Today, $WTIC generated a Price Momentum Oscillator (PMO) Crossover BUY signal. We use USO for our signals on Crude Oil, but it hasn't triggered a PMO BUY signal yet. USO was the big winner this week, up 3.94% this week. $WTIC was up 4.31% on the week. USO will break out when $WTIC breaks out. Currently price is in a bullish ascending triangle, but today price failed to hold the breakout above resistance.
While we have a crossover BUY signal, the PMO has been flat and this signal could fall away quickly if Crude Oil cannot breakout here.
This is strong overhead resistance not only in the short term, but in the longer term as well. Notice that price is now at the 2019 tops. This level also aligns with the 2010 low. Even should $WTIC breakout here, there is more overhead resistance to deal with at the 2018 highs. Note also that $WTIC triggered an IT PMO SELL signal. More on Crude Oil in its section near the end of this report.
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
For the week:
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.
For the Week:
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: We were surprised at the unusually high SPX Total Volume yesterday, because market action was otherwise relatively quiet. As it turns out, the meme stocks were very active, with AMC having 700 million shares traded. FYI it was up 35.58% yesterday, but was down -1.51% today.
The short-term double-bottom is resolving as expected to the upside. The minimum upside target would take price well above all-time highs.
The RSI remains in positive territory and we should see a PMO BUY signal next week if the rally continues.
SPY Weekly Chart: The longer-term rising trend out of the bear market low is intact. The weekly RSI is getting overbought. Of most concern is the nearing IT PMO SELL signal.
SPY Monthly Chart: The monthly chart demonstrates that we have a parabolic rise. Parabolas can be deadly. When the breakdown occurs, it is usually quick and lethal.
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 has turned up, but we don't have a positive crossover its signal line yet. The BPI did have a positive crossover and is trending higher with price. The GCI pulled back slightly today after holding a reading of 97 all week. The GCI is highly overbought. That condition has persisted throughout April and May.
The rising trends in participation are positive and the readings aren't really overbought in the short and intermediate terms.
Climax Analysis: No climaxes this week. The VIX continues rising on the inverted log scale. Until it penetrates the upper Bollinger Band this is bullish behavior.
Short-Term Market Indicators: The short-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The STOs were mixed today with the STO-B closing higher and the STO-V closing lower. Both still look bullish, but they are getting overbought and a divergence between the two suggests internals are deteriorating.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is MOSTLY NEUTRAL. The market bias is BULLISH.
These indicators turned up this week and continue to rise. The intermediate term is looking a bit more bullish, but we know that there is a weekly PMO SELL signal on tap, so best not to get too bullish. It is positive to see some expansion in the number of PMO BUY signals in the SPX as well as a positive crossover in oversold territory.
CONCLUSION: Given the STOs are mixed, the short term is looking less bullish. However with a rising VIX, improving momentum and participation, we remain short-term bullish. While the intermediate-term indicators are showing some improvement, the weekly chart has an overbought weekly PMO SELL signal on tap for next week. The SP100 had a negative weekly PMO crossover SELL signal already. At this point, the intermediate term picture is murky so we are intermediate-term neutral. Look for new all-time highs next week. We will keep you apprised if intermediate-term conditions improve enough to move bullish.
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Bitcoin sunk again and is testing the short-term rising trend. Given the RSI has turned back down in negative territory and the PMO has topped below its signal line, a test of this month's low is likely.
Yields are in a short-term declining trend are about to test the April/May lows.
10-YEAR T-BOND YIELD
The 10-year yield in particular is attempting to its rising trend. Given the two PMO tops below the signal line, more than likely the April low will be tested.
MORTGAGE INTEREST RATES (30-Yr)
We want to watch the 30-Year Fixed Mortgage Interest Rate, because, for the most part, people buy homes based upon the maximum monthly payment they can afford. As rates rise, a fixed monthly payment will carry a smaller mortgage amount. (See table.) As mortgages are forced to shrink, real estate prices will have to fall, and many sellers will increasingly find that they are upside down with their mortgage.
Rates are in a rising trend, but that is being tested right now.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: Strong breakout in the Dollar today. UUP closed well below the 20-EMA and near its low for the day. The PMO may be rising, but the RSI remains negative. This looked like a solid breakout, but the long black candle suggests this breakout could fail very quickly.
UUP Weekly Chart: Important support has been reached. It isn't likely to hold. The RSI is negative and not oversold. UUP narrowly escaped a weekly PMO negative crossover and the PMO has topped well beneath the zero line. Add to that the upcoming price tag of the Biden initiatives and we should see the Dollar break down, not up.
UUP Monthly Chart: The monthly chart isn't much better. A negative RSI accompanied by a falling, nearly negative PMO also suggest a breakdown ahead.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUYas of 5/21/2021
GOLD Daily Chart: Gold has been rallying strongly. This has put the RSI in overbought territory. Additionally, a new bearish rising wedge has appeared. With the low discounts and increased interest in Gold, look for Gold prices to settle and consolidate.
Today's OHLC bar dropped briefly below the rising trendline which could suggest a breakdown ahead or as noted above, consolidation that will help digest the rally.
GOLD Weekly Chart: The weekly chart is quite favorable. We have a breakout from a declining trend channel, a positive RSI and a new weekly PMO crossover BUY signal.
GOLD Monthly Chart: The monthly chart looks healthy as well. The RSI is positive and rising. The PMO appeared ready to initiate a crossover SELL signal, but it has flattened and is bottoming above the signal line.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners consolidated all week, breaking the steep rising trend. The PMO is holding its BUY signal and is not overbought. The RSI is positive and not overbought. Internals are overbought in all cases except for the BPI and GCI. They are configured positively. They are above their signal lines, rising and not overbought. The group is vulnerable given the overbought conditions and the possible cooling of Gold prices next week.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: USO hasn't triggered a crossover PMO BUY signal, but it was the big winner on our market summary this week, up 3.94%, followed by the Russell 2000 which was up only 2.51%. Price is in a bearish rising wedge. There is also a negative OBV divergence.
However, given the configuration of the RSI and PMO, a breakout isn't out of the question.
USO/$WTIC Weekly Chart: $WTIC's struggle with overhead resistance is holding back USO. The weekly RSI is positive and not overbought and the weekly PMO is rising. If Crude prices are going to pullback, this is a likely place.
USO Monthly Chart: Longer-term the monthly PMO is on a crossover BUY signal and the RSI, while negative, is rising from oversold extremes. We do expect to see higher Oil prices over the long term given the political climate.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT finally managed to overcome resistance at the 50-EMA, but the breakout failed. The 20-EMA is there for support and the PMO is on a BUY signal.
The RSI is neutral and the PMO hasn't made it out of negative territory. Given that yields are in a declining trend, TLT should at least test overhead resistance at the April/May tops.
TLT Weekly Chart: The weekly chart is encouraging as both the weekly PMO and weekly RSI are flattening as price holds support. We also notice that a short-term double-bottom is in play. The minimum upside target of the pattern would land TLT right up against resistance.
TLT Monthly Chart: The long-term picture isn't quite so bullish. The monthly PMO is pointing down and the RSI is negative. There is support available at the 2016 high and late 2019 lows so a reversal isn't out of the question.
Technical Analysis is a windsock, not a crystal ball.
-- Carl & Erin Swenlin
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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