Carl and I have been expecting a market top, but I can say that the depth and swiftness were quite unexpected. It's a good news, bad news situation. In the very short term there's evidence of a possible selling climax. Notice on the chart below that we did end up getting an island reversal as Carl and I talked about. On the bright side, you can see that price managed to hold above the 5/29 low around 3000. This could provide good support. The RSI is very oversold and the PMO is beginning to turn up on the 10-minute bar chart below.
It's a little bit funny as Elton sings, the SPX finally joined the SPY with a 'golden cross' LT Trend Model BUY signal on a correction. Such is the way numbers work. Should price drop below the 200-EMA, it will whipsaw back into a SELL signal.
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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: You can very clearly see the island on the daily chart. I'd been noting the bearish activity on many of our indicators. The RSI was very overbought, but today's decline brought it back to earth. Volume did increase on today's decline which isn't positive. The PMO has topped in very overbought territory. The best thing I can say is that support has just about been met on the SPY at 300.
Climactic Market Indicators: I didn't mention the VIX above, but you can see it has dipped WELL below the lower Bollinger Band on the inverse scale. These breaches tend to lead to a rally the next day or two. The rest of the readings are highly climactic. I suspect we could be looking at a selling exhaustion given the very high negative readings and VIX signal. However, I do note that in the bear market move, these readings were a dime a dozen and didn't really pan out into anything substantive.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. Yesterday I commented on how the STOs had been decompressing with little price deterioration. Not so today... they are now sitting in neutral territory. Notice the climactic drop in %Stocks indicators. Notice these are the levels they reached before 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. Although the SCI and GCI are still rising, the BPI tipped over and dropped below its signal line.
The IT trend is UP and the market condition is EXTREMELY OVERBOUGHT based upon the ITBM and ITVM. As noted yesterday all of these are topping and overbought. We don't have negative crossovers yet on the ITBM, ITVM and PMO but that doesn't make these indicators bullish.
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. Today's drop was significant and as such likely will see a bounce. Climactic indicators like the VIX suggest that bounce should come along Friday or Monday. What could be a problem though...we could be looking at a selling 'impulse', an initiation to lower prices as we saw during the bear market waterfall decline. Maybe we are back to the big day down then big day up then big day down... If we see a rally tomorrow, I will likely sell into it and close out some positions that are showing deterioration with the market.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: I've been telling you that $26 was going to be the place for a reversal and here we are. The PMO is turning up on oversold territory which is bullish.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: One of the few winners today was Gold. It's been perking up but hasn't managed to breakout. It appears it is ready to now that the PMO is turning up and the RSI is now above net neutral. Bearish sentiment continues with more discounts.
GOLD MINERS Golden and Silver Cross Indexes: I opted not to look at Miners for entries although with Gold looking more healthy I suspect that will put the wind at the back of Miners. Indicators aren't positive enough right now as most are moving lower.
CRUDE OIL ($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 pullback or possibly correction for Oil is underway. Given the highly overbought and falling PMO, I would look for more downside, possibly a test of the 50-EMA.
IT Trend Model: Neutral as of 6/5/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: As noted yesterday, I was looking for a breakout today on TLT and we got it. It leapfrogged both 20/50-EMAs as well as resistance at the May bottoms. Next up will be a possible break from the declining trend. Given the nice PMO bottom in oversold territory and the improving RSI, I would look for a breakout.
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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)