Big day for Gold, but not a good one. Today we had a "death cross" on Gold, meaning the 50-EMA just crossed below the 200-EMA. That has triggered a Long-Term Trend Model SELL signal. This gives gold an official bearish bias, although it looks pretty bearish already. Gold continues to slide. It has fallen nearly 20% since its August high. This is an important support area that it has just landed on. This could finally be the capitulation point, but discounts aren't high enough. Remember the higher the discount, the more bearish participants are. The PMO is in oversold territory as is the RSI, but other than that, there is nothing on this chart that tells me we will see a bounce here.
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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 SPY has now broken down from the ascending wedge. Total volume was considerable, dragging the OBV near its 6-month low. The PMO is accelerating lower and is not oversold. A support zone is arriving, but it's not there yet. The bright spot would be an extended VIX.
The RSI is negative and like the PMO, it is not oversold. Strongest support lies at the September high.
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DID YOU MISS GUEST, DAVID KELLER IN THE DP TRADING ROOM March 1st?
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Topic: DecisionPoint Trading Room
Start Time : Mar 1, 2021 08:44 AM
Access Passcode: tdd*4nNS
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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 continued lower but is still at its high for the year. The BPI tumbled lower, but like the RSI and PMO, it is not oversold. The SCI continues to deteriorate. Near-term oversold territory is just below 60%.
Participation continues to decline as more and more stocks lose support at their EMAs. Notice we do have a near-term oversold reading on the stocks above their 200-EMA but given the Stocks > 20/50-EMAs are not oversold, I suspect we will see even lower readings.
Climactic Market Indicators: There is a bright spot today. I mentioned that the VIX is now extended. It has punctured the lower Bollinger Band on the inverted scale and that usually means a rally pop ahead. Given breadth is showing a climax on heavy volume, this could be a selling exhaustion. I didn't see confirmation on the volume ratio charts so I don't believe this is a price bottom even in the short term. One issue is that the VIX, while it punctured the lower Band, did close within the Bands. This tells me there is a chance we will have to wait one more day before seeing a rally on this selling exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL.
The Swenlin Trading Oscillators were mixed today with the STO-B continuing lower and the STO-V actually rising slightly on today's decline. The STO-B is somewhat oversold, but I consider both to be in neutral. %Stocks indicators are declining quickly, but again, neither is really oversold.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The intermediate-term market bias is BULLISH.
The IT indicators continue their decline. They remain overbought. We are now seeing less than half of the SPX on PMO crossover BUY signals, but like the other indicators, while it is down, it isn't oversold.
CONCLUSION: It appears we may have seen a selling exhaustion in the very short term. We should see a day or two of rally given the extension of the VIX. After that, I would expect to see price continue retreating given none of the indicators are really oversold enough to support a new leg up. Newbies are going to get more discouraged but I don't believe they are in the capitulation phase yet.
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Bitcoin failed to hold the 20-EMA. Strong support lies at 42,000 and the 50-EMA. The PMO had begun to decelerate, but it is now accelerating downward. The RSI is barely positive. I would expect a test of the 50-EMA.
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: Part of Gold's problem today was a strong rise in the Dollar. The bullish double-bottom is about is about to trigger as price nears the confirmation line at the February high. The PMO just hit positive territory and the RSI is rising, positive and not overbought. I still find this rise in the Dollar suspect given previous fits and starts, but this rally looks believable given the indicators.
IT Trend Model: NEUTRAL as of 1/14/2021
LT Trend Model: BUY as of 1/8/2019
GLD Daily Chart: GLD like Gold saw a LT Trend Model SELL signal on the negative crossover of the 50/200-EMAs. The PMO appears to be reaching oversold territory, but given the bullish Dollar, I don't expect a reversal yet.
Full disclosure: I own GLD.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"GDX continues to cling to support at the June low. Given the bearishness of Gold right now, I am not confident it will hold this support level. Indicators are very oversold, but I don't see any signs of life there."
CRUDE OIL (USO)
IT Trend Model: BUY as of 10/20/2020
LT Trend Model: SELL as of 2/3/2020
USO Daily Chart: USO is outperforming the market by a mile. It continues to be one of the few bright spots in the market. Given the new rising trend channel and reversal of the PMO, I would expect to see it remain an out-performer.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: Yesterday's comments still apply:
"TLT broke out but quickly began another pullback. Yields and interest rates are likely to continue higher putting more pressure on Bonds. The RSI is oversold, though not as oversold as we've seen it previously. The PMO made an attempt to reverse on the breakout, but is topping again beneath the signal line."
Support is arriving and if we can see a bounce off it, that would form a double-bottom. Unfortunately yields don't appear ready to retreat, so don't count on it.
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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