The indicators were right about yesterday's selling exhaustion, but I believe today's rally was not a harbinger of good things to come. I'll explain in the section on Stocks. The headline news is that Utilities (XLU) had a negative 20/50-EMA crossover above the 200-EMA which triggered an IT Trend Model Neutral signal. Had that crossover occurred below the 200-EMA, it would've generated an IT Trend Model SELL signal. Yesterday, price broke down from the consolidation zone but landed on the rising trendline. Today price rebounded right back into the consolidation zone (unlike the SPY). The PMO is currently on a SELL signal, but overall it has been flat. The RSI is negative. The Stocks > 20/50-EMAs indicators are quite oversold and we did see them tick higher today. At this point, the EMAs are braiding and that means the signals aren't clean and many times don't stick around long. I would say given the oversold readings and the recent bounce off the rising trend, a "NEUTRAL" signal fits rather than a "SELL".
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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: While today's rally felt nice, it didn't manage to accomplish much as far as resistance levels. The 50-EMA and the bottom of the consolidation zone held up as overhead resistance. On a 1%+ move higher came on exceptionally low total volume. It hit lows we haven't seen since August. That doesn't fill me with confidence that the rally will continue on.
Climactic Market Indicators: No climactic readings today. Yesterday we were looking for a rally pop off the very negative climactic readings and the hammer candlestick. That did come to pass (thank you, indicators!), but unfortunately as noted above I don't see anything here that would suggest that the rally will continue. The VIX did close just above its EMA on the inverted scale, but it was mostly below it all day. Remember, as long as the VIX is below its moving average on the inverted scale, the market is vulnerable.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is SOMEWHAT OVERSOLD. Based upon the STO ranges, market bias is BEARISH. Negative readings increased greatly. They are now beginning to get oversold, but they have certainly moved much lower. %Stocks indicators are oversold, but despite a nice rally, those indicators didn't improve much at all.
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 slowed its descent slightly. The SCI continues lower. The GCI is mostly flat, but technically is rising slowly. All of these indicators aren't that oversold which tells me lower prices could continue.
The intermediate-term market trend is DOWN and the condition is NEUTRAL. The market bias is NEUTRAL.
Yesterday's comments still apply:
"We're seeing red bars for the first time on the ITBM/ITVM since the bear market. It's just another indicator that spells decline ahead in the intermediate term." They certainly aren't oversold.
CONCLUSION: The market rallied over 1% today, but total volume was very low. Price didn't manage to clear any overhead resistance. The indicators are almost all bearish and most aren't that oversold. I suspect we will see a resumption of the decline.
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:
"Carl has annotated a bullish cup shape and the gap. Given that bullish rounded bottom, he and I believe we will see this large "island" resolve upward and close that gap. The PMO is very bullish and the RSI has just entered positive territory above net neutral (50)." At least now the gap is being tested.
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: I updated the rising bottoms trendline today to incorporate the new bottom that was formed on today's rally. The main areas to watch for support are at the August low and the July high. I liked today's bounce, but with the RSI so negative and the PMO accelerating its decline, I am not expecting a rally. I also note that we have premiums again on PHYS. That is usually bearish for Gold.
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Carl and I talked about the difference between Gold and Gold Miners [in the 9/21 DecisionPoint Show]. On the chart we can certainly see the similarities as price is testing horizontal support. The RSI has moved negative and the PMO is moving lower. I note that given the updated indicators, we are seeing oversold readings which is good. The underlying foundation of the GDX is still strong given that 100% of the components have "golden crosses" intact."
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: The 20-EMA is still forming resistance. We now have a PMO that has topped below its signal line and a negative RSI. It appears we may have a new trading channel (annotated in blue).
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:
"Really not much to talk about with TLT. It continues to consolidate sideways as it struggles to overcome resistance at the 20/50-EMAs. The PMO is now on a BUY signal and the RSI has nearly reached positive territory so we could be seeing the beginning of a small rally to possibly challenge the September top."
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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