Market participation is clearly skewed to the big large-cap names. Notice that RSP was unable to even challenge previous its two previous highs. In fact, RSP hasn't even made it past gap resistance from February. I also note that the RSP's PMO is on a crossover SELL signal while the SPY's PMO is on a crossover BUY signal. In most circumstances, to sustain a bull market you should have wide participation. We know that mid-caps and small-caps have not really been participating and now, based on RSP, you can add many of the components of the SPX in that group. We should be aware of the fragility of these new all-time highs on the SPX.
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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: Compare the SPY PMO to the PMO you just saw on RSP in the first chart. Not only is the SPY on a PMO crossover BUY signal, but it is still rising unlike RSP's PMO. I also note, that the VIX has closed beneath its EMA on the inverted log scale. The last time that occurred was mid-July. Typically a dip below the lower Bollinger Band is bullish, but with the squeeze, those penetrations aren't necessarily meaningful unless they spike.
Climactic Market Indicators: We are seeing negative breadth numbers on a 1% rally. That certainly makes sense when you look at RSP. Although negative, they aren't climactic.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL. Based upon the STO ranges, market bias is NEUTRAL. I feel more comfortable in the short term when I review the STOs which are rising on both the SPY and RSP.
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 continued up today, but the GCI joined the SCI by topping and moving lower.
The intermediate-term market trend is UP and the condition is NEUTRAL. 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 haven't turned up yet which continues the negative divergence of price rising and indicators falling."
CONCLUSION: Of course there is no telling how long this rally will be sustained, but I can tell you what will cause it to fail. If we see those FAANG+ stocks turn over, they will likely topple the whole market. For now they look technically sound, minus the parabolic rises in some of them. Until we start seeing wider participation, this bull market is fragile.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: Yesterday's comments still apply:
"So many islands...as I mentioned last week, what I find most important on the chart are the declining trendlines and gap resistance. I don't see support until the bottom of that March spike. Today both the 20-EMA and the declining tops trendline held up as resistance. The PMO BUY signal and rising RSI do make me less pessimistic, but overall I don't see a big resurgence for the Dollar anytime soon."
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Very nice bounce today in Gold right off the 2011 price support and the rising bottoms trendline. It did not have to go all the way down to test the 50-EMA. Price is no longer overbought and the RSI has now moved into positive territory. Discounts remain which is bullish for Gold. The PMO is decelerating slightly. I am looking for a resumption of the rally in Gold....
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: ...and the Gold Miners. GDX stayed mostly on trend and bounced off the 50-EMA in its rally today. The RSI has been staying in positive territory. We are starting to see the Miners recapture their 20/50-EMAs as those indicators are on the rise again. I like Miners...I was bullish too early with them last week. They look healthier now.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/13/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Yesterday's comments still apply:
"Price continues to consolidate. The support area aligns with the gap from April and overhead resistance is at the March low. The RSI remains positive, but we did see the PMO trigger a SELL signal last week. I don't expect anything exciting in USO's future this week."
IT Trend Model: BUY as of 6/26/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Price continued to decline. Given the PMO has just dipped below the zero line, I would expect price to at least test the July low.
Full disclosure: I own TLT.
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Technical Analysis is a windsock, not a crystal ball.
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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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