The Price Momentum Oscillator (PMO) BUY signals keep coming in. This week we saw Crude Oil (USO), Energy (XLE) and Real Estate (XLRE) all post new PMO BUY signals. The Dollar had hit very important support in May but had been unable to turn up in a significant way. Today UUP broke above its 20-EMA and also saw the RSI move into positive territory. There is a large double-bottom forming on the chart as well. I'll cover Bitcoin in its section further down in today's DP Alert report.
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: Price did puncture the confirmation line of the short-term double-bottom and the 20-EMA intraday, but managed to close above both keeping the pattern alive, but on life support. The PMO has now topped below the signal line in oversold territory. The short-term picture is deteriorating. Additionally, the VIX has topped and continues lower on the inverted scale.
The RSI is also flat, but is staying in positive territory above net neutral (50). Total volume was slightly lower than yesterday and remains well below the annual 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.
I'm including the zoom thumbnail on the chart today. It's getting hard to discern the direction of these indicators without it. The SCI has now topped twice below its signal line which is especially bearish, but it is tempered by the fact that it is moving sideways and not downward. The BPI is still in a rising trend, but topped earlier this week. The GCI's negative crossover is the biggest issue on the chart. Typically when this indicator tops, and particularly when it has a negative crossover, the broad market will falter.
The rising trend in participation has now been compromised, adding more bearish fuel to the short-term fire.
Climax Analysis: No climax today. New Highs are on the decline which makes sense. While the VIX has topped in overbought territory on the inverted log scale, it does remain above the EMA which could give bulls some hope. When that EMA is compromised, the market enters a period of short-term weakness.
Short-Term Market Indicators: The short-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT.
The STOs are indecisive again as they vacillate from rising to falling in somewhat overbought territory. This also is a sign of short-term weakness. SPX stocks are slowly losing positive momentum now too.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is SOMEWHAT OVERBOUGHT. The market bias is BULLISH.
Intermediate-term indicators are still favorable. They are all rising and are not that overbought.
CONCLUSION: Short-term indicators continue to weaken, particularly participation. The PMO has turned down below its signal line. Seeing both the SCI and GCI moving lower beneath their signal lines takes the shine off the rising ITBM/ITVM and %PMO BUY signals. A reader asked if we have a double-top forming on the SPY. If price continues lower, that is a real concern; we're just not there yet. It doesn't seem likely that all-time highs will be hit tomorrow or even next week. Best case is more consolidation; however, worst case is a break below the 20-EMA that triggers even more selling. Stay vigilant and consider setting stops on your short-term investments if you haven't already.
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The bearish reverse pennant on a flagpole suggest that Bitcoin will eventually break down, not up. However, today's move higher pushed the PMO past its signal line to trigger a crossover BUY signal. We've been watching the RSI improve over the past week, but it is still negative. Bitcoin is now testing the declining trendline that forms the top of the pennant. A breakout will be difficult as it would require a break above the 20- and 200-EMAs. If the breakout occurs as the PMO suggests, there is still resistance at the January top to contend with.
Long-Term yields are bouncing off support at the April lows. The cup and handle appears to be resolving to the upside as expected.
10-YEAR T-BOND YIELD
The 10-year yield fell, but support at the 50-EMA is reinforced by the longer-term rising trend. Today's rise pushed $TNX past its 20-EMA and is keeping the longer-term rising trend alive.
IT Trend Model: SELL as of 4/26/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: It appears the Dollar is finally breaking out as noted in today's opening.
We can see how strong this area of support is on the weekly chart. Should the rally continue, a bullish double-bottom will begin forming. It's early to predict, but if price manages to rally above the confirmation line of the pattern it would have a minimum upside target that would have it challenging the mid-2020 top. Notice also that the weekly PMO is in the process of avoiding a crossover SELL signal.
IT Trend Model: BUY as of 5/3/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Today Gold's breakdown was swift and deep. However, price did find support on the 20-EMA. If we're lucky this will turn into a reverse island and price will be back up at $178 again. However, given the bullishness of the Dollar right now, the PMO top and tumbling RSI, the pullback on Gold is just getting started.
(Full Disclosure: I own GLD)
Today's drop took price below the January top. The next area of strong support is at $1850. We should see that soon.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners were hit particularly hard today on the deep decline in Gold. Add to that a market decline and you have a huge pullback on Gold Miners. Price is now below the 20-EMA. The PMO has triggered a crossover SELL signal and while the RSI is positive, it won't be much longer. This support level needs to hold at the mid-May top or Gold Miners could move down to $36.
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:
"Crude Oil looks very bullish. The best part? The RSI is far from being overbought and the PMO is on a crossover BUY signal that was triggered in oversold territory. The OBV does need to rise higher or we could end up with a negative divergence when it tops."
IT Trend Model: NEUTRAL as of 8/27/2020
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: Yesterday's comments still apply:
"Yields appear to be headed higher in the near term and that is pressuring TLT. It appeared TLT would finally breakout. We hadn't seen price above the 50-EMA in months. However, it immediately failed and was unable to test overhead resistance. For now, the 20-EMA is holding as support and the RSI is positive. The PMO is also technically rising, but we don't expect to see TLT get above overhead resistance at the April/May tops."
"This is a good picture of how the 50-EMA has been a problem since TLT began its decline last August."
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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