The big news on the day is the golden cross that occurred today on the SPY. The SP500 ($SPX) still has some margin to clear before it will see a golden cross. A golden cross triggers a LT Trend Model BUY signal. When the 50-EMA is above the 200-EMA, the chart now can officially be considered to have a bullish bias. Price is now coming up against gap resistance. There was a gap that occurred on the first big decline of the bear market. I also noted on this chart that volume pulled way back on this 1.21% gain. We could have an exhaustion lining up.
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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: BUY as of 5/8/2020
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: I noticed on the one year chart of the SPY that the RSI has now entered overbought territory. Keep in mind that overbought conditions on indicators can persist in a bull market environment. The OBV is rising.
Climactic Market Indicators: We have a possible exhaustion climax as Net A-D indicators pulled back on these climactic readings. The VIX is starting back down on the inverted scale which is generally short-term bearish.
Short-Term Market Indicators: The ST trend is UP and the market condition is EXTREMELY OVERBOUGHT based upon the Swenlin Trading Oscillator (STO) readings. STOs look great and are rising, but they are now extremely overbought. I note that these are the highest readings we've seen on these oscillators this year. The %Stocks indicators have turned back up but they are very overbought as well. These conditions can persist as I talk about frequently, but they also precede reversals.
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 did not top, but it is extremely overbought in addition to the very overbought conditions of the Silver Cross Index.
The IT trend is UP and the market condition is OVERBOUGHT based upon the ITBM and ITVM. Both ITBM and ITVM look great as they rise but they have now reached overbought territory. The %PMO Xover BUY Signals haven't actually topped yet. The reading is the same as Friday which was higher than Thursday. If it does top here, that will line up a negative divergence.
CONCLUSION: The ST trend is UP and IT trend is UP. Market condition based on ST indicators and IT indicators is OVERBOUGHT. Nearly all of our indicators are overbought. Yet most continue to rise strongly. Price is nearing gap resistance on the SPY and with all of these very overbought indicators, the market is highly vulnerable to a pullback. I would continue to watch your stops and tighten as needed.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: The PMO has slowed down and is very oversold. The RSI is also very oversold. Price has nearly reached strong support at $26. I believe it is lining up for an upside reversal.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: The rising trend (bottom of the symmetrical triangle) failed, but the good news is that support did hold at the April bottom. The PMO doesn't look great. It didn't slow its descent much despite a rousing 1.31% rally. The RSI has turned up and seeing discounts on PHYS means that participants are somewhat bearish. That is generally good for Gold given that sentiment is contrarian.
GOLD MINERS Golden and Silver Cross Indexes: The pullback on Miners was substantial, but it could open up possibilities. For now the indicators aren't particularly positive. The PMO is declining, the RSI is below net neutral (50), the BPI is in a declining trend, and we see declining tops on our new indicators %Stocks > 20/50/200-EMAs. However, seeing that 92% of Miners have price above their 200-EMAs is good. We need to see that type of internal strength to give a solid base to the next rally. Important support has been hit and is holding.
CRUDE OIL ($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 RSI is overbought, though falling. Right now price is attempting to fill the gap from March. It nearly accomplished that today but then fell back to close near its lows. I would look for a pullback in Oil prices. The PMO is topping.
IT Trend Model: Neutral as of 6/5/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds rebounded today as did the RSI. The PMO wasn't impressed with today's gain and continues lower. I also note that on today's rally, volume declined. I suspect there is more downside. I'm looking for price to hold above the 200-EMA as an area of support.
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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)