Real Estate has been in a declining trend since late September. Since June, it has been traveling sideways in a trading channel from $33 to $37. The problem with trading channels is the EMAs will begin to "braid" which gives us signal changes over and over. Currently XLRE is at the bottom of this trading channel. We could see a rally from here, but I wouldn't look for it until the BPI has a positive crossover. The indicators are very oversold and they are beginning to rise.
Below is the recording of "The Pitch" from this morning. It was a great time! The 15 actionable trading ideas we presented were very interesting and the panel discussion at the end was enlightening.
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:
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: I think all of us were happy to not see a continuation of yesterday's crash. However, while the market was up a little over 1%, we saw a new intraday low and a lower intraday high. Today was a relief rally as it didn't accomplish much. The VIX is still penetrating the lower Bollinger Band which is generally short-term bullish. Total volume was elevated but not climactic like we saw yesterday.
The double-top is in play as price continues lower to test $320. The RSI is negative and the PMO is declining and nearing the zero line.
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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.
Yesterday's comments still apply:
"The GCI has now topped. The BPI and SCI are both tumbling lower now. The BPI is nearing oversold territory, but that is oversold territory during strong bull market runs. This appears more treacherous."
These indicators are oversold, although we saw lower readings... I hate to bring back bad memories but you can see during the bear market, those readings were lower and the oversold conditions persisted for over a month before we saw a turnaround.
Climactic Market Indicators: Readings aren't climactic today and I pointed out the VIX which does suggest some follow-on movement to the upside. We saw a small expansion of New Lows despite today's rally.
Short-Term Market Indicators: Yesterday's comments still apply:
"STOs moved lower and sadly they are not oversold. On the other hand, we do have oversold readings on the %stocks indicators."
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is NEUTRAL. The market bias is NEUTRAL. These indicators have now pulled back to the zero line. Their continued decline (and they have much further to fall!) suggests the double-top will resolve downward as expected.
CONCLUSION: The selling exhaustion from yesterday may've already played out with today's rally. The VIX is still very high, fear hasn't been expelled and with the pressure of the election and COVID, the outlook isn't good. The technicals are certainly hitting oversold territory, but important indicators like STOs and ITBM/ITVM could definitely move lower. The ITBM/ITVM are both still in positive territory and falling fast. Tomorrow is the end of the week and end of the month. We'll be looking at those charts tomorrow in the Weekly Wrap to see if we have any new signal changes or new insight.
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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: UUP continues to rally. The strong breakout from the declining trend channel was suspect until I saw today's breakout above the 50-EMA. However, upon closer inspection I did notice UUP closed on its low for the day which formed a "shooting star" candlestick that suggests price will move lower tomorrow. Good news is we have a positive RSI and rising PMO that triggered a crossover BUY signal today.
IT Trend Model: NEUTRAL as of 10/14/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold continued to fall likely on the rising Dollar. It appears Gold is going to test the bottom of the bullish falling wedge before it breaks out. The PMO is falling below zero on a SELL signal. The RSI is negative and falling as well.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: I said yesterday that the 200-EMA needed to hold. So far so good even as a new intraday low was logged today. The indicators are very oversold but remain in a declining trend. %Stocks > 200-EMA is not oversold and the GCI is at 100%. I find that bullish as the group is showing internal strength in the long term.
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 took out short-term support at the September/October lows. As COVID cases expand, demand is on hold for Oil. I don't believe $24 will hold. The RSI is negative and the PMO is falling on a SELL signal.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: TLT had just managed to bounce off the 200-EMA. However, the 20-EMA and the overhead resistance held. The 200-EMA is holding up price for now. Seeing the RSI turning lower before reaching positive territory and a new PMO crossover SELL signal suggest more trouble ahead.
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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