UNG is a chart that makes me hate myself. Strong words, but I sold this one too soon with little to no profit to show for it. It has exploded (no pun intended). The question is how high can it go given its parabolic rally? Looking at the weekly chart, it really won't see resistance until it hits late 2017 highs. In all honesty, that resistance should be a breeze based on the weekly indicators. Even if it only gets to that level of resistance, it would be an over 14% gain. If it can overcome that resistance, there is plenty of upside potential. I don't think it is too late to get involved in UNG, but we do have a parabolic advance on our hands. If you venture in, set your stop and watch closely. On a parabolic advance, a trailing stop isn't a bad idea either.
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.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
MAJOR MARKET INDEXES
Each S&P 500 Index component stock is assigned to 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.
RRG® Chart: The bullish sectors are obvious right now. Consumer Staples (XLP), Materials (XLB), Healthcare (XLV), Real Estate (XLRE), Energy (XLE) and Utilities (XLU) are all within the Leading quadrant. We are seeing XLRE and XLU turning over a bit, but they still are traveling eastward. XLE, XLP, XLV and XLB are all holding onto their bullish northeast headings.
Communications Services (XLC) has entered the Leading quadrant, but is already moving southeast toward the Weakening quadrant.
Financials (XLF) and Industrials (XLI) are moving north toward the Improving quadrant. The westward component in its heading could prevent entrance into the Improving quadrant for some time.
Aggressive sectors Technology (XLK) and Consumer Discretionary (XLY) are fading fast with bearish southwest headings. XLK is now in the Lagging quadrant with XLY is moving toward it from Weakening.
RRG® charts show you the relative strength and momentum for a group of stocks. Stocks with strong relative strength and momentum appear in the green Leading quadrant. As relative momentum fades, they typically move into the yellow Weakening quadrant. If relative strength then fades, they move into the red Lagging quadrant. Finally, when momentum starts to pick up again, they shift into the blue Improving quadrant.
CLICK HERE for an animated version of the RRG chart.
CLICK HERE for Carl's annotated Sector charts.
THE MARKET (S&P 500)
IT Trend Model: NEUTRAL as of 1/21/2022
LT Trend Model: BUY as of 6/8/2020
SPY Daily Chart: It was a strong rally today, but we still don't see confirmation of the short-term bullish falling wedge pattern. The 20/50-day EMAs are still holding as resistance. However, support at the 200-day EMA is holding. The RSI is rising again, but is negative below net neutral (50). The PMO is flattening, but still declining.
We are seeing a rebound on the VIX which is bullish for the very short term. Stochastics have now ticked up in oversold territory.
Here is the latest recording:
Topic: DecisionPoint Trading Room
Start Time: Apr 11, 2022 09:00 AM
Meeting Recording Link.
Access Passcode: April@11
S&P 500 New 52-Week Highs/Lows: I would've expected to see an expansion in New Highs, but many of the Technology and Consumer Discretionary stocks that rallied today were well beneath there 52-week highs. New Lows stayed about the same. The 10-DMA of the High-Low Differential is falling. That is usually bearish for the market in the intermediate term.
Climax* Analysis: We had unanimous climax readings on the indicators today, giving us an upside initiation climax. SPX Total Volume was light, but that could be attributed to the short trading week.
*A climax is a one-day event when market action generates very high readings in, primarily, breadth and volume indicators. We also include the VIX, watching for it to penetrate outside the Bollinger Band envelope. The vertical dotted lines mark climax days -- red for downside climaxes, and green for upside. Climaxes indicate either initiation or exhaustion.
Short-Term Market Indicators: The short-term market trend is DOWN and the condition is NEUTRAL.
The STOs have reversed again and are now in neutral territory. This seems to confirm today's upside initiation climax. Participation is improving, but isn't healthy yet given percentages are well below our 70% bullish threshold.
Intermediate-Term Market Indicators: The intermediate-term market trend is DOWN and the condition is OVERBOUGHT.
The ITBM and ITVM moved slightly lower and are beginning to leave overbought territory. Despite today's rally we saw a contraction in PMO BUY signals.
PARTICIPATION and BIAS Assessment: The following chart objectively shows the depth and trend of participation in two time frames.
- Intermediate-Term - the Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
- Long-Term - the Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
The GCI continues lower well below our 70% bullish threshold which means a bearish long-term bias.
The SCI ticked up today, but is also well below our 70% threshold. This means the intermediate-term bias is bearish.
With %Stocks above their 20/50-day EMAs below both the SCI, the short-term bias is still bearish as well.
CONCLUSION: Support at the 200-day EMA held. As noted in yesterday's conclusion we feel that is a critical "line in the sand" for the SPX. We believe it will eventually be broken, but given today's upside initiation climax and the short-term bullish falling wedge, we are looking for a few rally days. Aggressive sectors benefited from today's rally, but so did most of the broad market. We still suggest exercising extreme caution on positions in Technology and Consumer Discretionary. Whether your positions are in aggressive sectors or defensive sectors, stops are a good idea as we consider this a bear market.
I am 15% exposed to the market.
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Bitcoin had a successful rally today. Maybe the bullish cup and handle is ready to execute with a breakout from the short-term declining trend. The RSI and Stochastics are improving, but both are still below net neutral (50). The PMO was unimpressed by yesterday and today's rallies. The OBV is still confirming the current downtrend.
Interest rates fell slightly today with the exception being 1-year and 1-month yields.
The Yield Curve Chart from StockCharts.com shows us the inversions taking place. The red line should move higher from left to right. Inversions are occurring where it moves downward.
The 7-year/10-year inversion has eased.
10-YEAR T-BOND YIELD
With this week's top we now have a bearish rising wedge pattern, which we normally expect to resolve downward. While we do expect the 10-year yield to move higher in the longer-term, it is now likely that we'll see a pullback, possibly to the first line of support at 2.5%.
IT Trend Model: BUY as of 6/22/2021
LT Trend Model: BUY as of 8/19/2021
UUP Daily Chart: The Dollar finally saw a down day. We also have a bearish engulfing candlestick today. This tells us to expect UUP to fall again tomorrow. The rally may be coming to an end given the PMO is beginning to top; however, the RSI and Stochastics still look fine.
On the one-year chart we can see there is a longer-term rising trend channel. Price is now poking out above the pattern. It appears this is a perfect place for a downside reversal.
IT Trend Model: BUY as of 12/29/2021
LT Trend Model: BUY as of 1/12/2022
GLD Daily Chart: Gold continued higher after breaking above overhead resistance at the late March top. Indicators are very favorable and suggest more upside ahead.
GOLD Daily Chart: We have been watching a bullish cup/saucer with handle pattern. With the recent rally, it appears to be confirmed. With positive indicators and low discounts, we believe the rally will continue, especially given the Dollar is possibly topping.
GOLD MINERS Golden and Silver Cross Indexes: Gold Miners look great and have been appearing in my DP Diamond Scans that I run to pick out "Diamonds in the Rough". It isn't surprising given the strong participation percentages on the chart. Stochastics are back above 80 and the PMO should trigger a crossover BUY signal soon.
CRUDE OIL (USO)
IT Trend Model: BUY as of 1/3/2022
LT Trend Model: BUY as of 3/9/2021
USO Daily Chart: Crude Oil has broken out of the symmetrical triangle chart pattern as expected. These are continuation patterns so the expectation based on the prior rising trend was an upside breakout. The RSI is now in positive territory and the PMO is bottoming. Stochastics are rising out of oversold territory.
This looks a very large pennant on a flagpole. The pennant pattern suggests price will easily reach $87.50.
IT Trend Model: NEUTRAL as of 1/5/2022
LT Trend Model: SELL as of 1/19/2022
TLT Daily Chart: Yesterday's comments still apply:
"TLT had formed a bullish falling wedge, but price broke below it instead of the expected upside breakout. A bearish conclusion to a bullish chart pattern is especially bearish. It isn't surprising given TLT has been in a bear market for some time."
"All indicators are oversold, but also are pointed downward suggesting no relief ahead for Bonds."
Good Luck & Good Trading!
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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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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