The question on everyone's minds right now after today's big upside pop on the Nasdaq is whether the "correction" for Technology is over. I found it fascinating to see the one-week sector results today. Technology is in the bottom slot down -8.32% with Comm Services just above at -6.56%. Under that graphic is the chart of XLK.
XLK bounced off its rising bottoms trendline and 50-EMA. The indicators didn't improve by much. The RSI is still negative, the PMO is in decline on a SELL signal, the Silver and Golden Cross Indexes are in decline and the BPI is still falling. Granted we did see a slight improvement on %Stocks indicators, but just a blip to the upside. The small tick higher on the OBV coming on a close doesn't inspire confidence. However, I wouldn't write off Technology just yet; the bounce was certainly impressive today and price is holding support. Is the correction over? I suspect the giant declines are over, but I don't foresee a huge upside move in Technology this week.
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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: The SPY did lose its rising trend, but the 50-EMA was stout support. The VIX is moving higher on the inverted scale but remains under its 20-EMA. Total volume contracted somewhat but it was still healthy.
Climactic Market Indicators: We have climactic readings yet again, this time to the upside. Since these positive readings arrived after a declining trend, I would look at it as a buying initiation impulse which would suggest higher prices tomorrow or Friday.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL. Based upon the STO ranges, market bias is NEUTRAL. STOs continued lower despite the rally. They aren't oversold just yet. %Stocks indicators ticked higher which is good, but I would've expected more improvement on %PMOs Rising given the nearly 2% gain today.
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.
No improvement on these indicators.
The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
Indicators continue to move lower in the intermediate term.
CONCLUSION: Another day of climactic readings. Today they suggests a buying initiation impulse so I'm expecting higher prices tomorrow or Friday. The short-term and intermediate-term indicators didn't improve much so I'm not ready to say that the pullback/correction has fully worked itself out. We'll know more tomorrow!
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar pulled back slightly today, but hasn't compromised the breakout from the declining trend. I have annotated the gap area that will likely be a problem for UUP. The RSI is now negative, but momentum is still quite positive.
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:
"Gold is still holding up. It found support along the 50-EMA and the 2011 top. It wasn't able to recapture the rising trend or the 20-EMA. The PMO is still in distress which is worrisome, but discounts remain high and that is generally bullish for Gold."
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Very nice rally on Gold Miners today, but it hasn't quite exited the descending triangle. Generally those patterns resolve to the downside. I'll feel much better if that declining trend is broken. The %Stocks Above 20/50-EMAs improved quickly which does give me hope that we will see that breakout.
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: USO rebounded, but the RSI is still very negative and the PMO is moving lower and putting more margin between it and its signal line. Resistance is near at $28.
IT Trend Model: Neutral as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Price closed on its intraday low yesterday and that generally precludes a continuation of the decline. The PMO topped below its signal line and the RSI is negative. We could be seeing the formation of a small reverse head and shoulders, but we need to see a rally back to the September top to complete it.
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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