Charts were quite interesting today on a nearly 1.25% gain on the SPX. Not all are 'in line' with the current rally. However, there were climactic positive readings; yet, negative divergences are continuing to plague indicator charts.
Yesterday I wrote about the Russell 2000's whipsaw SELL signal on the Price Momentum Oscillator (PMO). Well, more whipsaw today as the PMO was yanked higher by the more than 2% gain on IWM. The margin remains thin between the PMO and its signal line, so we could be in for more whipsaw. While it was a great rally today for IWM, it didn't clear last week's high. Notice that it currently would need to gain over 13% to reach previous all-time highs; whereas the SPX is only 3.5% away and the Nasdaq is 7.3% ABOVE it's previous all-time high.
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.
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: It was a great rally today, my portfolio certainly enjoyed it. The PMO while it did decelerate, continues to fall after Monday's SELL signal. Gap resistance remains strong and now we have a bearish rising wedge. While the wedge does imply we will see a break below the rising bottoms trendline, the bullish market bias tells me not to expect a huge correction. The 20-EMA is holding strong and has not been tested on this pullback which is bullish.
Climactic Market Indicators: We have a climactic reading on Net A-D. Net A-D volume isn't particularly climactic. The VIX is still hovering above its moving average on the inverted scale which tells us there is still a bullish bias. When positive climactic readings come after a decline, I usually look at them as bullish initiations or impulses. I'm not sold this time around because technically price lows have been in a rising trend since Friday's low was set. This is more than likely a buying exhaustion.
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. Again we are seeing lower readings on the STOs on a rally day. This does not confirm today's upside move. Good news is %Stocks indicators are rising again.
Intermediate-Term Market Indicators: The Silver Cross Index (% of SPX stocks 20EMA > 50EMA) and Golden Cross Index (% of SPX stocks 50EMA > 200EMA) are both rising again which is positive. I also like the BPI bottoming above its signal line (10-EMA).
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. Unfortunately, these indicators continue to unwind. As they move lower, they are showing a negative divergence with price.
CONCLUSION: The market enjoyed an excellent rally today, but most of our indicators aren't getting on board (volume indicators failing, STOs, ITBM/ITVM). On the bright side, the BPI has turned up and today's pop on Net A-D are bullish. Given the mixed indicators, I'm sitting in neutral right now. All of my positions currently have trailing stops set so that I can lock in some profits if the downturn materializes.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar continues to drop and I don't see any support available until we hit the bottom of the "Pinocchio" bar (a Martin Pring phrase) during the March crash. The PMO is showing no signs that this decline is ending. The RSI is very oversold so we could see a consolidation or at least a breather from this plunge.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Yesterday's comments still apply:
"Carl wrote an excellent 'free' article on Gold today that really covers it perfectly. His analysis is spot on, as usual! I would only add, since Carl doesn't use the RSI, that it is terribly overbought which does suggest we need a breather. I've marked previous times we've seen these overbought readings and overall the declines weren't horrendous. The virus crash was the worst and that was egged on by frenzied selling. I think we are looking at something similar to August 2019 where we saw the same type of overbought RSI readings and the result was a consolidation and eventual move higher."
GOLD MINERS Golden and Silver Cross Indexes: Yesterday I mentioned that I expected price to test the rising trend line and sure enough that's what we saw today. While readings are overbought, those conditions can certainly persist in a strong group like the Miners. With Gold providing a nice tailwind, I expect this rising trend to hold or we will see a little consolidation before prices move higher.
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 is getting pinched between the 20-EMA and 200-EMA. I am expecting a breakout to occur soon. I'm just waiting on the PMO to finally turn up. The RSI is positive and with the 20-EMA holding up as support, it just seems a matter of time until we see a breakout here.
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 will continue. I am looking for a breakout above $170. The PMO is continuing higher and the RSI is positive.
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 firstname.lastname@example.org for more information!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
The MoneyShow Las Vegas has been canceled "in person", but I will still be presenting during their video production. As soon as I have information, I will forward it! In the meantime, if you haven't already, click to get your free access pass!
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):