We're already at the Grand Canyon. Bryce Canyon was incredible (pictures at the end of article). I'm truly amazed by the terrain and topography in Utah and now Arizona. But... onto the market...
While readings on our climax chart aren't outside of our climactic range, I took a peek at the Volume Ratios and they definitely confirm that today was a climax day. We saw elevated Total Volume and the VIX actually spent some time under its EMA on the inverted scale and actually closed beneath it. That signifies internal weakness. I'll talk about the Volume Ratios under the "Climax Indicators" section.
** 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.
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.
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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: The market finished slightly lower but did move down to $430 before rebounding. This did take the RSI out of the shaded overbought level, but it is still overbought. The PMO still looks bullish.
The long-term rising trend channel is intact, but it hasn't come close to testing the top of the channel since April. This has formed 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 is trying to improve, it has at least stopped its decline. The BPI whipsawed back below its signal line and the GCI remained unchanged in extremely overbought territory.
Considering we only saw a -0.18% decline on the SPY, it is bearish to see the damage done to participation.
Climax Analysis: I discussed this chart in the opening, but remember, we usually see these climaxes resolve the following day or shortly afterward. If you recall, last Thursday we had an upside exhaustion climax. I believe we are seeing the results of that today.
NYSE Up/Down and Down/Up volume ratios are also climax detectors. The 9:1 ratio suggested by the late Dr. Martin Zweig in his book, Winning on Wall Street, is especially significant, but we also look for spikes outside the normal range to clarify a particular event. We have an NYSE and S&P 500 version of the ratios, and normally they will only be published when there is a notable reading.
The DOWN/UP Volume Ratio popped above the climax level.
The SPY DOWN/UP Volume Ratio was also outside of the climax range. These spikes on the Volume Ratios are quite prescient at tops.
Short-Term Market Indicators: The short-term market trend is UP and the condition is OVERBOUGHT.
The STOs topped on Friday giving us warning that a top may be near. Today they are confirming the top by declining again. Note also that we have only 47% of the SPX with rising momentum.
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 stayed at the same 42% reading. This tells me that the mega-cap stocks are still in charge of the SPY.
CONCLUSION: Today marked a downside initiation climax. This tells us to expect lower prices ahead. The STOs have topped and that usually means declining prices as well. The IT indicators are still slowly rising so all may not be lost as far as the intermediate-term rising trend, but the rising wedge suggests that trend is could be in jeopardy. Prepare for a short-term decline.
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Bitcoin is in a go nowhere pattern. Price continues to struggle against the 20-EMA. The RSI is negative and the PMO is turning down. I am still expecting 30,000 to be tested.
Yields are in a declining trend that appears to be accelerating.
10-YEAR T-BOND YIELD
The ten-year treasury yield dove lower today. There had been the possibility of a breakout from a few bullish falling wedges, but as we noted on Friday, the declining trends were getting steeper. The longer-term rising trendline is holding up alongside the 200-EMA, but given the negative RSI and falling PMO, we don't expect it to hold here.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: SELL as of 7/10/2020
UUP Daily Chart: UUP rallied today after a strong pullback last Friday. The RSI is positive and not overbought, and the PMO is still rising.
The bullish cup and handle pattern executed and price is now headed toward the March top. The chart pattern suggests price will overcome resistance at that level.
IT Trend Model: NEUTRAL as of 6/25/2021
LT Trend Model: BUY as of 5/24/2021
GLD Daily Chart: The continued to rally, but that didn't stop Gold prices from rising too. Price on GLD popped above the 20-EMA and is now up against resistance at the 50/200-EMAs. The PMO is now rising.
The RSI is rising and Gold nearly closed above the long-term declining trendline. I see a bullish double-bottom within the flag that could suggest that we will see price break up and out of the flag rather than the pattern expectation of a breakdown. Note also that discounts are beginning to increase as well.
Gold Miners (GDX): 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 broke below the rising wedge as expected. This took the RSI out of overbought territory. Unfortunately, the PMO had a negative crossover today suggesting support at the 20-EMA won't hold.
You can also see the heavy volume on today's drop. This may be a selling initiation climax for USO as well.
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 made its way above the 200-EMA.
The RSI is positive and the PMO has bottomed above the signal line which is especially bullish.
Technical Analysis is a windsock, not a crystal ball.
Pictures from Bryce Canyon:
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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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