The declining trend continues despite a nice rally. Good news is that price held support just above $340 for the SPY and we have a candlestick that resembles the bullish "hammer" pattern. We could be looking at a bull flag. Additionally, total volume did rise on today's rally. The RSI is positive, but the PMO isn't in agreement on a breakout; it is declining and very near a crossover SELL signal.
The DecisionPoint Alert Weekly Wrap presents an end-of-week assessment of the trend and condition of the Stock Market, the U.S. Dollar, Gold, Crude Oil, and Bonds. The DecisionPoint Alert daily report (Monday through Thursday) is abbreviated and gives updates on the Weekly Wrap assessments.
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MAJOR MARKET INDEXES
One Week Results:
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:
Top 10 Performers:
THE MARKET (S&P 500)
IT Trend Model: BUY as of 5/8/2020
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: The 1-year daily chart below shows me a possible double-top. We don't want to get too far ahead of ourselves there; it would require a drop below the September low to confirm the pattern.
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Participation: 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 SCI was unchanged today, but the BPI very nearly had a negative crossover its signal line. The GCI continues to rise.
Slight improvement on these indicators today.
Climactic Market Indicators: We very nearly had climactic readings today to the upside. The VIX again punctured the lower Bollinger Band on the inverted scale which is bullish in the very short term. We even saw a small increase in New Highs. I would look at this as a possible buying initiation based on the VIX and pop in volume, even though the Net A-D readings weren't quite climactic.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL. The STOs turned up today but are still in negative territory. I like seeing the improvement on the %stocks indicators.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH.
Yesterday's comments still apply:
"Today both ITBM/ITVM continued to contract which suggests intermediate-term weakness where we once had found strength."
CONCLUSION: The VIX and the pop in total volume suggest a break from this declining trend very soon. Price is sitting on support with a bullish hammer candlestick. Working against the market is a declining PMO that could trigger a SELL signal soon. Additionally, the IT indicators are bearish. I am bullish in the very short term, but more bearish in the IT and LT.
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This chart is included so we can monitor rate inversions. In normal circumstances the longer money is borrowed the higher the interest rate that must be paid. When rates are inverted, the reverse is true.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: I said that I would scuttle the cup and handle pattern if UUP dropped below $25. Today UUP traded above the $25 level all day so the pattern is still hanging on. The PMO and RSI are negative right now so it seems likely that the pattern will disintegrate rather than execute.
IT Trend Model: NEUTRAL as of 10/14/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: The bullish falling wedge continues to be the dominant feature on the Gold chart. It looked like it might trigger as price briefly popped above the declining trendline that forms the top of the wedge. Unfortunately Gold dropped lower today which pushed the RSI back into negative territory. The PMO is clinging to a BUY signal. Dropping discounts suggests more interest in Gold. I'm expecting a breakout.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Small problem with Gold Miners as they dipped below the rising trend channel. The RSI and PMO are still negative. The indicators are looking negative, so we may see another test of the $37.50 level.
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Oil continues to move sideways, as it makes huge gains, then large losses. The RSI is nearly positive, but overall Oil isn't likely going to leave this trading channel for some time. I decided to annotate another line of support/resistance at the September/October tops. It happens to line up nicely with the August lows, June/July tops and the start of the April gap down.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: I wrote yesterday that this was the do or die moment. It was poised to either bounce off the 200-EMA or break down below it. It fell over 1% and closed near the low for the day. The RSI is entering oversold territory, but the PMO is falling on a SELL signal, so those oversold conditions will likely persist.
Full Disclosure: I own TLT.
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
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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