With UUP's PMO crossing over its signal line on the daily chart to trigger a BUY signal, I wanted to really zero in on what the chart pattern currently is showing on UUP so I created a 2-hour chart. There are plenty of reasons to believe the Dollar is bottoming right now when you look at this chart below. Let's start with indicators. The RSI is just about in positive territory on the 2-hour chart and the PMO is turning up. The OBV has a positive divergence with price lows. This chart has a plethora of possible chart patterns given all of the islands, triple bottom possibly, etc. I am watching two in particular. That would be the bullish reverse head and shoulders pattern with a down sloping neckline and that whole formation being a reverse island set-up. We'll talk more about the Dollar and USO at the end of the report.
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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: Given the SPY did not make a higher high, I can now draw the top of a bearish rising wedge. Looking at the VIX, we see a puncture of the upper Bollinger Band on the inverted scale. This usually signals a day or two of decline. Volume was very low on today's decline, the lowest we've seen since right before the COVID crash. This is very concerning.
Climactic Market Indicators: Readings weren't particularly climactic, but they did skew 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.
Negative divergences are a big problem on this chart.
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 continue to rise which is bullish for the intermediate term, but they are now overbought AND negative divergences remain."
CONCLUSION: The negative divergences paired with very low volume today is what concerns me right now; mainly because it is so similar to the prelude to the COVID crash. The SPX still hasn't made new all-time highs even though the SPY has. This seems a likely spot to see a pullback or even a correction. Keep those stops tight or trailing.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The daily PMO triggered a BUY signal today which bodes well. As I noted in today's lead in, the chart patterns that can be discerned are bullish. There is the possibility that this is a reverse flag formation and even lower prices could be ahead. I'm of the belief that it is an intermediate-term bottom coming in. A drop below $25 would change that assessment quickly.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: It does appear that Gold will hold the 50-EMA. I was relieved to see it trade completely above the 2011 top today. The PMO is still very negative, but the RSI is holding up in positive territory. I also note that we had a high discount on PHYS today. They typically accompany bullish price reversals. Nonetheless, it is time for Gold to consolidate and doing so above the 2011 top will be healthy.
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: I mentioned a possible reverse island forming on Gold Miners. I do not like the OBV negative divergence and PMO SELL signal, but I do like the RSI nearly getting above 50 and the improvement in the BPI and %Stocks indicators. The 50-EMA appears to be holding for Gold so we might just see the same from GDX. This is a very strong area of support at the May top so this could be a bottom.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/13/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: The 20-EMA crossed above the 50-EMA today for a "silver cross". This triggers an IT Trend Model BUY signal for Oil. The PMO didn't trigger, but it likely will tomorrow unless we see a heavy decline. The energy sector has been "due"-- to find money rotating it's way. Oil prices rising and the Dollar rising could be helpful. This price action just doesn't impress me right now though.
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds are now sliding quickly but support is near around $161. The PMO SELL signal is ugly and the heavy volume on the decline this week is not inspiring confidence that it will hold that support level.
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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