After a very difficult trading day yesterday, the market rebounded. Remember yesterday was the first time since August of 2019 since the Nasdaq logged five straight days down. Fortunately, it finished with a positive close. That didn't help with the declining trend which continues to pick up momentum and getting steeper. The gap from last Monday, was closed and that suggests more downside.
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 declining trend persists, but I also noticed that rather than a possible "flag" it is a megaphone or broadening pattern. These are generally bearish since it implies increased volatility. The PMO is stagnant after topping. The RSI is hanging onto positive territory and the 20-EMA held as support.
You'll notice on the one-year chart that total volume shrunk on today's positive move which tells me there wasn't much conviction behind it.
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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 increase in the GCI is encouraging, but given the length and strength of the rally out of the bear market low, we would expect to see the GCI to read higher than 65%. The SCI and BPI continue lower.
Despite a gain today, there was very little movement to the upside on these indicators.
Climactic Market Indicators: No climactic readings. In the very short-term, I have to say it doesn't look too bad. The VIX continues to flirt with the lower Bollinger Band which is generally bullish for the market and we saw no contraction in New Highs.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL. The STOs did rise slightly today, but are still in negative territory. I do think this supports the idea of a short rally off the 20-EMA.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH. Today both ITBM/ITVM continued to contract which suggests intermediate-term weakness where we once had found strength.
CONCLUSION: The very very short-term picture is looking pretty good given rising STOs and VIX sitting on lower Bollinger Band on the inverted scale. However, the short to intermediate-term conditions are not positive and are getting worse. The PMO continues to fall, intermediate-term indicators are falling and the declining trend with megaphone are all bearish. I continue to pare down my portfolio.
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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: Yesterday's comments still apply:
"The "handle" on the cup is getting unruly. I suspect this pattern will bust soon. $25 continues to be the make or break point for the pattern and the Dollar. The PMO is now falling below its signal line and the RSI is back into negative territory."
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. We just got a PMO BUY crossover BUY signal and the RSI just entered positive territory. We are seeing discounts shrinking, but that tells me there is more interest in Gold. I also notified by Diamonds subscribers that Gold and Gold Miners made a big appearance on my PMO crossover scan as many of the Gold ETFs and Miners shared the same crossover BUY signals.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Miners were up and we saw a PMO BUY signal on GDX. The rising trend channel is intact but I'd have a higher confidence level if price could get above and stay above the 20/50-EMAs. I do like seeing the indicators moving higher as it suggests many of the Miner stocks are showing similar price strength.
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: It was a nice rally in Oil, which took price above both the 20/50-EMAs. This could be the beginning of a breakout move given the PMO is on a BUY signal and has entered positive territory. The RSI is staying above net neutral (50).
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Okay, TLT, it's time to bounce. TLT has hit the moment of truth. A decisive (3%+) rally off the 200-EMA would be very bullish and would likely mean a move to at least test the September tops.
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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