Still in Las Vegas braving 100+ degree weather today!
Gold Miners are a beat down industry group. Notice that participation is almost non-existent. All of the Gold Miners have their price below their 20/50-EMAs and only 23% have their price above their 200-EMAs. Yesterday price broke below important support and today we are seeing a continuation of the decline. The PMO is falling, but it isn't really oversold yet. The RSI is certainly oversold, but oversold conditions in a bear market configuration can persist. As I continue to say, we are watching this group closely. When they do turn around there will be some excellent bargains in this industry group.
** ON 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've made it to Las Vegas, next up: 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.
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 continues to press and hit all-time highs. The rising trend drawn from the June low is still intact, but the intraday tops are beginning to fade.
The RSI remains positive, the PMO is on a BUY signal and the VIX remains above its EMA on the inverted scale which is bullish. Additionally we had a bullish conclusion to a bearish rising wedge. All of this implies higher prices, but there are problems underneath the surface. One is that the OBV has yet to set a higher high. If price sets a new high, so should the OBV.
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 is rising but it hasn't crossed above its signal line. The SCI continues to move lower despite yet another all-time high hit by the SPY. The GCI is holding steady at yesterday's extremely overbought reading.
Although we have 65% of stocks with a 20-EMA > 50-EMA, only 47% have price above their 20-EMA and only 56.6% have price above their 50-EMA. While a participation number of 65% for the SCI is good, we know that those stocks are seeing deterioration.
Climax Analysis: No climax today. Total volume was low today, but not completely out of the norm. I prefer seeing a spike in volume on new all-time highs as it implies bullish sentiment and a likely continuation. I'm not seeing this right now. Additionally, the VIX did puncture the upper Bollinger Band and that usually means a short-term decline is on the way.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
Despite the market closing higher, the STOs continued to decline. They are generally a great determinant of where the market will go in the very short term and they are clearly pointing down.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
There was little improvement on the intermediate-term indicators. They are rising which is bullish, but they aren't making any headway. We're seeing an increase in momentum among SPX members, but we still have only about 30% with rising momentum. That isn't sufficient enough to hold the market up.
CONCLUSION: The market continues to inch higher and set new all-time highs. However, we're not seeing any improvement on short-term indicators right now. The OBV still has a negative divergence and IT indicators are mostly neutral. Given the STOs are heading lower, we would expect the market to pullback very soon. Lack of participation continues to be an issue, but mega-cap stocks continue to hold the market enthrall and running higher. As noted yesterday, we should take advantage of the current rising trend, but be on watch for a possible storm. Stops are an effective way to protect yourself in an uneasy market environment.
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Bitcoin made it back above the 20-EMA. In the process it triggered a bullish double-bottom pattern. The pattern's minimum upside target is at resistance at the prior May/June tops. The RSI isn't quite positive, but the PMO is looking bullish as it rises out of overbought territory.
Long-term yields failed at overhead resistance once again.
10-YEAR T-BOND YIELD
Yesterday's comments still apply:
"The 10-year treasury yield is still holding the rising trend from the December/January low. Additionally it is managing to stay above support at the long tail from May. The PMO is beginning to turn up which does imply we will see a breakout from the bullish falling wedge."
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The bull flag has been executed on the 6-month candlestick chart. Price closed right on the 200-EMA. This chart pattern suggests we will see follow-up on this rally breakout.
There is also a bullish cup and handle formation on the one-year daily chart. Today's breakout began to execute this bullish pattern. The PMO did flatten, but overall it is still rising. As strange as it may seem, the Dollar is bullish and will likely rise higher.
IT Trend Model: NEUTRAL as of 6/25/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: A bullish Dollar is putting pressure on Gold prices. We had been watching for a possible bullish reverse island formation, but instead prices gapped down. They are holding support, but this is quite bearish.
There is a bearish reverse flag formation on the one-year daily chart for $GOLD. We have been expecting Gold prices to hold above this current support level, but the RSI and PMO are quite bearish. Add to that a strong Dollar and you should expect Gold prices to drop.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil continues to maintain its rising trend.
The RSI is positive and not overbought. The PMO looks less bullish as it does appear ready to go in for a crossover SELL signal. For now, we aren't that worried given the current rising trend.
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT continues to move mostly sideways as does its PMO. Yields haven't broken down in a serious way and consequently TLT hasn't broken out in a serious way.
Overall the rising trend is intact and the RSI is positive. With the 20-year treasury yield failing to break back above resistance, long Bonds should continue higher. It's just slow going right now.
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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