It was choppy day of trading, but price did finish higher. Trading Room attendees will recognize the 5-minute candlestick chart below. I use a 5-minute candlestick chart to determine my entries and exits. An entry arrives when the 5-min PMO crosses above its signal line while the RSI is in positive territory above net neutral (50).
In the final minutes of trading today, a BUY signal was triggered when the PMO had a positive crossover and the RSI was positive. I decided to add the "extended hours" to the chart so we can see if the signal saw any follow-through. It did but now we have a SELL signal measured by a now negative RSI and PMO crossover SELL signal. We now know that the opening hour of trading, price will be under pressure.
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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 short-term double-bottom is still in play as price remained above the confirmation line of the pattern. Remember that the upside target of this pattern would be at new all-time highs around $430 for the SPY. The PMO stayed at the same reading for a second day in a row. Total volume was below the annual average and yesterday's.
The RSI continues to climb in positive territory, but the OBV still shows a short-term negative divergence with price tops.
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 stayed at the same reading but both the BPI and GCI dropped very slightly. All of these indicators can be considered overbought.
Participation is improving with rising bottoms. This suggests the short-term rally should continue.
Climax Analysis: No climax today. We still have a negative divergence between price and New Highs. The VIX was healthy today closing on its low, suggesting market participants are still bullish. The upper Bollinger Band hasn't been punctured by the VIX on the inverted scale which suggests more rally to come.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs shot up on what I would consider an initiation to higher prices. No change on %PMOs rising. We really need more than 35% of stocks to have rising momentum if this rally is to be sustained into the intermediate term.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
The ITBM and ITVM were mostly unchanged, but the ITVM did rise slightly. We have an oversold bottom on %PMO Crossover BUY signals.
CONCLUSION: While there are some problems in the short-term (OBV and New Highs negative divergences), the STOs made an impressive move to the upside and the VIX isn't really overbought yet. I am looking for higher prices in the short term and a likely trip to new all-time highs. The longer term has promise, but indicators haven't quite confirmed that this short-term rally will continue into the intermediate term.
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The steep declining trendline has been broken, but overhead resistance is still looming at the 200-EMA and January top. I also note that the 20-EMA is coming down to keep the 200-EMA company. That will strengthen that resistance line further. The PMO is flat--not even a 2.27% gain turned it higher. The RSI is negative but rising out of oversold territory. Look for overhead resistance to continue to hold.
Long-Term yields headed down to test support at April lows, but support wasn't broken yet.
10-YEAR T-BOND YIELD
The 10-year yield still looks very bearish. Yields were unable to move above the 50-EMA. The PMO has topped twice below the signal line. We may've seen the 10-year yield move higher today, but the chart is still very bearish.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart:Yesterday's comments still apply:
"UUP is in a bullish falling wedge and we have a positive OBV divergence. The PMO and RSI are not yet on board for a rally."
"If UUP is going to recover, it needs to do so now while it is on strong price support."
"If this support level is lost, we don't see strong support again until the 2018 low. Given more spending coming down from Congress, we doubt this level will hold."
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Although Gold finished lower on the day, the rising trend wasn't even tested. The PMO is still very bullish. The main problem is a highly overbought RSI. Granted overbought conditions can persist in a strong rally, but it is time for Gold to pull back or consolidate.
(Full Disclosure: I own GLD)
The next level of overhead resistance doesn't arrive until $1963. Other than the overbought RSI, it does appear that Gold will continue toward that resistance level.
GOLD MINERS Golden and Silver Cross Indexes: Miners are consolidating, but they are staying above very important support. You can see that not only does the 2021 top touch the support line, but many other troughs, gaps, etc. are touching it. The rising bottoms trendline is coming up quick. The RSI is still positive and the GCI turned sharply higher. I still like Miners and expect to see them rally again.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Yesterday's comments still apply:
"USO's chart is still mostly bullish with a rising PMO and a positive RSI. However, price isn't doing much and is about to hit overhead resistance."
From Monday: "Part of the problem for USO is that Crude Oil ($WTIC) prices are stumbling at overhead resistance at the 2019 highs. We have more "touches" of this resistance line that strengthen it. The PMO is technically rising, but until $WTIC breaks out, USO will continue to move sideways."
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: The rising trend remains on TLT even with today's small decline. The PMO is on a BUY signal and the RSI is positive. Given yields are looking bearish, we should see TLT reap the rewards with a breakout here.
As I noted yesterday, price hasn't traded above the 50-EMA since the August top. Seeing price hold above the 50-EMA today is very encouraging.
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.
Helpful DecisionPoint Links:
DecisionPoint Alert Chart List
DecisionPoint Golden Cross/Silver Cross Index Chart List
DecisionPoint Sector Chart List
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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