I began my Diamonds Report with the following thank you and I'd like to share it with readers of the DP Alert report:
"Before I begin, I want to extend my sincere thanks to all veterans who have served or are serving our country today. I would especially like to thank my father, Carl Swenlin (20 years USAF), and my husband, John Wood (22 years USN). You were my first hero, Dad; and John, you have joined ranks alongside him. My life has been forever changed by these two extraordinary men. Thank you! I will continue to complain that the stock market remains open on such an important day; not to mention, that I don't get to enjoy Veteran's Day with my husband even though I served too (although I'm looking forward to our complimentary dinner tonight from a local restaurant!). "
It was a rather dull day in the market as price, although higher, moved mostly sideways today. The trading day ended on a positive note. The RSI is back in positive territory and the PMO turned up above the zero line to end the day. Volume came in as price began to rally. We have a double-bottom that is visible in the thumbnail.
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
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.
CLICK HERE for Carl's annotated Sector charts.
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 short-term rising trend remains intact as today's intraday low stayed above the rising bottoms trend line. Total volume was average and market participants are beginning to get a bit more complacent as the VIX heads toward the upper Bollinger Band on our inverted scale.
Notice that price did remain below overhead resistance at the September top. The RSI is positive but is beginning to reach overbought territory.
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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.
All of these indicators finished slightly higher. The BPI is getting overbought but overall these indicators are bullish.
These indicators are overbought in all timeframes. They certainly have head room and could hit even higher extremes, but we should be ready when they fail.
Climactic Market Indicators: No climactic readings today. Despite a rally today, Net A-D and Net A-D Volume were negative. We also saw New Highs contract again.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
Yesterday's comments still apply:
'Today both STOs dropped. These indicators have been very timely on determining market tops and bottoms. Notice they tend to peak then fall, you don't generally see them bounce around. Seeing tops right now has me concerned about the short term."
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
The ITBM and ITVM aren't that overbought yet, but %PMO crossover BUY signals is reaching in near-term overbought territory.
CONCLUSION: Despite a positive close, our climactic indicators were negative or contracting. The STOs are falling and indicators in the short-term timeframe are overbought. The IT is still bullish, but ST overbought conditions need to be cleared. Consolidation could do the trick given we still have a bullish bias in both the short and intermediate terms. I still believe we will see a breakdown of this short-term steeply rising trend, but as noted IT indicators suggest it won't be too painful.
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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.
Bond markets were closed today so there are no changes to the yield chart.
IT Trend Model: NEUTRAL as of 5/28/2020
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar is in a clear trading range. At this point it is making an attempt to reach the top of it again. The PMO still hasn't actually turned back up and now the RSI is flattening in negative territory. The 20/50-EMAs are proving difficult to overcome.
IT Trend Model: BUY as of 10/21/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Despite a decline today, Gold remains in a long-term rising trend and horizontal support is near at the early July top and April top, but I have to say I feeling less and less bullish by the day. Gold triggered a new PMO SELL signal today and the RSI is still negative.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Gold Miners have had a bad week and it could get a bit worse based on the PMO topping below the zero line and the RSI moving negative. Fortunately support is nearing at the 200-EMA."
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 generated a new PMO BUY signal, but it still remains below the zero line. However, things are looking up for Oil. The RSI is positive and we have a breakout from its declining trend channel. Price has actually cleared the 20/50-EMAs as well. Overhead resistance is nearing at the August top. We need to see the PMO get above zero; if not, I highly doubt we will see a breakout from this consolidation channel.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: It may've been an up day for TLT, but very little ground was gained. With interest rates rising, Bonds are feeling the pressure. TLT is barely holding onto the bottom of the bullish falling wedge. The RSI is negative and the PMO just triggered a crossover SELL signal. I am looking for a drop to at least $152.50.
Full Disclosure: I own TLT.
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Carl
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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