CRUDE OIL ($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: Yesterday' comments still apply: "I've been considering a reverse island on Oil, but now it looks very much like a pennant on a flag pole. It's hard for me to get super bullish on Oil, but these are technical characteristics that I'm watching closely. The 50-EMA is posing very difficult overhead resistance."
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Chart pattern identification has been quite challenging. I still think the double-top is in play. The PMO has decelerated but is still declining.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount AND get the LIVE Trading Room for free! Contact firstname.lastname@example.org for more information!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
Erin Swenlin will be presenting at the The MoneyShow Las Vegas August 16 - 20 at Bally's/Paris Resort! You'll have an opportunity to meet Erin and discuss the latest DecisionPoint news and Diamond Scans. Claim your FREE pass here! You can watch online with this pass too!! There will be online events held in May and when I have more information I'll let you know.
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):