I talked about Energy (XLE) being at a possible pivot point yesterday. Today it rallied strongly leaving us with many potential choices for possible trades. One of the charts that I was drawn to today was Natural Gas (UNG). Carl and I spotlight UNG often. The chart is beginning to look very bullish. However, it looked very bullish earlier this year with a cup and handle pattern as well as a reverse head and shoulders. Both patterns busted.
We have a new short-term double-bottom on UNG. If it breaks above the confirmation line, the minimum upside target would be about $10.50. There is a new PMO crossover BUY signal and the RSI just hit positive territory. I also note a positive divergence between the OBV bottoms and the price lows of the double-bottom. There are risks. While price reached above the 20-EMA, it has to deal with overhead resistance that overlaps at the confirmation line and the 50-EMA. I've set a 7% stop that would indicate a breakdown from the double-bottom.
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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 cooled today, but still managed to set a new all-time intraday high. We can see that the rising trend has now been broken. The RSI remains in the overbought shaded area which suggests more consolidation or a pullback. The PMO is decelerating very slightly. Total volume finished about the same as yesterday, below the annual average.
The top of the rising trend channel has been reached and now price is moving sideways. We note that there is another puncture of the upper Bollinger Band on the inverted VIX. This is generally a cue for a decline over the next day or two.
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 turned down yesterday but today turned back up. Both the SCI and GCI continue to rise. None of these indicators show negative divergences, but all three are overbought.
Participation improved slightly even on the decline which is positive. However, like many of our indicators, they are extremely overbought.
Climax Analysis: No climax today. New Highs did improve on today's decline which is somewhat positive, but as noted earlier, the VIX on the inverted log scale is very overbought. This is where we look for more consolidation or a decline.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
Interestingly, the STO-B ticked higher today on the decline.The STO-V continued to decline. Most concerning, more stocks lost their rising momentum. Less than half of the SPX have rising momentum! Rallies can come on the back of a few, but we need broader participation to support higher prices. Negative divergences are still visible.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is OVERBOUGHT. The market bias is BULLISH.
The ITBM turned down to join the ITVM which had already been in decline. Seeing these indicators top in overbought territory flashes a warning. %PMO Crossover BUY Signals had a negative crossover its signal line.
CONCLUSION: Short-term indicators were somewhat mixed, while many of our IT indicators turned down. The short-term rising trend has been broken, albeit in a sideways manner. Overbought conditions tie all of our indicator charts together. Add the puncture of the upper BB on the VIX and we have a recipe for a pullback. Given the strong bullish bias, we aren't looking for a correction or crash yet.
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Notice that Bitcoin didn't have to test the bottom of the rising wedge. This set up a move to test the top of the wedge. There is a new PMO crossover BUY signal and the RSI is positive. However, a rising wedge is bearish so we would expect a breakdown once the top of the wedge is tested.
We could be looking at a double-top for long-term yields. Yields currently remain above the confirmation line.
IT Trend Model: BUY as of 3/5/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: UUP lost support at the February high which also happens to be the confirmation line for a bullish double-bottom. This breakdown below the confirmation line as well as the 50-EMA, suggests more decline ahead. The PMO SELL signal and negative RSI also suggest more decline ahead.
The double bottom pattern has disintegrated fully with price dropping below the confirmation line. The next area of short-term support is at $24.60.
IT Trend Model: NEUTRAL as of 1/13/2021
LT Trend Model: SELL as of 3/4/2021
GLD Daily Chart: There were additional sellers of Gold given the Dollar finished lower today. The reverse correlation would suggest that Gold would finish higher today not lower. The RSI has now moved back below net neutral (50), but fortunately price was able to hang on to support at the 20-EMA. The PMO is showing no damage so we would expect Gold to make another go at overhead resistance.
The double-bottom pattern is still in play, but it's getting stale as price pushes against the confirmation line without a breakout. Discounts contracted suggesting traders are slightly less bearish.
GOLD MINERS Golden and Silver Cross Indexes: Yesterday's comments still apply:
"I still like Gold Miners, but they are struggling to breakout above the 200-EMA. However, the indicators look very positive and suggest that breakout is imminent."
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday I noted, "XLE is ready to recover and a breakout for Oil will seal that deal". Today, the deal was sealed with a strong breakout to resolve the ascending triangle as expected. The PMO has turned up and the RSI is rising in positive territory. I'm looking for a test of the March high and more.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELLas of 1/8/2021
TLT Daily Chart: Yesterday's comments still apply:
"TLT is about to breakout above resistance at the late March top. At this point, we are waiting for yields to lose support. There is a double-top on long-term yields, but the confirmation line has not been broken yet. I expect to see a breakout here. The RSI just entered positive territory and the PMO is rising on a BUY signal."
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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