It was a rather dull trading day so I decided to take a close look at the intraday 10-min candlestick chart. There is a short-term bearish double-top. The PMO had a negative crossover shortly after today's high was hit. The RSI is negative, but not oversold. Should this double-top trigger on a drop below the confirmation line at 3815, the minimum downside target is right at the bottom of gap support around 3780.
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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.
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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 finished the day slightly higher than it started. The declining volume that is occurring on the past three days of rally gives us the impression it is running out of steam. The PMO is now flattening out as well.
The RSI, like the PMO is flattening. This isn't unexpected given today's nearly unchanged finish.
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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 picked up a few tenths of a point today to move it further into overbought extremes. The SCI is still moving lower. That would also suggest internal weakness. The BPI is rising but hasn't had a positive crossover just yet.
Participation improved slightly. In the short and intermediate terms, readings are not overbought and could support higher prices.
Climactic Market Indicators: Nothing climactic about today. The VIX continues to chug toward the upper Bollinger Band. It's above its EMA and that generally is a sign of strength. However, it is mimicking the conditions it had right before the September top. Similar activity occurred prior to the November buying exhaustion. It wasn't much of a problem in November, but it certainly was a problem back in September.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs continue to rise. I don't like the flat reading on the %PMOs rising.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The intermediate-term market bias is BULLISH.
These indicators continue to rise slowly--usually a good sign.
CONCLUSION: Volume has been trickling lower as price rallies. That usually is the sign of an exhaustion. The indicators have a slight bullish bias as nearly all of them are rising. I've been looking at price testing the top of the current rising trend channel, but as volume softens, it seems more likely that price will be stunted before hitting all-time highs. Nothing is negative enough to look for a big decline, more likely we'll see some froth.
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Yesterday's comments still apply:
"The bullish falling wedge executed and the PMO has now turned up in oversold territory. Believe it or not, it appears we might see 42,000 again, if not more."
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 took a breather today, but formed a shooting star candle after a rally. This suggests some downside tomorrow. Overall we have a rounded bottom and a positive RSI with rising PMO so any decline shouldn't last.
IT Trend Model: NEUTRAL as of 1/14/2021
LT Trend Model: BUY as of 1/8/2019
GLD Daily Chart: Gold is at the bottom of a short-term trading channel. The PMO isn't that negative. I suspect Gold will hold support within this channel. The bottom of the channel coincides with the 200-EMA.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: I've decided to analyze the 6-month candlestick chart for Gold Miners and add the one-year bar chart below. We can see the bullish falling wedge and the failed breakout. Price hasn't rejoined the prior declining trend (it's holding above the wedge). The BPI is holding above the signal line and interestingly we saw a slight expansion of stocks above their 20-EMA. I believe support at the November low will hold, but it doesn't appear Miners are ready for a sustained rally yet.
CRUDE OIL (USO)
IT Trend Model: BUY as of 10/20/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: Price finally made it past the 200-EMA. It is still traveling within a bearish rising wedge and the RSI has just hit overbought territory. I'm not too worried given the rising PMO that should give us a crossover BUY signal tomorrow.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT generated a new PMO crossover SELL signal. TLT looks a lot like Gold and the Dollar as it travels within a short-term trading range. I'd expected price to hold here at $150, but with the RSI not hitting oversold territory yet, the chart is looking quite bearish.
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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