The DecisionPoint Scoreboards continue to change this week. Last week, the NDX had a PMO SELL signal on Friday, but it was back to a BUY signal on Monday so I left the Scoreboard alone. Today the PMO SELL signal on the NDX looks far more ominous and as such must be recorded and written about. Technology took a huge hit today with XLK down -2.60%! It has been a leader since the March crash as far as outperformance, but it didn't really take the rest of the indexes all the way with it. The SPX, OEX, Dow, SP400 and SP600 still have not challenged their all-time February highs and the NDX has put that level far behind in the rearview mirror. If Technology starts to fail, will it take the indexes down with it? I suspect it will to some degree, but that sector needs a serious pullback and likely will see more serious damage. Right now the NDX is forming a double-top formation. It is still holding the 20-EMA and it could fall a bit further without compromising the rising trend. The bullish market bias could save it, but I'd be prepared to lighten the load in Tech positions right now.
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: We got a pullback that has taken price to the bottom of the gap resistance area. This had the PMO topping today. Total volume was above the 250-EMA on this decline which doesn't bode well. The VIX is remaining above its moving average which is positive, but it is on the decline on the inverted scale and that is generally characteristic of short-term pullbacks.
Climactic Market Indicators: I think it is good news that the negative A-D numbers were small and not climactic on this decline. We also saw more new highs on a more than 1% decline. The bullish bias certainly seems intact.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL. Based upon the STO ranges, market bias is BULLISH. Market bias is still bullish. The STOs continue to decline but have not reached negative territory yet. The %Stocks numbers are healthy and not overbought, but they are falling right now.
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. There are still negative divergences in terms of direction of price and indicators. However, 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 OVERBOUGHT. With most of the ITBM/ITVM readings since the end of April being above the zero lines, the market bias is BULLISH. Can't complain about a rising ITBM/ITVM on a down day. These indicators are beginning to get overbought, but they do remain bullish.
CONCLUSION: As I've been saying, the market's bullish bias may've saved us from a huge decline (for now), but it is now in the sludge of gap resistance. It will be far easier for it to drop back down given the negativity of the short-term indicators and higher volume on today's decline. IT indicators while still bullish are getting overbought. I don't see the fire power necessary to break out from gap resistance right now. Indicators overall are beginning to deteriorate or they are overbought. The environment is ripe for a good pullback right now with a bullish enough bias to likely prevent it from being a giant decline.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The next support level is $25.34. Given the very bearish indicators and high volume on the sell-off, I wouldn't expect that level to hold.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold continues to soar and a weak Dollar is helping it along. The large discounts are very good for Gold. It means (believe it or not) that investors are bearish on Gold. Bearish sentiment leads to bullish moves. The RSI is overbought, but it can maintain that level for some time in a bullish environment which Gold is definitely in right now.
GOLD MINERS Golden and Silver Cross Indexes: Finally got a pullback today on the Miners. Technically it was overdue and despite Gold moving higher, Miners are subject to the winds of the market. They were terribly overbought so a drop back toward support at the early July top is a good thing. The components of GDX are showing immense strength based on the indicators. Miners continue to show up on my Diamond report scans. I currently hold NEM.
CRUDE OIL ($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 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. We got the expected upside breakout from the symmetrical triangle continuation pattern. The RSI is getting overbought and price is now up against overhead resistance. The PMO still looks healthy. If it breaks out, I will likely add to my position.
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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)