We saw a gap up on the open today that took price back into the trading range on this 10-minute candlestick chart. The PMO has given us a crossover SELL signal to finish the day in this timeframe, but the RSI is still positive . After reaching the high for the day, price consolidated the move instead of pulling back.
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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: Price bounced off the 20-EMA with today's rally. The PMO is still on a SELL signal and declining. Total volume was about average. The VIX is sitting on its EMA so it isn't giving us any helpful hints. The RSI is rising in positive 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.
The SCI is rising again, but the BPI continued to decline on today's rally. The GCI is highly overbought, but that high reading does tell us that most of the stocks in the SPX have a bullish bias as their 50-EMAs are above their 200-EMAs.
Unexpectedly, we saw more stocks losing price support at the 20-EMAs and 200-EMAs on a rally of +0.79%.
Climactic Market Indicators: Not much to see on the Climax chart. No climax, just a declining trend on New Highs which is characteristic of the flat trading of the past week. As noted above, the VIX has nothing to enlighten us with.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs are the concern today. Both indicators dropped a little bit more today. They remain above zero for now and haven't come close to oversold readings yet. Seeing them drop on a rally day like this suggests underlying weakness that may not be apparent on the other indicators.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The intermediate-term market bias is BULLISH.
These indicators are mixed but both are near-term overbought. On a rally, one would expect to see both of these indicators rising.
CONCLUSION: Overall we had a rally today and saw deterioration on some of our primary indicators. That suggests weakness. The bias is still bullish in the intermediate term and is simply neutral in the short term. The VIX is neutral. I have to go with the STOs and they tell me to expect more consolidation or possible decline.
I have to believe that market participants or the "crash prevention team" will keep today's rally going tomorrow to punctuate the presidential transition. Carl and I always joke about a "crash prevention team" that seems to swoop in when a market rally is needed or to prevent a big decline. It's not a real thing (...or is it?).
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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: So much for Thursday's bearish engulfing candlestick. Friday the rally was strong. Today, the Dollar pulled back again. It remains above the 20-EMA and the RSI is positive. Given the rising PMO, I would expect this new rising trend to continue.
IT Trend Model: NEUTRAL as of 1/14/2021
LT Trend Model: BUY as of 1/8/2019
GLD Daily Chart: GLD again tested the 200-EMA and it held. Unfortunately, that decline triggered a bearish reverse flag. The PMO continues to decline and has reached negative territory. The RSI is also in negative territory. Best case for Gold is consolidation above the 200-EMA.
Full disclosure: I own GLD.
I wanted to show you $GOLD, as it didn't hold the 200-EMA intraday.
GOLD MINERS Golden and Silver Cross Indexes: Despite today's rally, I am not a fan of Gold Miners. We do have oversold readings, but the RSI is negative and the PMO is on a SELL signal and dropped below the zero line. While indicator readings are oversold, Gold itself looks bearish and that will add unwanted gravity to Miner's prices.
CRUDE OIL (USO)
IT Trend Model: BUY as of 10/20/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: The rising trend continues for USO, but we do have a bearish rising wedge. Price attempted to breakout from it but immediately hit very oversold territory and last Friday it pulled back. The PMO is mostly flat, but highly overbought. Oil is still vulnerable to a test of the 20-EMA or bottom of the wedge.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT has formed a bullish cup and seems to be now giving us a bit of a handle. The RSI is rising and the PMO appears ready to turn back up. I'm not particularly bullish as I would've preferred it to keep the short-term rising trend intact. Yields have topped, but have not actually broken down. For now I am optimistic.
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.
Helpful DecisionPoint Links:
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DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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