Today the PMO line on both the SPX and SPY crossed above its signal line which triggered new crossover BUY signals. The SPX wasn't the only new crossover BUY signal, the OEX also had a positive PMO crossover. The NDX just missed joining in, but you can see that it likely will give us a BUY signal tomorrow.
At this point, the OEX does have a bullish ascending triangle pattern that is accompanying today's PMO crossover BUY signal.
The NDX on the other hand, has a symmetrical triangle formation. This is a continuation pattern that is coming off a decline. The expectation is a breakdown. Be careful with your investments in the Technology sector.
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.
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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: On Friday the market broke out from its short-term declining trend. However, today it was stopped just before reaching new all-time highs. It appears that the double-top is not going to materialize. The PMO BUY signal is encouraging, especially when accompanied by a positive RSI.
Total volume was light today. There is an ominous intermediate-term bearish rising wedge on the one-year daily chart.
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 BPI had a positive crossover today which is encouraging. Both the SCI and GCI continue to push higher, with the GCI still holding its highest reading since we began this dataset in 2017. This tells us that the GCI is extraordinarily overbought. The SCI could technically rise higher, but it is also quite overbought.
We didn't see that much damage in participation on today's decline. Indicators are overbought and seeing them begin to decline is worrisome.
Climax Analysis: We didn't have a climax day, but New Highs did increase. The readings are overbought and we did see the VIX on the inverted scale pullback as participants are getting antsy.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
These indicators are mixed. The STO-B continues to rise, but the STO-V was slightly lower today. With readings mixed and seeing damage on the %Stocks indicators, price is vulnerable to a decline in the short term.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH.
These indicators were mixed today as well. The ITVM declined while the ITBM climbed back into overbought territory. Slightly more than half of the stocks in the SPX are on PMO crossover BUY signals. I would expect much better participation given we are pushing toward new all-time highs.
CONCLUSION: Indicators are mixed today. The volume indicators, STO-V and ITVM, are suggesting there are problems under the surface as they are declining while their partners, STO-B and ITBM continue to rise. However, given the new PMO BUY signal with positive RSI on the SPY, there is a short-term bullish bias that can't be completely ignored. The short-term breakout from a declining trend channel with neutral short-term indicators suggests a bit more upside; but, given the mixed and in some cases, overbought indicators, realize that a rally isn't likely to last very long.
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There is a declining trend channel on Bitcoin, but price is pushing for a breakout. The PMO is still on a SELL signal, but is beginning to curl up. The RSI is positive. There is a high likelihood that Bitcoin will breakout. Unfortunately it is in an intermediate-term bearish rising wedge. It appears it will take one more test of the top of the wedge, but I'd expect it to fall back down from there.
Yields have slowed their rising trend, but ultimately, they are still in a rising trend and that will continue to put pressure on Bond prices.
IT Trend Model: BUY as of 3/5/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: In the short term, UUP is in a bearish rising wedge. However, it is beginning to get stale as price makes its way into the apex. The RSI is positive and the PMO is rising strongly.
If we see price get above the 200-EMA, I wouldn't expect it to turn back down since we have a bullish double-bottom in play. The minimum upside target of the pattern is around $25.30.
IT Trend Model: NEUTRAL as of 1/13/2021
LT Trend Model: SELL as of 3/4/2019
GLD Daily Chart: We were somewhat encouraged last week when Gold 'drifted' out of its rising trend instead of falling heavily. It was short-lived. Price has been unable to reach past the 20-EMA. Now we have a PMO that is topping well below the zero line. There is a negative RSI as well.
GOLD Daily Chart: More than likely Gold will need to test support at 1675.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are traveling within a bullish falling wedge. I found it positive on Friday that price didn't have to go all the way down to the bottom of the wedge before turning back up. The PMO is flat, but has avoided a crossover SELL signal. The indicators are bothersome. GDX was up today yet we saw deterioration in participation. The big problem for GDX will be the likely decline on Gold. While Miners aren't completely tied to the price of Gold, they do tend to do better when Gold is rising. I'd hesitate buying into Gold Miners as the negatives outweigh the positive right now.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: With the issue at the Suez Canal, Crude experienced some volatility. Ultimately support was held and the longer-term rising trend is being recaptured. The RSI has hit positive territory and the PMO is decelerating. I expect Crude Oil prices to continue higher.
We do have overhead resistance arriving at the February high, but overall I would look for a challenge of this month's highs.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT had just broken out of a bullish falling wedge, only to be turned away at the 20-EMA. Support has now been lost again at the February low. The PMO is positive, but the RSI remains below net neutral (50). Yields broke down last week, but they have quickly recaptured that level. As noted on the yield array above, there is still a rising trend in yields, it just isn't as steep.
We would expect to see TLT test support at this month's low.
Technical Analysis is a windsock, not a crystal ball.
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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