Today the Nasdaq closed above 10000, marking another all-time high! It is now at a psychological level that at the end of March seemed nearly impossible to reach within the year, let alone within 2 1/2 months. Despite seeing this current rally move price to new all-time highs, the Swenlin Trading Oscillators (STOs) are diverging negatively from price. The RSI is highly overbought, but we can see in December into January those overbought conditions stayed. The PMO is very overbought as the typical range for the major indexes is between -2 and +2. We saw -6 readings earlier so it isn't out of the question that we'd see it continue to rise from here. The OBV broke out above its bull market top in mid-May, but it took until now for it to break above that price level. This suggests that even with increased volume, it took price weeks to be able to finally break to these new all-time highs. Of course with so much liquidity in the market, that could account for the high volume with the rally out of the bear market lows.
** Announcement **
I will be traveling July 1 - July 15. I will be writing on the road, but broadcasting will likely be suspended during that time. It's going to be an adventurous road trip for me and my husband. We will be taking a train from Los Angeles to New Orleans, visiting family, checking out retirement areas and then renting a car to make our way back to California with various sightseeing stops along the way. I'll be sure to post a picture or two and I'm sure I'll have funny stories to share along the way. It'll be interesting to see the various stages of the reopening of America. A heads up to Bundle subscribers, the LIVE Trading Room is on hiatus as Mary Ellen will also be out of pocket in the upcoming month. We hope to reopen in late-July. Please direct questions to erin@decisionpoint.com.
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: BUY as of 6/8/2020
SPY Daily Chart: The RSI dipped out of overbought territory but the PMO remains overbought and rising. Carl and I noted during our taping of this week's DecisionPoint Show that volume rose today on the decline. Carl also remarked that we could be looking at a reverse island formation. The market is overdue for a pullback or more consolidation. It appears that gap resistance is going to hold.
Climactic Market Indicators: We saw more negative climactic readings which suggest to me we are still looking at more downside ahead. It's hard to see on this chart, but the VIX did dip below its 20-DMA on the inverted scale which would also suggest more decline.
Short-Term Market Indicators: The ST trend is UP and the market condition is OVERBOUGHT based upon the Swenlin Trading Oscillator (STO) readings. These indicators are all negative as they move lower. I suppose the good news is that they are unwinding without serious price deterioration.
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 SCI is very overbought right now. We don't have a ton of back data on this new indicator, but we can see that it is at its highest reading in 3 years. It is taking longer for the GCI to catch up mainly because 50-EMAs were pulled forcefully downward during the bear market decline and therefore are taking longer to catch up. Remember that the SPY only had its "golden cross" two days ago. The BPI is still rising which is positive, but it is very overbought.
The IT trend is UP and the market condition is EXTREMELY OVERBOUGHT based upon the ITBM and ITVM. All but the ITVM and PMO moved lower. Topping indicators don't generally precede big breakouts or rallies.
CONCLUSION: The ST trend is UP and IT trend is UP. Market condition based on ST indicators and IT indicators is OVERBOUGHT. While the Nasdaq hit new all-time highs, the rest of the market didn't participate. Indeed all of the indicators (including the ones on the Nasdaq chart) are in decline with the exception of the PMO which is extremely overbought. The SPY has set up a likely reverse island just below gap resistance. I am bearish in the short and intermediate terms right now. Keep a close watch on your investments and consider taking profit and returning when this short-term decline is about done.
DOLLAR (UUP)
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: Well the $26 support level was breached today although price did close above that level. The RSI is extremely oversold, as is the PMO. This is the level I would expect a rebound.
GOLD
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold finished mostly unchanged today and managed to close above its 20-EMA. The PMO is decelerating once again in anticipation of a possible return to its signal line. Discounts are expanding and that means that gold investors are bearish. Sentiment is contrarian so we should begin to look for a breakout above the declining tops trendline soon.
GOLD MINERS Golden and Silver Cross Indexes: Miners broke out of the declining trend spectacularly today. Yesterday I didn't have much confidence is this happening, certainly not this soon. Indicators are starting to perk up. The 100% reading on %Stocks above their 50-EMA is clearly overbought, but to get to that level it tells us their is plenty of internal strength. Overbought conditions can persist in a bullish environment. I like Miners, I might take a look at a few in my Diamonds Report tomorrow.
CRUDE OIL ($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: Despite a 1.69% gain today, price didn't challenge the top of gap resistance. The PMO is turning over and the RSI is overbought. I continue to look for a pullback on Oil.
BONDS (TLT)
IT Trend Model: Neutral as of 6/5/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds continue to flourish with a nearly 1.5% gain today. This has turned the PMO up in oversold territory. I also note that volume is rising as price is rising. That confirms the current rally. Only issue now is overhead resistance arriving in the form of the 20/50-EMAs as well as the overhead resistance line at the May bottoms. The RSI is rising along with the PMO which does suggest to me that we will get a breakout on TLT.
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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)