I was looking at the VIX very closely this afternoon. I have been watching carefully to see if the VIX can get back above its 20-EMA on the inverted scale. So far no luck. One of the ways we can monitor internal strength is to follow what the VIX is doing. It's known as a fear gauge for the market. That means it is a sentiment indicator. Remember that sentiment is contrarian. If everyone is very scared or bearish (high value VIX), that is generally the time to look for upside reversals. If everyone is complacent (low value VIX) that is bearish for the market. That's one reason why DecisionPoint inverts the VIX on charts. Breaks above/below the Bollinger Bands help us pinpoint possible reversals; but something else to study is where it is in regard to its moving average. Notice that when the VIX is under its average on the inverted scale, the market is weak and bearish. During the bull rally from the bear market low, you can see the VIX popped up above its average after being exclusively below it and began to oscillate above it (internal strength). Right now the VIX is hovering just below its average. I see this as a sign of internal weakness.
** 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 firstname.lastname@example.org.
DP INDEX SCOREBOARDS:
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
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 to highlight that volume is now under its annual average for a second day in a row. Market participants seem to be weary as we reached a buying exhaustion on Tuesday. I wanted to highlight the "reverse divergence" on the OBV. It's a 'reverse' divergence as it tells us that despite volume coming in during the previous rally days, price didn't breakout from the June top.
Climactic Market Indicators: No climactic readings today. Let me reiterate that the VIX has not been able to get back above its moving average on the inverted scale. Additionally, I'll highlight the bearish rising wedge.
Short-Term Market Indicators: The ST trend is DOWN and the market condition is NEUTRAL based upon the Swenlin Trading Oscillator (STO) readings. I've been a believer of the Swenlin Trading Oscillators for most of this year, but they are now moving in a different direction from our %Stocks indicators. While I like seeing rising STOs, I note that a serious breakout rally cannot happen if only 18% of stocks have rising momentum. Read that again, 18%... AND falling.
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. This chart is reading "neutral" again today. The SCI is falling and the BPI and GCI are mostly flat.
The IT trend is UP and the market condition is OVERBOUGHT based upon the ITBM and ITVM. In concert with the %Stocks with PMOs Rising indicator, the %Stocks with PMO Crossover BUY Signals is only 34% and falling. The ITBM and ITVM are also moving lower.
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. The market is acting 'toppy'. We have a short-term declining trend that is bringing price back toward an execution of a bearish rising wedge. The VIX and %Stock indicators are screaming internal weakness. The rising STOs are encouraging but I don't think it overshadows the other bearish indicators.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: The RSI is rising and the PMO has made a convincing bottom in oversold territory. The 20-EMA and 200-EMAs could pose strong overhead resistance, but with the PMO and RSI improving, I feel fairly confident it will reach $26.75.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold's consolidation has made my comments from earlier this week still valid:
"Gold continues to travel sideways but has narrowed into a symmetrical triangle. Since the previous trend was rising, the expectation is an upside breakout. The PMO is flat but looks ready to turn higher. The RSI is neutral. I like seeing discounts on PHYS since that generally leads to higher prices."
GOLD MINERS Golden and Silver Cross Indexes: I like the flag that is setting up on the flagpole formed by the rise out of the bear market low. The BPI is improving somewhat but I'm not seeing enough bullishness in the other indicators to get on board Miners just yet.
CRUDE OIL ($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 managed to just get back above overhead resistance. The RSI is moving back into positive territory above net neutral. The PMO is about to trigger a crossover BUY signal. At this point price is struggling with the support/resistance along the April/May lows, 20/50-EMAs and a declining trend. I'd look for a breakout from the declining trend as a signal that price will really start to move upward.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Add it with a discount AND get the LIVE Trading Room for free! Contact email@example.com for more information!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
Erin Swenlin will be presenting at the The MoneyShow Las Vegas August 16 - 20 at Bally's/Paris Resort! You'll have an opportunity to meet Erin and discuss the latest DecisionPoint news and Diamond Scans. Claim your FREE pass here! You can watch online with this pass too!! There will be online events held in May and when I have more information I'll let you know.
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):