DecisionPoint uses the iShares S&P Commodity-Indexed Trust (GSG) to follow Commodities. GSG uses index futures contracts to gain exposure to a production-weighted index of front-month commodities futures contracts.
I noticed today that GSG broke out alongside a new Price Momentum Oscillator (PMO) BUY signal. The RSI is positive and not overbought.
GSG top three allocations currently are 55.21% in Energy and 20.21% in Agriculture and 12.07% in Livestock. All of these areas are poised to do well moving forward.
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: New all-time highs were logged intraday, but not at the close. Overhead resistance is proving difficult to overcome. Should price turn down here, we will likely be looking at a very short-term double-top. Let's not get ahead of ourselves as there are still bullish features.
The PMO is nearing a crossover BUY signal, the VIX is oscillating above its EMA and Total Volume saw an increase on new intraday all-time highs. The RSI is positive and price is sitting comfortably above the 20-EMA.
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.
Negative divergences persist on the SCI and BPI. The SCI and GCI have the same readings as yesterday.
There wasn't much improvement on participation. The declining trends remain.
Climax Analysis: No climax today. New Highs contracted slightly. It is positive to see the VIX staying above its EMA. It suggests internal strength in the very short term.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
It was a positive close (albeit a tiny one) but SPX components saw a decrease in stocks with positive momentum. The STOs are both in decline, but we haven't seen a major breakdown. The most important takeaway is that the short-term bullish bias is about gone.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
All of these indicators fell today. The negative divergences are now etched given we have tops on both the ITBM/ITVM. Additionally a top was formed on %PMO Crossover BUY signals which also seals its negative divergence with price. That indicator had been rising since mid-May.
CONCLUSION: Today's takeaways are that the short-term bullish bias is slowly disintegrating as the STOs continue to decline, and the intermediate-term negative divergences are official as all three IT indicators topped together for the first time in weeks. We would expect to see price break from this consolidation zone to the upside based on the bullish double-bottom pattern, but the indicators, along with less than enthusiastic price action seem to suggest otherwise.
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Bitcoin is breaking down from the reverse pennant. As noted yesterday, the minimum downside target is around 10,000. It's hard to imagine a decline that large, but at the beginning of April no one thought Bitcoin would lose 50% in May. The PMO is now on a crossover SELL signal and the RSI is negative and not particularly oversold. We suspect that 30,000 will not hold.
Long-Term yields are bouncing off support at the April lows. The cup and handle pattern never executed. There was an attempt at a rally after the formation of the handle, but when that very short-term rising trend was broken, the pattern became obsolete.
10-YEAR T-BOND YIELD
$TNX is about to break below support at the April low. The PMO certainly suggests that that level will not hold.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar chart is very messy, but there is a short-term rising trend that is discernible now. The PMO is on a BUY signal, but the RSI remains negative.
The 20-EMA is still posing as resistance, but a rounded bottom may finally be forming on UUP. If it can rally here, a longer-term double-bottom might be setting up.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Gold was lower today but it is holding above the 20-EMA. While the RSI is positive, the PMO is crossing below its signal line.
(Full Disclosure: I own GLD)
We're seeing a bearish rounded top, but with the RSI still positive, I'm looking for a successful test of the rising trendline.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners are about to hit the rising trendline from the April low. This could be a reverse island formation, but the SCI had a negative crossover and the PMO is on a SELL signal. I don't see a price reversal given participation is waning.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: We have a "bullish engulfing" candlestick today. USO looks very bullish with the rising, not overbought PMO. The RSI is positive, albeit getting overbought. We expect Crude Oil to continue to rise.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: Yesterday's comments still apply:
"We could be looking at a bullish cup and handle on TLT. There is a rally beginning as price bounced off the 20-EMA and now 50-EMA. However, overhead resistance has held since March. Yet, with a positive RSI and a now positive PMO, this is probably the best chance TLT has had to finally breakout. We also know that yields are beginning to weaken."
"The 20-EMA is closing in on the 50-EMA. A crossover will trigger an IT Trend Model "Silver Cross" BUY signal. If yields lose support, we may finally see a breakout and a sustained rally."
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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