This morning I was on "Your Daily Five" and presented five of the charts that I'm watching going into this week in just 10 minutes. Most are below! Today the SPY finally made it into the gap resistance area and closed within. The PMO is on a BUY signal and rising. There are a few issues to point out. First the volume pattern isn't optimal. The OBV did make a higher high, but notice that total volume is falling and on a day where price finally had a breakout, volume pulled back. Second problem is the VIX closing outside of the upper Bollinger Band. Typically a close above that band precedes a short-term decline.
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: As noted in the opening, gap resistance is now being challenged and the VIX is overbought.
Climactic Market Indicators: No climactic readings and I already noted the VIX.
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. The STO-V headed lower on Friday and continued after today's close. The STO-B has now joined it in a small decline. I don't like to see lower STOs on a breakout day.
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. Currently there is a negative divergence between price tops which are rising and indicator tops which are currently in declining trends.
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. All of these indicators are rising and bullish.
CONCLUSION: 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: The Dollar is clinging to support, but with a negative RSI and PMO SELL signal that arrived well below zero, I would look for a breakdown.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold has a tiny breakout in the thumbnail. The RSI is positive and we are now seeing deeper discounts on PHYS which suggest higher prices. The PMO is pulling out of a decline and could give us a bottom above the signal line which I consider especially bullish.
GOLD MINERS Golden and Silver Cross Indexes: Loving Gold Miners still. On "Your Daily Five" this morning I talked about this chart and how bullish it is. Friday we had a breakout from a possible short-term bullish flag formation. Today it continued with a big gap up. The PMO is not overbought and while the RSI is somewhat overbought, it is clear that the members of GDX are very healthy and could certainly support more upside. 100% of members have 20-EMAs > 50-EMAs and have price above both the 20/50-EMAs. Strength begets strength.
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: Price is getting squeezed between the 20-EMA and the 200-EMA. Overhead resistance continues to hold and the PMO is still trending lower. Despite a currently positive RSI, I am expecting a breakdown below the 20-EMA.
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds have mostly been consolidating sideways and have formed a tiny symmetrical triangle. I'm expecting an upside breakout given the positive RSI and PMO BUY signal. Full disclosure: I own TLT.
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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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