Today we saw a rally, but it was not accompanied by bullish indicators. A prime example is the loss of Price Momentum Oscillator (PMO) BUY signals on the DP Scoreboards. On Friday, both the Dow and OEX lost their PMO BUY signals and today the SPX/SPY lost its PMO BUY signal. The NDX had already generated the same PMO SELL signal earlier last week. Looking at the charts below, it doesn't appear that we'll see a whipsaw back into a PMO BUY signal.
The Dow still has a reverse divergence (bearish) with the OBV. Despite an increase in volume, price has not reached higher highs.
I'll talk about this one shortly.
The OEX had already closed gap resistance, but faltered at previous all-time highs. Now it appears we could be looking at a pullback to the rising bottoms trendline that forms support should we lose the 20-EMA.
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: I like that price is staying above the 20-EMA and did like that we were losing volume as prices began to decline. Yet here we are today with a .73% gain and we have even lower total volume numbers. With the new PMO SELL signal and failing volume on this rally, I'm not that optimistic we will see a follow-on rally.
Climactic Market Indicators: With today's big rally, I noticed that we actually had negative Net A-D Volume. The divergence with Net A-D which was positive today is a concern. On the bright side, the VIX remains above its moving average on the inverted scale. Oscillation above its moving average suggests internal strength.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL. Based upon the STO ranges, market bias is SOMEWHAT BULLISH. Some mixed messages on the STOs as well. The STO-B rose slightly while the STO-V continued its decline. We have official negative divergences with the %Stocks indicators on an intermediate-term basis.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) and Golden Cross Index (% of SPX stocks 50EMA > 200EMA) still bullish overall, although I do not like that the SCI is in the process of topping in overbought territory. The BPI is officially in a negative divergence with price since it topped on Friday.
The intermediate-term market trend is UP and the condition is OVERBOUGHT. With most of the ITBM/ITVM readings since the end of April being above the zero lines, the market bias is BULLISH. We finally saw some deterioration on the IT indicators as they all moved lower. This is a problem, especially given the force of today's rally to the upside.
CONCLUSION: I always like a good rally, but today's wasn't accompanied by bullish activity on our indicators. In fact, most are deteriorating. The strange negative divergences between the breadth and volume components of Net A-D and the STOs leaves me feeling bearish. I still believe that the bullish market bias will likely prevent a crash, but lower prices on a pullback are likely coming this week. I've changed my stops to 'trailing' as I've got some great profits going on with some of my stocks. I'd like to lock those in.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The 2018 low support level is $25.34 and today we got a gap down that took price below that. It appears we have a "hammer" candlestick on this gap down which does tell me this is likely an island formation and we should see price move back above this level. However, the next price support level is at the March low.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Previous comments still apply:
"Gold continues to soar and a weak Dollar is helping it along. The large discounts are very good for Gold. It means (believe it or not) that investors are bearish on Gold. Bearish sentiment leads to bullish moves. The RSI is overbought, but it can maintain that level for some time in a bullish environment which Gold is definitely in right now."
GOLD MINERS Golden and Silver Cross Indexes: Miners are back in the saddle as they gapped up on a huge move today. This area is clearly overbought, but the indicators aren't showing any deterioration so I would look for more upside. Full disclosure I still hold Newmont Mining (NEM). Wishing I'd gotten more of it! I might add a Silver ETF on a pullback.
CRUDE OIL ($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:Previous comments still apply:
"Oil remains attached to support at the 200-EMA. The PMO hasn't really turned back up but it sure wants to. The RSI is positive. It could be time for Oil to make a move higher."
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 I still like it. It hit overhead resistance today and pulled back. It may pullback a bit further, but overall the PMO looks great and isn't overbought and the RSI got a nice pullback preventing TLT from getting too overbought.
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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)