XLRE and XLU both had 'golden crosses' (50-EMA > 200-EMA) today which triggered Long-Term Trend Model BUY signals. Looking at the charts, the PMO has topped on both but is also decelerating to possibly avoid the SELL signals. They are both struggling to overcome overhead resistance. With the indicators (minus the OBV) rising or trending higher on XLRE, I think we could be ready for a breakout there. XLU, however, is showing weakness as most of its indicators have topped or are deteriorating.
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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: You might've noticed, but the SPY has reached and logged new all-time highs whereas the SPX is still working its way toward that. Volume really pulled back on today's big rally and that is usually a sign of a buying exhaustion.
Climactic Market Indicators: No climactic readings today. The VIX remains above its moving average on the inverted scale but closed near the upper Bollinger Band which suggests participants are getting complacent. That usually is the time for a reversal to the downside.
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. Yesterday's comments still apply:
"These indicators are tipping over in overbought territory which is bearish and negative divergences persist."
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.
The BPI has now moved past the most recent top which is good. A little higher and it may be able to negate the negative divergence. SCI and GCI are rising which is bullish, although the SCI is getting overbought.
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. These continue to rise which is bullish for the intermediate term, but they are now overbought AND negative divergences remain.
CONCLUSION: I was thinking today would've been the decline, but it occurred to me that the SPX hasn't reached all-time highs yet. Bulls will likely be pushing hard for that breakout and given the SPY already has, it certainly seems possible, but given the lack of volume on today's rally, I'm not so sure they will pull it off. The short-term indicators are mixed with the STO-B rising and the STO-V falling. The big issue is the negative divergences. I've added trailing stops to my positions. I'm expecting a decline, but want to take advantage when the market continues higher like today.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: Monday's comments still apply:
"Carl suggested in Friday's Weekly Wrap that we could be looking at a two bar reverse island on UUP and he was correct. I also note the larger island. The PMO has turned up in oversold territory so this could be a possible rally point. Gold is in need of a pullback, so this could be the perfect storm."
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: I'm keeping Carl's comments below that he wrote yesterday. That 2011 top didn't really hold, but it did close above it. I also note that the 50-EMA held up. I agree with Carl's assessment yesterday that now is a good time to see sideways consolidation.
I can find no news that rationally connects to gold's crash. Because of lack of bullish sentiment, I thought we would be spared a violent pullback, but I was wrong about that. The most compelling negative technical issue is the vertical up move since mid-July – vertical advances beg for vertical corrections. As of today, gold has taken back 50% of that move, which may be sufficient for the correction. Gold is still above the support line drawn across the 2011 top, but I will personally turn negative if that support is broken. Now would be a good time to see some sideways consolidation.
Full Disclosure: I own GLD long-term but will likely take profits this week.
GOLD MINERS Golden and Silver Cross Indexes: I see what could possibly be a reverse island forming just above support at the 50-EMA and May top. I'd like to think this is a good reentry point, but the indicators don't looks so hot with negative divergence on OBV, RSI that is negative and a PMO SELL signal in overbought territory. Like Gold, this seems a good time to unwind those indicators with sideways consolidation.
CRUDE OIL (USO)
IT Trend Model: NEUTRAL as of 1/27/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Big rally for Oil today. The 20-EMA is closing in on a "silver cross" above the 50-EMA. That would generate an IT Trend Model BUY signal. The PMO is twitchy, but looks to be headed to a crossover BUY signal finally.
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Yesterday's comments still apply:
"Today we saw a PMO SELL signal and a deep decline that had price testing the 50-EMA. While it held, the high volume on this decline that is accompanied by that PMO SELL signal will have me out of TLT this week, if not tomorrow."
Full disclosure: I own TLT.
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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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