During today's Trading Room with Mary Ellen McGonagle (MEMInvestmentResearch.com), someone asked whether there was any significance to price not getting above the 200-SMA, but rising above the 200-EMA. You can see that the EMA (blue line) was broken which is certainly bullish, yet we are finding resistance at the 200-SMA. We are seeing price squeezed between these two EMAs which is interesting, but likely only indicating neutral price action. Since I have this 'clean' chart, I wanted to make sure to note the negative divergence we have with the OBV. The PMO and RSI are still healthy.
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: Price is struggling to break out of the zone of resistance. We lost volume again today, but it occurs to me that we have the Memorial Day holiday on Monday which could account for it. Tomorrow is options expiration, so we should expect higher volume with little price movement. However, with holiday trading, we may not see excessive volume.
Climactic Market Indicators: No real climactic readings today. On the bright side, we see the red bars shrinking up which could be a bullish sign. The VIX is beginning to fall without hitting the upper Bollinger Band on the inverted scale. That is a bearish sign. Overall the chart is mixed.
Short-Term Market Indicators: The ST trend is UP and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. The STO-B did top today and the STO-V is now decelerating in anticipation of a top. The %Stocks indicators are falling and also have declining tops which I would read as a negative divergence with price tops.
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. The BPI had a positive crossover on today's rally, but we still have declining tops (best seen in the thumbnail). The GCI is topping and that isn't good.
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The IT trend is UP and the market condition is NEUTRAL based upon the ITBM and ITVM. Definitely a mixed message on this chart. It is similar to the STOs. The breadth indicators (STO-B, ITBM) have topped whereas the volume indicators (STO-V, ITVM) are still technically rising. I expect to see them top along with the breadth indicators. In any case, there is a negative divergence still in place with declining indicator tops and rising price tops.
CONCLUSION: The ST trend is UP and IT trend is UP. Market condition based on ST indicators and IT indicators is NEUTRAL. I've sensed weakness in the market, but nothing has really materialized. Today's topping STOs along with negative divergences that are still in play suggest we should see a decline. I closed out three more positions today. The market indicators are telling me to watch and wait rather than participate (I'm poet and I didn't even know it!).
DOLLAR (UUP)
IT Trend Model: BUY as of 3/12/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: Yesterday's Comments: "The Dollar is holding above support, but price wasn't able to challenge overhead resistance at the late April top. Typically when we decline without testing overhead resistance, you will see a breakdown. Given the negative configuration of the PMO, I would expect to see support broken on this next test." Well, the Dollar didn't break support today. That doesn't mean it won't. The PMO is still very negative.
GOLD
IT Trend Model: BUY as of 12/26/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Big pullback for Gold today. It has caused the PMO to top below the signal line which is very bearish. Yet, we aren't seeing price back in the declining trend. In fact it remains in a short-term rising trend (blue rising trendline). 1700 is an important support/resistance area. Additionally, the 20-EMA did hold up as price closed above it.
GOLD MINERS Golden and Silver Cross Indexes: Overbought Miners really pulled back today but they held above that short-term support line. They still could decline a bit more, but this could be a good entry point. The BPI dropped quite a bit, so if it continues lower, it might be wise to wait to make sure this decline is over and the rising trend can hold.
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: The rally in oil continues. Overhead resistance at $35/barrel is about to be hit. The PMO is very overbought (albeit rising). I suspect when gap resistance is met, price will turn back down.
BONDS (TLT)
IT Trend Model: BUY as of 1/22/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Yesterday's comments still apply: "TLT isn't at all interested in breaking down despite all of the indicators suggesting that it should do so. The head and shoulders pattern is still viable, but a break above the 20-EMA would likely break up this pattern."
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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)