Today I had the pleasure of doing a podcast with FinancialSense.com's James Puplava. We talked at length about the "top ten" large-cap stocks that run the show in the SPX. James did a study taking out those big cap stocks and found the chart was very different as to what is actually going on in the SPX. I decided to take a look at RSP, the equal-weight S&P500 ETF. Wow! According to RSP, the market is in a declining trend with a bearish bias. If investors get spooked and start letting go of the large-cap positions quickly, the market could fall swiftly as there is no foundation of strong stocks to pick up the slack.
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DP INDEX SCOREBOARDS:
As noted, the NDX had a crossover BUY signal generate on the PMO. Setting another new all-time high, one has to wonder how long and how far higher it can go. I decided to review the equal-weight ETF version of the Nasdaq.
We still see a move to all-time highs, but the negative divergences are a bit more obvious.
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: The market averted a down day, but it didn't help the PMO change course and we saw the VIX dip below its moving average on the inverted scale.
Climactic Market Indicators: It's our third day in a row where we have climactic negative readings on a positive close. This is shouting selling initiation, but so far the market is deaf.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERSOLD. Based upon the STO ranges, market bias is NEUTRAL. The negative divergences have only gotten worse on the short-term indicators. Participation keeps falling given the %Stocks readings and yet... More proof that we have those big cap players pushing the indexes higher.
Intermediate-Term Market Indicators: The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA).
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA).
- The Bullish Percent Index (BPI shows the percentage of SPX stocks on Point & Figure BUY signals.
We are now seeing negative crossovers on the SCI and BPI. While it is positive to see the GCI rising, it is still in a negative divergence with price.
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.
Yesterday's comments still apply:
"These indicators continue to fall and are just more in a long line of negative divergences."
CONCLUSION: Looking at RSP put many of our breadth indicators into perspective. Somehow price continues to march higher and yet we have so many negative divergences. Clearly the top 2% of the SPX is carrying the load as participation declines with the smaller cap components.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: We saw a big upside move yesterday that brought the PMO back above its signal line, but most importantly, the declining trend hasn't been broken. Neither have we seen price even test the 20-EMA. The most important characteristic on this chart is that blue declining trend line. If we get a breakout then I'll get bullish.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold held the 2011 despite the big decline today. The PMO is falling and on a SELL signal, but the RSI remains positive. I'm mostly concerned about support holding. Discounts continue on PHYS which is bullish for Gold.
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Looks like GDX has formed a new rising trend in the short term. I like seeing those indicators confirming the new trend. I'm still a fan of the Miners.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/13/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Not much here except to note that the decline had the 50-EMA tested and the PMO is now on a SELL signal. I don't foresee much change ahead as it continues to consolidate sideways.
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: The PMO is still falling despite a rebound after the deep decline yesterday. This looks a lot like a bearish reverse flag formation. I do like the PMO decelerating though and the RSI is moving positive again. I'll be interested to see if price can get back above the 20-EMA.
Full disclosure: I own TLT.
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Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
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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