We've been watching UUP closely as it has been nearing an IT Trend Model "Silver Cross" BUY signal. These signals are triggered when the 20-EMA crosses above the 50-EMA. Despite a slight decline today, the signal was inevitable. Remember that EMAs will travel in the direction of price. As long as price remained above those EMAs, the signal was a lock. I'll talk more about the Dollar in its section further down in this report.
** 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 at varying times while I'm traveling, but 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: Yesterday's upside initiation climax alerted us that we would likely see higher prices today. The rally has taken price back above the May top. The RSI remains positive, but the PMO is stubbornly not turning back up.
Total volume fell again today, taking it well-below its annual average. Current concern is that price is not only nearing all-time highs again, it is about to test the top of a bearish rising wedge.
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 been unimpressed with the last two days of rally. It continues lower and has now reached the February reading that came before the bear market drop. The BPI continued higher, but it still looks like a slight tick up, nothing impressive. The GCI remained at the same reading, staying in very overbought territory.
Participation didn't improve on today's rally. This does leave the Stocks > 20/50-EMAs in oversold territory, but long term we still have a very overbought reading on Stocks > 200-EMA.
Climax Analysis: No climax today. We did see New Highs expand slightly and the VIX fell, pushing it toward the upper Bollinger Band on the inverted scale. When the VIX punctures the upper Band, we should expect lower prices.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERSOLD.
The STOs are very slowly rising out of oversold territory which suggests this rally still has some legs. However, we saw no improvement on overall rising momentum which doesn't inspire confidence.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
Both the ITBM/ITVM continue to decline. Neither is oversold in the longer term given readings prior to and including the bear market, but near term they are beginning to get oversold.
CONCLUSION: As expected the market continued its rally today. Short-term indicators are rising and many are oversold suggesting we should see a rally continuation. However, with intermediate-term indicators still flashing negative, we aren't counting on it lasting much past current all-time highs. Let's eke out as much short-term profit as possible, but play defense. Consider setting trailing stops or selling weaker positions into strength. We know that the market is in for a strong pullback or a correction in the intermediate term, so daily babysitting is required on all of your positions, more so than usual.
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Carl wrote an excellent article on Bitcoin. Here is the link to this "hot off the presses" article.
Yields are rebounding but haven't managed to climb above resistance yet.
10-YEAR T-BOND YIELD
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: We discussed in today's opening that UUP had a "Silver Cross" today. Despite the failure to hold above the 200-EMA, the chart is still bullish. There is a large bullish double-bottom forming. The PMO is rising and is now in positive territory. The RSI which had moved overbought on last week's vertical rally is now back in positive territory. The expectation is at least a challenge of the confirmation line of the double-bottom formation.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: I noted yesterday that we would likely see Gold consolidate its decline along support at the March high. I still believe that will be the case, but the PMO has now dropped below the zero line. Gold will have a tough time rallying while the Dollar remains strong.
(Full Disclosure: I own GLD)
The $GOLD chart shows that this recent bottom is sitting above support as well. $GOLD's PMO is headed lower but it is still in positive territory. The RSI is very oversold. I would continue to look for sideways price movement.
GOLD MINERS Golden and Silver Cross Indexes: Participation is not improving on GDX enough to count on this as a pivot point. The SCI and GCI are still moving lower and aren't oversold yet. The PMO has dropped below the zero line. While GDX isn't dependent on Gold, it certainly is affected by it and Gold doesn't look ready to rally.
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 pulled back last week which helped move the RSI out of overbought territory. However, the last three days of rallies are pushing it right back into overbought territory. This isn't that bothersome. Notice that it was overbought almost the entire month of May.
I thought I would pull out the weekly chart. Notice that $WTIC is getting ready to test overhead resistance. While we believe it will breakout, it may take a few tries before it is successful.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: TLT closed higher. It set a lower low in the process but didn't produce a higher high. Overall the chart still looks fairly bullish with a positive RSI and rising PMO.
You could make a case for a bullish complex double-bottom or bullish cup with handle. However, we know yields will be a driver. If they begin making their way above resistance or break their declining trends, the rosy chart will change very quickly.
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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