DecisionPoint has a ChartList called the "ETF Tracker" available on StockCharts.com. It tracks 82 ETFs that cover the major industry groups. I'll discuss how to download the "ETF Tracker" on StockCharts.com in a moment.
The two big finishers today were the Biotechnology ETF (IBB) and the Alternative Harvest ETF (MJ). I've been pounding my desk for a few weeks now on marijuana stocks so it shouldn't be a surprise I'm including it today. However, Biotechs was a bit of a surprise. During today's free DecisionPoint Trading Room with Arthur Hill, he brought up IBB and both of us were impressed by the chart.
IBB broke out of a trading range today, although it did close within it. I would expect to see higher prices given the positive RSI and PMO BUY signal. Additionally, the PMO just hit positive territory. Volume is clearly coming in based on the OBV. You'll also note that IBB is about to see a "Silver Cross" of the 20/50-EMAs. That would trigger an IT Trend Model BUY signal. If price can test the February high, that would be a 10% gain from today's close.
MJ is looking more and more interesting. After an upside breakout from the bullish falling wedge, MJ moved above both the 20/50-EMAs. A "Silver Cross" IT Trend Model BUY signal is also on tap for MJ. I see a reverse head and shoulders developing right now. The breakout would take it to overhead resistance at the March top which would be an over 15% gain. However, given it is not overbought and momentum is kicking in, I expect to see price move even higher. A move to the February high would be an almost 58% gain. Congress will be looking at proposed legislation that would legalize marijuana. This area will see significant growth if it passes. Given the legislation is being introduced by two republican congressmen and given the democratic majority, I expect to see it pass this time around.
To download the ETF Tracker ChartList, you need to be an Extra member or above. Go to "Your Account" and click on "Manage ChartPacks". You'll want to download the free "DP Trend and Condition" ChartPack. There are plenty of other ChartLists included in that ChartPack that you might want to check out too!
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: Price continues to be bounded by the 20-EMA and overhead resistance at new all-time highs. We are still waiting for the short-term double-bottom to reach its minimum upside target around $430. Of course, we see problems ahead for the broad market. If price loses support at the confirmation line, that pattern will be scuttled.
The RSI is still in positive territory and the PMO technically rose today (+0.01). Total volume was well below average.
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 are prominent on the Silver Cross Index and BPI. The GCI is moving lower very slowly and also sports a slight negative divergence. The biggest concern with the GCI is that it crossed below its signal line last week.
We had short-term rising bottoms on %Stocks > 20/50-EMAs, but those rising trends have been broken. Additionally, we can see that we have persistent negative divergences on both of those indicators.
Climax Analysis: No climax today. I already noted the low volume. We do have the VIX oscillating above its EMA on the inverted scale and that does tell us there is internal strength in the very short term.
Short-Term Market Indicators: The short-term market trend is UP and the condition is NEUTRAL.
Overall these indicators are sitting in neutral territory. The problem is that they continue to move lower. Currently only 44% of stocks have rising momentum. That won't fuel a strong move into all-time highs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
Today the ITBM moved lower while the ITVM moved higher. They currently are trending higher, but we have a negative divergence in play. %Crossover BUY signals continue to improve, but given that we reached new all-time highs last week, we should see higher participation.
CONCLUSION: Short-term indicators continue to deteriorate suggesting more weakness in the short term. The IT indicators are somewhat mixed, but mostly positive. The overarching issue is the increase in negative divergences. The SPY hasn't broken down and the VIX isn't below its EMA yet. More than likely we will continue sideways, but we should be on the lookout for a breakdown. Play defense.
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Bitcoin is breaking down from the bearish reverse pennant. The minimum downside target of that pattern would take price down to 10,000. While we don't expect to see that level near term, it certainly isn't out of the question. At the very least expect a test at 30,000. The RSI has turned lower in negative territory and the PMO BUY signal is about to flip.
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 losing its longer-term rising trend. Support is still available at the April lows, but given the declining PMO, we don't expect it to hold.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: The Dollar continues to bounce around. Each breakout is failing.
The RSI remains negative and the 20-EMA is so far holding as overhead resistance with the exception of the brief foray above on Thursday. The PMO did trigger a BUY signal last week, but it is already flattening.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Gold retraced and nearly closed the gap from Thursday. The 20-EMA held as support.
(Full Disclosure: I own GLD)
The rising trend out of the March low remains intact. The RSI is positive, but the PMO is edging toward a crossover SELL signal. Overall we expect Gold to hold the rising trend, but that still leaves us open to some more downside. Discounts are beginning to increase so traders are beginning to get more bearish on Gold.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners gapped down last week with Gold. They have not been able to close the gap and seem stuck beneath the trading range of the past few weeks. However, price is still holding above the mid-May top. The RSI is still positive, but the PMO is now on a SELL signal. The PMO is negative, but the indicators under the hood aren't that negative. This could turn out to be a reverse island formation.
CRUDE OIL (USO)
IT Trend Model: BUY as of 11/23/2020
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: After the upside breakout from the bearish rising wedge last week, price is just continuing higher. The RSI is positive and not overbought. The PMO is on an oversold BUY signal so we do expect Crude Oil to continue higher.
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: 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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