Back on January 12th I discussed Natural Gas (UNG) in my Diamonds Report and then during our DecisionPoint Show. Full disclosure, I own UNG. Over the past week we are seeing prices pull back after breaking out above the October low. The 200-EMA was strong overhead resistance. While I don't like seeing the PMO turning over, this could be a cup and handle bullish chart pattern.
If you own it like me, you should tighten up that stop. When I originally presented UNG to you in January, the stop was set around $8.75. Given the new price levels, that stop should be raised. I've listed a 4.3% stop level that would take price to about $10, but you could certainly adjust that higher or lower. This tight stop would preserve some of my personal portfolio gains. I suspect we will see a reversal at the 50-EMA given the bullish chart pattern, but the "handle" could move lower so we should protect ourselves accordingly.
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: We saw a healthy bounce off the 50-EMA, proving once again that a strong bullish bias will usually prevail. We saw a slight drop in total volume, but it was still above average. The PMO is turning back up. The rising wedge continues to develop with today's bounce, giving the rising bottoms trendline one more "touch".
The RSI remains in positive territory. We can see that today's price bar is sitting back above support at the January high.
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Topic: DecisionPoint Trading Room
Start Time : Feb 22, 2021 08:57 AM
Access Passcode: L%tC6D47
For best results, copy and paste the access code to avoid typos.
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 continues to decline, but the BPI ticked up today. The GCI also moved slightly higher. It has moved to the highest reading since 2017 where the dataset begins.
Participation improved slightly on today's 1%+ rally.
Climactic Market Indicators: Although the numbers didn't push breadth above our climax thresholds, I would read today as a climax day. New Highs surged higher. The VIX closed on its low for the day indicating complacency or optimism among participants. I would consider this a buying exhaustion. Notice what happens when New Highs pop. Today's reading on New Highs is the third highest over the past six months.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The short-term indicators look pretty good as the STOs and %Stocks indicators improve.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The intermediate-term market bias is BULLISH.
The ITBM/ITVM are rising together again, but are getting quite overbought. %PMO Crossover BUY Signals did turn back up slightly from 55.00 to 56.00. That turn also occurred above the signal line.
CONCLUSION: It looks like we could see another run to the top of the rising wedge after the SPX bounced off the 50-EMA and the bottom of the wedge. The Climax indicators suggest a buying exhaustion in the very short term. We could certainly see a continuation of today's rally, but typically a pop in New Highs is an indicator of a buying exhaustion. With the strong bullish bias, price may just consolidate sideways in response, but proceed with caution. The entire atmosphere in the market is full of unapologetic speculation and that is always a dangerous. Keep stops in play.
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The parabola has been broken and today a new PMO SELL signal triggered. Price remains above the 20/50-EMAs. I would still expect to see a drop to 42500 before it challenges the all-time high again.
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: Looks like we have a small bearish head and shoulders pattern that has developed off the rally from the 2021 low. Typically these patterns arrive after a more lengthy rally, but given the bearish outlook for the Dollar, I think it is appropriate. Today price did manage to avoid executing the pattern, but based on the negative RSI and PMO declining below the zero line on a SELL signal, I expect the pattern will resolve downward.
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IT Trend Model: NEUTRAL as of 1/14/2021
LT Trend Model: BUY as of 1/8/2019
GLD Daily Chart: I drew the declining tops trendline and then dragged a copy of it lower. I was hoping to see a bullish falling wedge, but instead I ended up with a declining trend channel. The RSI turned down below net neutral (50). Price didn't even reach the 20-EMA before pulling back toward support at $166. With the Dollar so weak, Gold should be doing better. The PMO is still rising so I would expect a successful test of support at $166.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"Miners pulled back after reaching the 20-EMA. I expect them to hold this area of support. The indicators are oversold. If Gold rallies like I believe it will, GDX should get some love. For now it is vulnerable to a test of the $31 level."
CRUDE OIL (USO)
IT Trend Model: BUY as of 10/20/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Oil popped up above the rising trend channel. It seems a new short-term rising trend is developing. I'll annotate it should price continue higher as the current rising trend is accelerating. Price is very overbought, but what's new? Oil is in a strong long-term recovery. The RSI could clear these overbought conditions with a small pullback or even consolidation, but it doesn't seem interested. Demand will be increasing a great deal when airlines and travel open up again and that will only make prices rise higher.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: Bonds are in free fall. I don't generally sell my "Buy and Holds", but I shed TLT a few weeks ago. I don't see any relief in sight for long Bonds as yields continue to fly higher.
Monthly chart support doesn't arrive until $137.50 on the daily chart, but on the monthly chart below, support doesn't arrive until $130. Notice the strong breakout in yields. I doubt Bonds will find support until the 2016 high.
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:
DecisionPoint Alert Chart List
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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