It is so hot in the Grand Canyon right now (95 degrees) with very little breeze! We did a few stops at the best viewpoints and have already returned to the hotel. Plus, I had the market charts waiting for me! Great excuse to hide out in air conditioning.
We took a plane ride this morning and I've got some pictures at the end of the blog if you're interested. We head home tomorrow. Decided to cut it short and skip Bull Head City and just make the long drive home. Consequently, the publishing of the DP Alert will be later tomorrow night. However, everything will be back to normal next week. Thanks again for your patience as I travel the country. Have Mac, will travel!
We had already noted the breakdown from the bullish falling wedge yesterday. A bearish conclusion to a bullish chart pattern is especially bearish and today's drop confirmed it. Yesterday the long-term rising trend was compromised and now the 200-EMA has been left behind. The RSI is negative and not yet oversold. The PMO is continuing lower after already topping below its signal line (especially bearish). I do see gap support ahead around 12.0. That would be an excellent area for $TNX to digest this drop. If it continues past it, we could see the yield move as low as 10.0.
** WORKING 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 finished Las Vegas, Zion, and Spanish Fork and have now reached the Grand Canyon. After this we will finally head back home on Thursday.
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 did not resolve the downside initiation climax from yesterday. I believe we are still vulnerable to that decline given the RSI is now overbought. The VIX closed above its EMA on the inverted scale, telling us that investors are feeling a bit unsure--not bearish, but not bullish.
Total volume did pare back on a day where new all-time highs were once again logged.
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.
More cracks in the foundation can be found in participation. The SCI and BPI both continued lower despite today's positive close. The GCI maintained at the same reading but remains overbought.
Here is a big problem. The SCI is at 64%, meaning 64% have 20-EMAs > 50-EMAs. Notice that of those stocks, only 55.6% have price > 20-EMA. Only 58.6% have price above the 50-EMA, meaning both the 20/50-EMAs are declining, putting their Silver Crosses in jeopardy. A reminder, this is all occurring while the SPX logs new all-time highs.
Climax Analysis: Yesterday marked a downside initiation climax. While the readings weren't outside the norm, the Volume Ratios confirmed it (see yesterday's report for the charts). New all-time highs were hit but Net A-D Volume was negative. New Highs did pop higher as expected, but I do not like that negative Net A-D Volume.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
The STOs were mixed. Given what happened with Net A-D Volume and Total Volume, I'm not surprised to see the STO-V decline. The STO-B did rise, but overall it is hovering in overbought territory. We do now have more than 50% of the SPX with rising momentum, but a paltry 57%. Again, this is on new all-time highs.
Intermediate-Term Market Indicators: The intermediate-term market trend is UP and the condition is NEUTRAL. The market bias is NEUTRAL.
We do see the ITBM/ITVM rising, but very slowly. They are still in Neutral territory. %PMO Crossover BUY signals improved by a mere 3% today. Mega-cap stocks are still in charge of the SPY.
CONCLUSION: Yesterday's downside initiation climax didn't really materialize today in the expected decline, but I don't think we are out of the woods. If you look at the FAANG+ stocks, every one of those charts are bullish. However, a leader like Apple (AAPL) is now climbing parabolically which means a dastardly decline is likely on the way. When these stocks begin to crack, the SPX will decline in earnest. We could eke out more upside, but the foundation is cracking and will disintegrate. In the very short-term, the downside initiation could still result in a drop tomorrow, so be prepared. I am not increasing my exposure to the market and I have my positions carefully protected with stops.
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I've annotated a small short-term symmetrical triangle. It isn't enlightening given these formations can resolve in either direction, but it does tell us that price is being squeezed and a decision point is near. Given the inability to maintain above the 20-EMA, I still am looking for a drop to 30,000.
Yields are in a declining trend that appears to be accelerating.
10-YEAR T-BOND YIELD
I discussed the $TNX chart in the opening, but for consistency, I've included it in its normal section of the blog.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: UUP is continuing to rally. The RSI is not yet overbought and the PMO is still rising. Given it has maintained above the 200-EMA for about a week, I expect it to move higher.
Yesterday I talked about the bullish cup and handle pattern that had already executed. Today I wanted to point out the large intermediate-term bullish double-bottom pattern. Should price get past the confirmation line (drawn across the March high), the minimum upside target is around $26.20.
IT Trend Model: NEUTRAL as of 6/25/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: Gold was higher, but it was unable to close above key moving averages.
The bearish reverse flag formation appears to be falling apart given the upside breakout. However, the long-term declining tops trendline is still holding it back, as well as the EMAs. The rising RSI and PMO do suggest prices should continue higher, but with such a bullish chart on the Dollar, it could be slow moving.
Gold Miners (GDX): Yesterday's comments still apply:
"Gold Miners are poised to rise higher. The PMO, GCI, and SCI are beginning to turn up. We don't confirming participation numbers yet. In particular, I'd like to see %Stocks above 20/50-EMAs rising."
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 closed below the 20-EMA for the first time since the short May pullback. The RSI may be positive, but the PMO had a crossover SELL signal yesterday suggesting support may not be found until price hits the 50-EMA. I did note another very high volume day of selling so we could be looking at a selling exhaustion in the making.
IT Trend Model: BUY as of 6/10/2021
LT Trend Model: SELL as of 1/8/2021
TLT Daily Chart: With yields falling fast, TLT is rising fast. It is beginning to accelerate its rising trend and may be getting parabolic. The RSI is now overbought and resistance is now being hit at the January low and the early February top.
I note well-above average volume on TLT for two days which could be signaling an upcoming buying exhaustion. However, until yields find support, TLT will just keep moving higher.
Technical Analysis is a windsock, not a crystal ball.
First picture is from a lookout at Spanish Fork UT. You can see Lake Utah below the mountains. It was a great 4th of July there (celebrated on the 3rd since the 4th was a Sunday and it is Utah). All of the neighborhoods lit off stadium-quality fireworks:
Microbrew when we arrived at Bryce Canyon:
Bryce Canyon shots continued:
First view of the Grand Canyon at the Watch Tower. Yes, I was a bit nervous but I had my lovely husband to calm me:
Views from the airplane tour:
You can see the airplane wing in the upper left!
Cactus flower along the canyon rim:
From Bright Angel Point:
We all agreed that we didn't need to go out to that lookout!
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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