Correction to yesterday's DPA, I referenced the song, "Living on the Ceiling", but I attributed it to the wrong band. It is Blancmange not Heaven 17. The market is still basically "living on the ceiling", but today the SPY managed to log a new all-time intraday high. With this new all-time intraday high, it has set up negative divergences on our "Bias View" chart below.
The "Bias View" chart shows us, using the simple measure of "green", whether the market has a bullish or bearish bias. It is clear when you review the chart below that we still have a strong bullish bias in the intermediate term, but it is fading in the short term.
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.
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: As noted earlier, the SPY set a new intraday all-time high. It doesn't look particularly impressive since price is still living on the ceiling of this consolidation zone. With the new intraday all-time high, we can see there is an OBV negative divergence. The PMO is now closing in on a crossover SELL signal.
By traveling within this consolidation zone, price has pulled away from the top of the rising trend channel. The RSI is positive and leaving overbought territory.
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 and BPI are twitching. Yesterday they were in decline and today they are rising again. The SCI avoided a negative crossover its signal line. The BPI was below it yesterday, but today's rise put back above its signal line. No changes to the GCI. All of these indicators are overbought.
Participation is not improving as far as stocks holding support at the 20/50-EMAs. So while we have 94.4% with 20-EMAs > 50-EMAs, overall participation shows nearly 20% do NOT have price above their 20-EMA. It is somewhat less dramatic as far as the 50-EMA; only about 5% aren't above their 50-EMA.
Climax Analysis: No climaxes today, but we did see New Highs expand somewhat, but overall we see a negative divergence with price. The Bollinger Bands on the VIX squeezed even tighter together today.
As I noted yesterday,
"When the Bands squeeze it makes any penetration of the Bollinger Bands less useful since it is easy for them to punch through the upper Band one day and immediately puncture the bottom of the Band the next.
A Bollinger Band squeeze also signals that volatility is ahead. The Bands can't remain squeezed together and the only way to have them expand is on high volatility. I've never seen a VIX squeeze finish with a powerful thrust to the upside. High volatility is nearly always bad."
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
STOs turned down today and we saw further deterioration of the %Stocks indicators. Note--only 43% of stocks have rising momentum. It will be very difficult to continue rising if we don't have more stocks on the rise.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH.
The ITBM/ITVM both turned down today as well and now we only have 48% of stocks with PMO BUY signals. Since only 43% have rising momentum, that means 5% of those BUY signals are in jeopardy. That isn't terrible, but again, we need a better foundation for a rally continuation.
CONCLUSION: I noted yesterday that I use the STOs and ITBM/ITVM to determine probably market direction. Since they have both turned down, I believe we will finally see the pullback we've been waiting for. Participation continues to deteriorate and that confirms today's drop in my primary indicators. With the SPY setting a new intraday all-time high, it set up negative divergences. I'm expecting a decline tomorrow or at best more consolidation.
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Bitcoin is working hard to overcome resistance at the 20/50-EMAs. So far Bitcoin is avoiding an IT Trend Model Neutral signal. An IT Trend Model Neutral signal is generated when the 20-EMA crosses below the 50-EMA while the 50-EMA > 200-EMA. There is a good chance that will be avoided since price is now above the 50-EMA and the PMO is rising again.
Long-term rates are beginning to break their declining trends.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: UUP has bearish engulfing candle. It is so big, it is engulfing the last three candlesticks. The PMO is falling and below zero. The RSI is very negative and hasn't quite reached oversold territory.
$24.40 was broken today which leaves us looking at $24.20 as the next stopping point. Given government spending is quickly rising, we don't expect to see the Dollar rally anytime soon.
IT Trend Model: NEUTRAL as of 1/13/2021
LT Trend Model: SELL as of 3/4/2021
GLD Daily Chart: Gold lost its rising trend, but it was the result of "drift" as it was up today. Support is holding at the 20/50-EMAs and the November/February lows. The PMO is technically still on the rise and the RSI is positive.
Discounts on PHYS contracted, suggesting participants are getting less bearish. I also note we have a long tail on today's OHLC bar that would translate to a "hammer" candlestick which suggests price will move higher tomorrow.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners tested support at the 200-EMA and then recovered. This is also a support area that includes the 20/50-EMAs and the confirmation line of the original double-bottom. GDX has seen some internal damage, but with today's positive close, we are seeing a little bit of improvement.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Gold had a long "tail", USO has a long "wick" on its candlestick. That is a "shooting star" candlestick. Additionally, we could be looking at a reverse island formation, both imply price will fall tomorrow. I'm not so sure about that.
The PMO generated a new crossover BUY signal and the RSI is in positive territory.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT has a "hammer" candlestick which implies price will rise tomorrow. Given that price closed below the 20-EMA, the PMO turned down and the RSI moved into negative territory, any price rise will not likely have staying power.
The rising trend has been broken along with the 20-EMA and yields are rising again. Both suggest lower prices ahead.
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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