It was very hard going into today being bearish, but the climactic indicators and the bearish reverse "hanging man" candlestick suggested strongly that I do. Now what? Climactic indicators aren't so clear today, short-term indicators look mostly bullish, yet intermediate-term indicators have turned bearish. The intraday chart shows us that market participants aren't really sure what to do as price basically consolidated after the gap up yesterday. We did see a drop today but it hasn't come down to test the bottom of gap support. That is my target right now for the market.
The Dow Industrials ($INDU) joined the SPX, OEX and NDX today by triggering its own PMO SELL signal. This signal comes in highly overbought territory. I see a rising wedge pattern that suggests a breakdown in the near future.
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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 decided to redraw the rising wedge to incorporate the recent high and low. The pattern is bearish and suggests a breakdown. I noted in today's DecisionPoint Show that support is very strong at around 300 where we have horizontal support at the 2019 summer tops, short-term support at April/May tops, 50-EMA and 200-EMA. With all of those elements, I have to believe that price will find some support in there. If the rising wedge does breakdown, we could be in for a much deeper decline. We have a reverse divergence on the OBV. Despite higher volume on the rally, it was unable to break above this month's high.
Climactic Market Indicators: No climactic readings today, but I do note that the VIX appears to be holding below its 20-EMA on the inverted scale. This suggests internal weakness in the very short term.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. The STOs are rising and have hit positive territory; however, the %Stocks indicators are falling which is bearish.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) is falling and the Golden Cross Index (% of SPX stocks 50EMA > 200EMA) is rising. The SCI has topped in overbought territory, but BPI and GCI are moving higher..barely today. I see this as neutral to bearish.
The IT trend is UP and the market condition is OVERBOUGHT based upon the ITBM and ITVM. We now have the ITBM and ITVM declining as well as the number of stocks with PMO BUY signals.
CONCLUSION: The ST trend is DOWN and IT trend is UP. Market condition based on ST indicators is NEUTRAL and IT indicators condition is OVERBOUGHT. Despite rising STOs, the rest of the indicators are leaning bearish. At this point I would look for more consolidation or a possible decline to test the 295-300 level on the SPY.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: The RSI is starting to rise and the PMO just barely turned up today in oversold territory. It seems time for the Dollar to rally back up to the bottom of the previous consolidation area. The 20-EMA could pose strong overhead resistance, as well as the 200-EMA. I feel fairly confident it will reach $26.75, not quite so confident it will be able to breakout from there.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Yesterday's comments still apply:"Gold continues to travel sideways but has narrowed into a symmetrical triangle. Since the previous trend was rising, the expectation is an upside breakout. The PMO is flat but looks ready to turn higher. The RSI is neutral. I do note that the very high negative correlation reading with the SPX suggests that a market downturn could be good for Gold. I like seeing discounts on PHYS, that generally leads to higher prices."
GOLD MINERS Golden and Silver Cross Indexes: I was just getting bullish on Miners but it appears they have a bit more work to do as the "flag" gets longer on the flagpole. The indicators are beginning to tick up, but are still in declining trends. The RSI is mostly neutral. Support is holding, I'm looking for a breakout from the flag and at that point indicators should be bullish enough to begin trading the Miners.
CRUDE OIL ($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's comments still apply: "Given the very negative PMO, I didn't expect price to find support at the 20-EMA, but it did. It did NOT close the gap yet. I will remain bearish until gap resistance is broken."
IT Trend Model: Neutral as of 6/5/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds rose today but we haven't seen a breakout from overhead resistance. The PMO is flat. That area of overhead resistance could prove a problem given it is a combination of the 20/50-EMAs, and horizontal support/resistance at about $162.
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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.
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