I have had many people (my children included) ask me about the GameStop phenomena. Carl called them "gamestoppers", but decided that "Short Stoppers" was a more apt name given they have moved on to other targets.
There is something alluring about putting the "big guys" on notice. It surprises me that it has taken this long to occur. With a new surge in younger traders given the many app platforms available and the ever-present plethora of disgruntled traders, this seems to have been inevitable. The question is how much weight do they have and how will this affect trading going forward? I don't have the answers, but clearly they have had enough weight to sway GameStop (GME).
The beyond parabolic move in GameStop (GME) happened when Reddit boards decided to squeeze the short positions held by big money managers on GME. Many began piling in (including my stepson who I suspect haunts Reddit now and then) shooting the price straight up. Well, interest is waning and so is price...although it is still trading in the atmosphere at $225. Bubbles burst and with a P/E of -52.94...this one should soon enough.
The next target was AMC Entertainment (AMC). My daughter is in this one (though she did not enter before the first gap up). Price has certainly been affected. At least with AMC we do see that the chart was shaping up nicely with a double-bottom pattern and a rising PMO.
Last word was that Silver was being targeted. Certainly the Silver ETF (SLV) shot up today, but you'll note on the stocks above it was nearly instant 100%+ gains. Carl and I discussed the SLV chart and it isn't out of the question that short stoppers pushed price, but we see large percentage fluctuations on silver without any tampering. At this point, it is hard to say if it will continue higher, but the chart was already beginning to look interesting. Intraday price did exceed overhead resistance, but it closed back within.
SLV on the intraday chart shows that interest was already picking up on Silver last week.
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 market rallied strongly today but was still confined below the 20-EMA. The PMO continues to move lower and thankfully out of overbought territory. Given we saw 1.66% rally today, Total Volume was somewhat paltry. The rising trend channel is intact for now.
The one-year daily line chart for the SPY shows us that price has indeed bounced off the 50-EMA cleanly. At the same time, we see it bounded by the 20-EMA. The RSI has reentered 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 GCI is up slightly from a reading of 90 to a reading of 90.40. This is a very overbought reading. The SCI and BPI are both still declining despite today's big rally.
Participation did rise slightly on today's rally. Readings are somewhat oversold as I note we have seen much lower lows on both of these indicators.
Climactic Market Indicators: We saw a climax on Net A-D, but no confirmation from Net A-D Volume. The VIX is beginning to rise again out of very oversold conditions which is positive. I struggle to call this a buying initiation, but I don't believe its an exhaustion either. I suspect we will see more froth.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is OVERSOLD.
The STOs are rising out of oversold territory which is bullish. The %Stocks indicators are oversold and bottoming.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The intermediate-term market bias is BULLISH.
Both the ITBM/ITVM continue to decline and are not oversold at all.
CONCLUSION: The short-term picture is positive for the SPY. The STOs are rising from oversold territory and we are seeing some improvement in participation. The Net A-D climax today is likely pointing to continued higher prices tomorrow. The intermediate term is not seeing the same improvement. We are still quite vulnerable to a sizable pullback. If we see higher prices, this could be the "strength" you want to sell into.
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The bullish falling wedge or pennant on a flagpole suggest we will see Bitcoin breakout. It failed to do so last week, but it is consolidating sideways rather than dropping to test the bottom of the wedge. The PMO is beginning to decelerate.
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 broke out of the trading range that developed this month. Price punched above the 50-EMA as well. The last two times that price made it above the 50-EMA, it failed to hold and continued to trend lower. This could be a fake out. Although, the PMO does look healthy and the RSI is now in positive territory.
IT Trend Model: NEUTRAL as of 1/14/2021
LT Trend Model: BUY as of 1/8/2019
GLD Daily Chart: GLD has been in a trading range itself. It was bullish to see Gold prices rise alongside the Dollar. They have a reverse correlation, so this tells us that Gold had a plethora of buyers to push price. You can also see a pullback on the discounts for PHYS. Gold is beginning to get noticed. At this point price is bounded by the 50-EMA and the top of the channel. The PMO is decelerating and the RSI is making a move toward positive territory above net neutral (50). With renewed interest in Silver over the Short Stoppers, Gold possibly is getting a second look. We would expect to see a breakout given indicators are improving, but the Dollar is also showing strength and that of course puts downward pressure on Gold.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: The GDX chart is beginning to improve as price has broken out of a bullish falling wedge. Like Gold, we don't have a successful breakout above the 50-EMA, but we can see that the short- and intermediate-term indicators are rising out of oversold territory. The PMO is turning up and the RSI has just reached positive territory. It appears GDX and Miners are going to finally rally.
CRUDE OIL (USO)
IT Trend Model: BUY as of 10/20/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Carl and I both agree that today's rally coming off consolidation looks good. Price held support at the 20-EMA. Overbought conditions were alleviated somewhat with this price pause. The PMO is rising again and the RSI has remained positive and not overbought. We do have a bearish rising wedge, so we do suggest caution.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: The PMO is now topping well below the zero line. The RSI is negative and we lost the short-term rising trend. Today's unchanged price finish doesn't inspire confidence that this will be the bottom.
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.
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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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