It took awhile, but the Dow is finally catching up to the other DP Scoreboard indexes (SPX, OEX, NDX). At last, the Dow saw a "golden cross" of the 50/200-EMAs. That crossover triggered a Long-Term Trend Model BUY signal. You'll note on the DP Scoreboards that the SPX and OEX got their LT BUY signals in early June and the NDX had its "golden cross" back in March! Currently there are declining tops on price as well as indicators which confirms the current declining trend. However, those negative divergences could clear if prices begin rising and we see a breakout above the June top.
DP INDEX SCOREBOARDS:
TODAY'S Broad Market Action:
One 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: Price remains within the gap resistance area. Momentum and the OBV are healthy enough, but I do notice that we have a declining trend in volume bars. I would think we would see an uptick in volume on the rally. Since we're not my caution flags are out. I noticed the VIX is beginning to move away from the upper Bollinger Band after piercing it yesterday. This is usually a sign of decline.
Climactic Market Indicators: Breadth has been a bit strange of late. Carl discussed this during today's taping of the "DecisionPoint Show" which will air tomorrow at 8:00a EST on StockChartsTV (it'll be sent to our subscribers via email before it airs). On Monday, Net A-D and Net A-D Volume declined despite a market rally. That's a sign of a problem. The next day they were elevated, but not that climactic. Today, Net A-D increased, but Net A-D Volume decreased. As I noted in the chart above, volume patterns aren't particularly bullish given the rally this week. Now we see the VIX turning lower on the inverted scale. I also note that there were no New Highs.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT. Based upon the STO ranges, market bias is BULLISH. Market bias remains very bullish and that seems to have helped price avoid the breakdown it really needs. STOs are still moving lower as price moves higher. This is a bearish situation, but that bullish bias could turn a decline into more sideways consolidation.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) and Golden Cross Index (% of SPX stocks 50EMA > 200EMA) continue higher which is bullish. Carl pointed out in today's show that their are negative divergences currently in play. The market could wiggle its way out of them should these indicators not top, but that could be difficult to arrange.
The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. With most of the ITBM/ITVM readings since the end of April being above the zero lines, the market bias is BULLISH. The bias in the intermediate term is even more bullish than in the short term given all of the indicators below are rising, but again there are still possible negative divergences lining up.
CONCLUSION: Well, my conclusion from Monday still holds. I noted in my title for this week's DecisionPoint Show "Bullish Market Bias - Can't Beat 'em, Join 'em". I'm not going to fight the market, but there are some caution flags out there so evaluate your stops to ensure you keep your profits.
"Our indicators have told us for some time that we have a "bullish bias". Last week's price action off negative divergences proves it. Negative divergences generally lead to breakdowns. Instead of breaking down, price moved sideways. I am expecting an upside breakout, but with short-term indicators looking less bullish, I expect we could see a pullback before gap resistance is finally overcome."
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: Carl and I both agreed today that the Dollar looks extremely weak and although we now have a very oversold RSI, the PMO is negatively configured. In a bearish configuration (50-EMA < 200-EMA) we should expect oversold conditions to hold longer than usual. Right now the next support level is $25.34. Both Carl and I don't believe that level will hold.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: With a very weak Dollar, we can expect Gold to show strength. It is doing just that. The RSI is now overbought, but the PMO is not. We have a bottom above the signal line for the PMO which is especially bullish. Discounts continue which tells us that sentiment is bearish. Very bearish sentiment is a fertile condition for Gold to rally. I don't see a downside to Gold right now.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners continue to shine. I keep waiting to see a pullback, but it continues higher and the tailwind from the weak Dollar and strong Gold prices should keep it soaring. The participation among members of GDX is nearly 100% on all indicators. As I mentioned yesterday, strength begets strength. The RSI is now in overbought territory, but it hasn't reached extremes yet.
CRUDE OIL ($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: Oil held its position above the 20/50/200-EMAs, but closed slightly lower. I like the RSI here, but the PMO isn't flinching in its decline. I think this could still be a decent buy point as I suspect support will hold here, I would just prefer to see momentum moving in a positive direction.
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: I still own TLT and plan on holding it. We got the expected upside breakout from the symmetrical triangle continuation pattern. Overhead resistance is nearing, but price is not overbought based on the RSI and momentum is positive and rising.
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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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