Yesterday I discussed the possibility of a reverse island formation. Unfortunately, it is still there. On top of that, price is still stuck up against overhead resistance at the February top. Volume continues to dwindle. I'm starting to regard this phenomenon as a lack of 'conviction' overall in the market rather than a lack of conviction in the direction of the move. Most seem to be waiting it out on the sidelines. One positive is that the PMO has avoided entering negative territory and appears ready to turn back up. Additionally, the VIX is above its EMA on the inverted scale which is usually bullish for the market.
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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 significance of current overhead resistance is much clearer on the 1-year daily chart. I also note that the RSI is not able to get into positive territory. Again the lack of volume seems more about disinterest in trading than disinterest in selling today.
Climactic Market Indicators: We had somewhat climactic negative readings, but nothing I feel needs to be classified as exhaustion or initiation.
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.
The STOs are still bullish. They are rising and are not overbought. %Stocks indicators fell today but given the decline, it isn't a surprise.
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 is rising and positive. The SCI and GCI don't look too healthy as they move lower.
The intermediate-term market trend is DOWN and the condition is NEUTRAL. The market bias is NEUTRAL.
While these readings are moving higher, they are still in negative territory. We are seeing very oversold readings on %PMO crossover BUY signals and they are currently rising, albeit very slowly.
CONCLUSION: Price remains stymied at February top resistance. Additionally, we still have an island which is a set-up for a reversal. The STOs are looking positive and the VIX is above its EMA on the inverted scale, but volume has dried up. A strong rally or breakout should be accompanied by higher volume and we haven't seen that. On the other hand, we aren't seeing strong downside volume either. We are in a period of unfavorable seasonality that ends on November 1st.
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:
"The gap was covered last week and now we see a pullback. This sure looks like a bullish cup and handle. The PMO is rising nicely and the RSI is positive and not overbought. We could see another day of lower prices, but the cup and handle along with the PMO and RSI tell me to expect higher prices soon."
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 rallied and consequently is still holding support at 1825. The RSI is negative, but it is starting to rise. The PMO is unfortunately below zero, but it is decelerating. We have increased discounts on PHYS which is generally bullish for Gold."
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Excellent rally in Gold Miners today but we need them to get above the 50-EMA to avoid a negative 20/50-EMA crossover. That negative crossover would be an IT Trend Model Neutral signal. The PMO is still falling and has reached negative territory for the first time since the COVID bear market. That tells me it is oversold. Given the %Stocks > 200-EMA is near 90% and we have 100% of components with Golden Crosses on their charts, there is a strong foundation for this group to quickly recover.
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Today's big decline, took out short-term support and had the PMO turning down beneath its signal line in negative territory. The RSI is falling and negative. It certainly appears we will see a test of the $26 level.
IT Trend Model: Neutral as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Yesterday's comments still apply:
"Bonds continue to meander sideways. The RSI is positive and the PMO is rising so perhaps we will see some action this week."
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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