Yesterday we had five BUY signals added to DecisionPoint Scoreboards and today we add three more. Yesterday it was Trend Model BUY signals, today it is three Price Momentum Oscillator (PMO) BUY signals. The Dow was the only one without the BUY signal, but you can see it is very close on the chart below. I've also included the NDX, OEX and SPX charts below. As discussed yesterday, the question is whether they have arrived too late. Notice the declining tops trendlines haven't been broken with the exception of the NDX which managed to close just above. Overhead resistance at all-time highs and an attempt to break a declining trend will be difficult.
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.
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 SPY also had a PMO crossover BUY signal trigger today. The RSI remains positive and the VIX is rising and above its EMA on the inverted scale. Total volume was very light today.
We've annotated a symmetrical triangle on the SPY. There are rumblings of a possible triple-top here, but the symmetrical triangle is probably a better representation. It is a continuation pattern, but it isn't unusual to see a reversal to the downside. Overall we have a trading range, with a possible symmetrical triangle continuation pattern that would call for a breakout above this trading channel.
SPY Weekly Chart: The longer-term picture is murky. We do have another PMO bottom above the signal line which is bullish, but the PMO is overbought and indecisive overall. The megaphone broadening pattern is bearish. It indicates volatility and indecision.
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 intermediate term is still quite bullish. The BPI and SCI have had positive crossovers and are rising from near-term oversold territory. The GCI is mostly flat, but still rising.
Today's small decline did cause these indicators to top. They are getting overbought, but bullish overall.
Climactic Market Indicators: No climactic readings today, but we did see an initiation climax on Monday that ended with an exhaustion climax yesterday. Note the declining tops on Net A-D and flat tops on Net A-D Volume, that was our giveaway that it was a likely buying exhaustion yesterday.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
Short-term indicators are positive. The STOs are getting overbought right now, but ultimately they are rising. We currently have declining tops on these indicators which is confirming the declining trend.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
The ITBM/ITVM are telling us that the intermediate term is favorable. They are rising and aren't overbought. Currently they are confirming the declining trend. %Crossover BUY signals is rising and is also in neutral territory.
CONCLUSION: Momentum has shifted this week to the upside. Price is now having to deal with overhead resistance at all-time highs and it has to defeat the current declining tops trendline. We suspect next week will bring a pullback to clear short-term overbought conditions. The intermediate term is bullish which is why we are leaning toward the "symmetrical triangle"/trading range versus a developing bearish triple-top. Our sector to watch next week is Materials (XLB). Gold and Gold Miners are showing strength and in a neutral to bearish short-term environment, that is an area to keep an eye on. Read more on Gold below.
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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: The Dollar is in a trading range and is nearing the bottom at $24.75. The PMO triggered a SELL signal below the zero line and the RSI is negative. We would expect to see a rebound off that level, but the PMO and RSI make that suspect. Remember when the 50-EMA is that far below the 200-EMA, there is a long-term bearish bias. It is best not to expect a bullish outcome.
UUP Weekly Chart: We can see the importance of this line of support as well as a very bearish weekly PMO that has topped once again below the signal line. A breakdown seems most likely given the bearish daily and weekly charts.
IT Trend Model: NEUTRAL as of 10/23/2020
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: A bearish Dollar will put the wind at Gold's back. This chart is very bullish with a breakout from a bullish falling wedge, a positive RSI and a PMO BUY signal arriving in oversold territory. Discounts on PHYS are elevated which is also bullish for Gold.
GOLD Weekly Chart: This week Gold managed to break back above the 2011 top and close there. The weekly PMO is decelerating slightly, but overall is negative given the SELL signal and current direction. The breakout is impressive and certainly suggests higher prices despite a negative PMO. We remain bullish.
GOLD MINERS Golden and Silver Cross Indexes: A similar chart for Gold Miners with a breakout from a falling wedge. The RSI is positive again and the PMO triggered a BUY signal today. Intermediate-term indicators are rising and aren't particularly overbought. It is the longer-term indicators that are extremely overbought. However, look at their movement during June to August. Overbought conditions can persist and we think they will again.
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 remains in a wide trading range. It has struggled with the 20/50-EMAs as resistance since losing their support at the beginning of September. The RSI remains negative and momentum is flat. Nothing here indicates a breakout ahead nor a breakdown below $24.
USO/$WTIC Weekly Chart: The weekly PMO isn't that bearish, but you can see that it is turning over with price as the 17-week EMA holds as overhead resistance. We're not expecting much from Oil going into next week except lower prices.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: Bonds are looking up given the new PMO crossover BUY signal. The RSI is still negative and the 50-EMA is posing difficult resistance. We suspect the 200-EMA will hold as support again this week given the rising PMO, but yields are rising and that will put pressure on Bonds.
TLT Weekly Chart: The longer-term weekly chart isn't quite as favorable, but the 43-week EMA (which mimics the 200-EMA on a daily chart) is holding as support with the 17-week EMA pushing down on it. The current declining trend has $152 as the next support level. The weekly PMO is suggesting that will eventually be tested.
Technical Analysis is a windsock, not a crystal ball.
-- Carl & Erin Swenlin
Our job is not to see the future, it is to see the present very clearly.
-- Jawad Mian, stray-reflections.com
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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