The PMO on the OEX has been moving mostly sideways, but today it did cross above its signal line to initiate a crossover BUY signal. The biggest problem for the OEX (and a similar one for the SPX) is the bearish rising wedge. You'll also note that it is performing about as well as the SPX right now. They are mirroring each other. My takeaway? Mega-cap stocks are leading this market.
Technology big caps are particularly "in charge". The Nasdaq 100 (NDX) has been steadily outperforming the SPX. Notice it had a PMO BUY signal back in May and it has been moving higher ever since. In fact, right now we are seeing a breakout from the top of a bearish rising wedge. Bullish resolutions to bearish patterns are particularly bullish. Leadership by these large-cap stocks can keep the SPX moving higher.
** 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.
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: Meanwhile on the SPX, we don't see new all-time highs and if you look in the thumbnail, the PMO has actually topped below its signal line. Like the OEX and NDX, the SPX is sporting a bearish rising wedge.
The RSI is positive, but we now have declining tops on the OBV in the intermediate term and now in the short term.
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 is continuing to drop lower. It is now getting close to near-term oversold territory. The GCI which had remained steady did top today beneath its signal line. The BPI held onto its same reading today.
Participation has stagnated, topping in oversold territory.
Climax Analysis: No climax today. New Highs did expand which is positive. However, today the VIX penetrated the upper Bollinger Band on the inverted scale. This typically leads to another short-term downtrend. We shouldn't read too much into it given the Bands have begun to squeeze together, but if investors get too complacent, short-term reversals generally follow.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERSOLD.
The STOs are bullish as they rise out of oversold territory. However, we aren't seeing an expansion in PMOs Rising to confirm. Momentum is stalling; this makes sense given the PMO is topping below its signal line. It will be very bearish if STO readings begin to fall again.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
We did see another percentage point added to %PMO Crossover BUY signals, but both the ITBM and ITVM continue to sink lower. Price is struggling to hold above the intermediate-term rising bottoms trend line.
CONCLUSION: The rally appears to be stalling out earlier than expected. However, given short-term indicators like the STOs are oversold and rising, we are still looking for all-time highs in the short term. Large-caps in sectors like Energy, Technology and Consumer Discretionary are seeing breakouts and rising momentum. That has carried the market short-term, but there is not enough universal participation to keep it there should those stocks relinquish leadership. Intermediate-term indicators are agreement; this won't continue much longer.
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Carl's article on Bitcoin yesterday hit the mark. Here is the link to this article.
Bitcoin is rebounding and the PMO is trying to avoid holding this current crossover SELL signal. Bitcoin is in a trading zone and is headed back to test the top.
Yields are rebounding but haven't managed to climb above resistance yet.
10-YEAR T-BOND YIELD
Yesterday's comments still apply:
"Keep an eye on the support zone between 14.0 and 14.5. The PMO is suggesting this zone will be broken. However, $TNX is holding onto the rising trend line drawn from the December low. Additionally, we have a 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 Dollar may have closed higher, but the declining trend is still intact. Support is holding and the RSI is positive. This support area should hold.
I still see a large bullish double-bottom forming. Given government spending, I am fairly confident it won't get past the confirmation line.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Gold continues to consolidate above support. The indicators aren't improving, so expect more of the same.
(Full Disclosure: I own GLD)
$GOLD did bounce off support and appears ready to reverse, but the longer-term declining tops trendline could hold it down. It is also getting very close to a negative 20/50-EMA crossover for an IT Trend Model Neutral signal.
GOLD MINERS Golden and Silver Cross Indexes: Participation continues to lag in the Gold Miners industry group. Today an IT Trend Model Neutral signal was generated as the 20-EMA crossed below the 50-EMA. There's nothing here that tells me they will rally anytime soon.
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 to push 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: TLT is pulling back to support at the April/May highs. That support should hold given the RSI is positive and the PMO is rising. Although TLT lost ground today, a higher low was set.
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. 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.
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