Another big rally for the market as the SPX propelled higher by 1.64%. Carl and I agree that most of this is likely due to the big +6.35% gain for Apple (AAPL) which enjoys the highest weighting in the SPX. The Dow, which has taken some of the weighting away from AAPL, was up a little over half that at +0.88%. Apple has their big iPhone reveal tomorrow which could continue to boost the stock price, but I'm beginning to be more cautious about the current rally than I was on Friday.
On the 10-minute bar chart, we can see the solid rising trend channel that price has formed. The pullback at the end of the day shifted momentum downward and pulled the RSI into negative territory.
***Click here to register for this recurring free DecisionPoint Trading Room on Mondays at Noon ET!***
Did you miss the 10/5 trading room? Here is a link to the recording (access code: qE58C9.E). For best results, copy and paste the access code to avoid typos.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
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: Carl pointed out the accelerated rising bottoms trendline. The reverse head and shoulders pattern has activated an it will hit its minimum upside target at almost exactly $360 for the SPY. We're quite close and that concerns me. Total volume on this big rally was paltry which does indicate a lack of participation.
Climactic Market Indicators: We had climactic readings on all but one trading day last week and here we sit on a rally of 1.61% and see no climactic readings on Net A-D indicators. Additionally, New Highs contracted today! Readings are trending lower. The VIX punctured the upper Bollinger Band on the inverted scale again which usually suggests a day or two of decline. Given the Bands are so close together, I am not putting great emphasis on the punctures on the top or bottom Bands.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT. Based upon the STO ranges, market bias is BULLISH.
This is the chart that is sending warning signs. We have a strong bullish bias, no arguing, but after getting a climactic readings the past two days on the STOs and now seeing them pull back, I'm worried. This rally is very similar to the one in May and our warning that it was ending came when the STOs pulled back after climactic or overbought readings. We had two days of contraction on these indicators before the gap down in early June. I see this lining up right now.
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.
I had to double-check, but the Golden Cross Index has been flat for two days. The SCI and BPI are both rising strongly so no complaints there.
The intermediate-term market trend is DOWN and the condition is OVERBOUGHT. The market bias is BULLISH.
Another opportunity to compare readings to those from June. We had a quick rise of these indicators going into that June top. When they backed off, trouble arrived quickly. Currently these indicators are continuing to rise which is comforting. %Crossover BUY signals is rising strongly, but it is clearly overbought. It is now at the level it was at prior to the June top.
CONCLUSION: I wrote Thursday that when the STOs or other indicators begin to back off, we should heed the warning. I'm not expecting the bottom to fall out tomorrow, but I think we should be prepared for the eventual pullback or even possibly correction. Apple's big event tomorrow will likely keep technology rising for another day, but these indicators are telling me the party is about to end.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: Carl is about ready to dump the cup and handle pattern, and so am I. I still think it is a valid pattern for now. If it drops below $25, I will definitely call it dead. However, right now, we could be looking at a possible island reversal. Oh, but wait! The PMO has topped practically below the zero line and is on a SELL signal. Then there is the RSI which has moved into negative territory. As the Magic 8-Ball says, "Outlook not good".
IT Trend Model: BUY as of 3/24/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold rallied slightly in lock step with the reverse correlation to the Dollar which was down about the same percentage. The Dollar is beginning to look bearish and that will be good for Gold. It is very bullish that it has gotten back above the 2011 top, but I'll be more impressed if the bullish falling wedge executes with a breakout above the declining tops trendline.
Full Disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Miners were down today, but remain above the 20/50-EMAs. The PMO is about to give us a crossover BUY signal and the RSI just moved positive. If Gold breaks out, that will certainly help Miners, but if the market does reverse as our market indicators suggest, they could get caught in the crossfire. I currently own a Miner and for now I'm holding until I have more information.
CRUDE OIL (USO)
IT Trend Model: SELL as of 9/8/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: USO has been in a trading range between $24 and $31 for months. The last two times that Oil rallied, it was unable to hold a position above the 20/50-EMAs. Basically it didn't even make it to the top of the trading range. The PMO isn't giving us much help, but the negative RSI tells us to expect further weakness.
IT Trend Model: Neutral as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: TLT is holding onto support at the 200-EMA, but it can't get back above resistance at the August low. The PMO is decelerating just a bit and we do see the RSI rising now. Even if we do see price get back into the trading range, I won't get particularly bullish until the 50-EMA is vaulted.
Full disclosure: I own TLT.
Have you subscribed the DecisionPoint Diamonds yet? DP does the work for you by providing handpicked stocks/ETFs from exclusive DP scans! Get in on the new "DecisionPoint Diamond Mine" trading room that is part of that subscription! Contact firstname.lastname@example.org for more information!
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.
Helpful DecisionPoint Links (Can Be Found on DecisionPoint.com Links Page):