We've been watching and waiting for the 20-EMA to cross below the 50-EMA on Gold (GLD). We use GLD to monitor DecisionPoint signal changes for Gold and today GLD generated an IT Trend Model Neutral signal on that negative 20/50-EMA crossover. I suspected after the big gap down that we would see Gold digest that decline by consolidating sideways above support at the confirmation line for the March double-bottom. Now we wait for a possible reverse island which would mean a gap up. The indicators are not on board for that right now. The RSI is very negative and not really oversold and the PMO is continuing lower beneath the zero line. At this point, the consolidation is likely to continue. You'll want to see the $GOLD chart in the section on Gold, it isn't so rosy.
(Full Disclosure: I own GLD)
** UPCOMING VACATION - June 28th to July 9th **
It's that time of year again! Last year it was a road trip to Alabama and back, this year it is a road trip to Utah and back! We plan on dropping in Las Vegas, Zion, Spanish Fork, Bryce Canyon, back to the Grand Canyon, Bull Head City and finally back home.
I plan on writing, but all trading rooms will be postponed until I return home. Blog articles may be delayed depending on WIFI service and/or our travel for the day.
DP Alert subscribers: The DP Alert will be published daily at varying times while I'm traveling. I will try to keep as close to our regular schedule as possible. Rest assured, you will ALWAYS have the report prior to market open the next day.
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: After bottoming below the signal line, the PMO is heading back up again as new all-time highs were logged today. Price is attempting to break out of the bearish rising wedge. We saw this happen on USO a few weeks ago. A bullish conclusion to a bearish pattern is especially bullish. however, the OBV is showing a negative divergence on these fresh all-time highs.
Total volume is holding steady. However, the VIX again punctured the upper Bollinger Band on the inverted scale. It also finished on near its high for the day.
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.
Despite the short-term rally this week, the SCI continues to lose ground. This is an intermediate-term indicator and it is in line with the ITBM/ITVM (we'll look at that chart later). The BPI held steady, as did the GCI.
About 2/3rds of the SPX have "silver crosses" (20-EMA > 50-EMA), yet of those stocks, a mere 46% have price above the 20-EMA and only about half have price above the 50-EMA. The good news on this chart are rising indicators out of oversold territory for %stocks > 20/50-EMAs. This suggests we could see more rally ahead in the shorter-term.
Climax Analysis: No climax today, although Net A-D was elevated today. New Highs are continuing to expand which is positive. The VIX is where I have heartburn. When we see the VIX puncture that upper band on the inverted scale, we usually see a decline over the next day or two.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
The STOs moved much higher today, so much so that they are now in Neutral territory. We are also seeing improvement on participation and rising momentum which are both coming out of oversold territory. While this suggests we will continue to print new all-time highs, it also is shortening the life of the rally now that they are already in neutral.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
The ITBM/ITVM did rise slightly today, but not enough for me to consider these indicators bullish. Only about 1/4 of the SPX have PMOs that are above their signal lines. That number needs to go higher and really should've at this point.
CONCLUSION: Short-term indicators are still bullish and rising, but they have already reached "neutral" territory, meaning they could get overbought very soon. Until then I expect to see higher prices in the short term. The VIX does seem to suggest we will have a cooling off period over the next day or two, but overall we see strength. Additionally, defensive sectors like Utilities, Real Estate and Staples are lagging while aggressive sectors like Technology and Consumer Discretionary are outperforming. Literally the tables on the sector summary could turn quickly. Right now the short-term trend appears sturdy, but given lack of participation and still negative intermediate-term indicators, we are likely on thin ice with this rally.
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Carl's article on Bitcoin this week hit the mark. Here is the link to this article.
After dipping its toes beneath support at 30,000, Bitcoin is rebounding. The PMO has now turned up, clearing the short-lived crossover SELL signal. The RSI is still negative but it is improving. More than likely we will see another attempt to overcome resistance at the 50-EMA. However, there is a long-term issue, today the LT Trend Model initiated a SELL signal as the 50-EMA dropped below the 200-EMA. This tells me it isn't likely we will overcome resistance at 40,000.
Yields are rebounding but haven't managed to climb above resistance yet.
10-YEAR T-BOND YIELD
The PMO has turned back up and we could be seeing a double-bottom forming on $TNX. The intermediate-term rising trend is holding and it is clinging to support above the 14.0/14.5 zone. Short-term it appears we could see higher yields as price also bounced off the bottom of a bullish falling wedge. However, until I see resistance broken at the April lows, I'm not counting on it.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar closed lower, but it did create a higher low. The 200-EMA is the next obstacle. Given the positive RSI and rising PMO, I expect it will at least make another effort to close above it.
I still see a large bullish double-bottom forming. There is a high likelihood we will see the confirmation line at the March top at least tested.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: $GOLD didn't trigger an IT Trend Model Neutral signal, but it will tomorrow unless price rallies above the 50-EMA which is highly unlikely. We now have an ugly reverse flag formation which doesn't look good alongside that negative PMO and RSI. While I believe Gold will hold the current level of support above $1750, it is certainly vulnerable to a new decline. A rising Dollar is not helping matters.
GOLD MINERS Golden and Silver Cross Indexes: Not surprisingly, Gold Miners also triggered an IT Trend Model Neutral signal. I like that GDX is holding above support but "under the hood", participation is not improving. The SCI is not yet oversold and continues to point downward. This may be a reversal point for GDX, but participation is confirming the current malaise.
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 is pushing higher. While the RSI is now in overbought territory, I wouldn't look for a breakdown. It can stay overbought (see May). The PMO is not overbought and rising. The OBV is confirming this rising trend as well. I think most are in agreement that government policy on fossil fuels will keep prices rising."
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: With yields falling somewhat, TLT was able to rally. Price didn't have to test the 20-EMA before turning back up. That could mean we will see a breakout above the 200-EMA.
I see a large double-bottom formation that executed when price broke above the April/May tops. It didn't reach its minimum upside target at about $148.50, but as long as the rising trend is intact, I will consider the pattern valid.
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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