DecisionPoint

March 2015

DecisionPoint

DP Market Update: Rebound Over - March 31, 2015

by Erin Swenlin

After consolidating the correction last week, price rebounded on Monday, but it was over today as price stayed in the red all day. It consolidated in negative territory, but the end of the day price saw price fall back down and out of that area of congestion. Interestingly, you can see a double-top in that area that executed in textbook fashion, dropping price the length of the pattern once the neckline was broken. The purpose of the DecisionPoint Daily Update is to quickly review the day's action, internal condition, and Trend Model status of Read More 

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Equal-Weight Versus Cap-Weighted Indexes

by Carl Swenlin

I have always been a fan of equal-weighted indexes as opposed to capitalization-weighted indexes because equal-weighted indexes generally give us more bang for the buck. The reason is that cap-weighted indexes weight the constituents based upon their market capitalization; whereas, equal-weighted indexes give each constituent an equal weight in the index. For example, the S&P 500's fifty-nine largest stocks (12% of the 500 stocks) compose 50% of the total market capitalization of the index, so those top fifty-nine stocks will have an inordinate influence on the daily percentage change Read More 

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Music to Your Portfolio: Using the PMO & Trend Model in Harmony

by Erin Swenlin

I was asked a question recently about how we can use the Price Momentum Oscillator (PMO) in conjunction with the Trend Model or which do I rely on most when making investment decisions. In a general sense, I prefer to use the PMO with Trend Model confirmations or positive Trend Model configurations with bullish PMO moves.  If you have a buy and hold strategy, I think the Intermediate-Term Trend Model works to your advantage. There are fewer crossovers in comparison to the PMO and hence fewer needs to reevaluate your positions. There are far more PMO crossovers Read More 

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DP Market Update: Resistance Holds - March 24, 2015

by Erin Swenlin

Since reaching and nearly capturing all-time highs, price has been declining. The rounded top on the 10-minute bar chart is clear and implies price will continue lower. There is an area of support nearby at the 3/19 low, but I believe that will be taken out quickly. The purpose of the DecisionPoint Daily Update is to quickly review the day's action, internal condition, and Trend Model status of the broad market (S&P 500), the nine SPDR Sectors, the U.S. Dollar, Gold, Crude Oil, and Bonds. To ensure that using this daily reference will be quick and painless, we Read More 

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Be Careful of the Parabolic Advances

by Carl Swenlin

When prices arc upward at ever-increasing speed, they form a parabolic curve, which should cause us to feel ever-increasing caution. With parabolic moves we never know when the final top will arrive because of the frenzy of buying driving the move, but we know that vertical moves cannot be sustained, and ultimately we can expect that the parabolic will collapse, with prices falling as quickly as they advanced. Let's look at a few charts that caught my eye. The first I saw was Pharmaceutical SPDRs (XPH). Note the parabolic price curve with a corresponding flat OBV (On-Balance Volume) Read More 

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Don't Look Now, Bonds are Back on a BUY

by Erin Swenlin

I wrote in the last issue of ChartWatchers that the DecisionPoint Intermediate-Term Trend Model went on a Neutral signal. The first signal change since the BUY signal had originally generated on January 17, 2014! Well, it was a short-lived signal as today, 2 weeks later, the Trend Model generated a BUY signal. The intermediate-term Trend Model generates its signals based on the position and crossovers of the 20/50/200-EMAs. You can see on the chart below that the January 2014 BUY signal generated when the 20-EMA crossed above the 50-EMA. The Neutral signal was generated when the Read More 

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DP Market Update: Holding Pattern Before FOMC Meeting - March 17, 2015

by Erin Swenlin

Price didn't do much today, spending the majority nearly all day in the red. After hitting the intraday low, it trended up and managed to recoup about half of the day's losses. The purpose of the DecisionPoint Daily Update is to quickly review the day's action, internal condition, and Trend Model status of the broad market (S&P 500), the nine SPDR Sectors, the U.S. Dollar, Gold, Crude Oil, and Bonds. To ensure that using this daily reference will be quick and painless, we are as brief as possible, and often we let a chart speak for itself. SIGNALS: Read More 

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Understanding PMO Rankings With Hot and Cold Group & Blinkers

by Carl Swenlin

In the DecisionPoint Daily Report and Tracker reports we sort the lists by PMO (Price Momentum Oscillator) rank using the current PMO value and listing the stocks/indexes from the strongest to the weakest, but as usual, we can't take the rankings at face value. There is more to it than that. We can see on the list below that as of Friday (3/13/15) the Consumer Discretionary SPDR (XLY) is ranked number one in the list of market indexes and sectors we track in the DecisionPoint Daily Report. The first thing I will do is click on that line and bring up a chart. We see Read More 

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PMO Crossover SELL Signals on $WTIC, $BRENT and USO

by Erin Swenlin

DecisionPoint covers United States Oil Fund (USO) regularly in the DP Market Update on Tuesdays, during the webinar on Wednesdays and in the DP Weekly Update on Fridays (found in DP Reports Blog). It appeared USO would make a turnaround as we got a prescient PMO Crossover BUY signal in mid-January followed by a break from the steep declining trend price was traveling in. I watched from the sidelines as price fluctuated between 18 and 20, first appearing as a possible bull flag but finishing as a continuation rectangle pattern.  Looking at the USO daily chart, we Read More 

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DP Market Update: Correction Picks Up Steam - March 10, 2015

by Erin Swenlin

Yesterday, price managed to turn up and scalp some losses, but today prices gapped down and continued lower, basically taking over where it left off on Friday. The purpose of the DecisionPoint Daily Update is to quickly review the day's action, internal condition, and Trend Model status of the broad market (S&P 500), the nine SPDR Sectors, the U.S. Dollar, Gold, Crude Oil, and Bonds. To ensure that using this daily reference will be quick and painless, we are as brief as possible, and often we let a chart speak for itself. SIGNALS: Here we include Read More 

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McClellan Oscillator Components Moving Below Zero

by Carl Swenlin

The McClellan Oscillator is a venerable indicator that was introduced in the late 1960s by Sherman and Marian McClellan. It is still followed today by many technical analysts, but I think many people find it a little intimidating, so I'd like to quickly review how I use it and see what it is telling us today. An important point of DecisionPoint's coverage on StockCharts.com is that we publish a version of the Oscillator for most major indexes as well as for the nine S&P sector indexes, and a DecisionPoint ChartPack containing all the versions is available. The chart below is the Read More 

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Dollar Struggles at Long-Term Resistance

by Erin Swenlin

Last Friday the dollar gapped up to reach overhead resistance at the 2010 high. Looking at UUP, the dollar ETF, we see that today, resistance held. The question now is whether it will be able to break out and set a new multi-year high. Looking at the Price Momentum Oscillator (PMO), we see that there was a crossover BUY signal generated last week as the PMO crossed above its 10-EMA which suggests a breakout is imminent. On a shorter-term daily chart it appears that the PMO is very overbought, but the chart above demonstrates that is not really the case when you look Read More 

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Lights Out for Energy Sector

by Erin Swenlin

On February 19th I wrote a blog article on the Energy Sector and its possible resurgence as both the Energy SPDR (XLE) and the equal-weighted sister Rydex Energy ETF (RYE) had gone on Intermediate-Term Trend Model BUY signals following Short-Term Trend Model BUY signals. Well, it's lights out for XLE as the Intermediate-Term Trend Model generated a SELL signal. RYE is close behind with the Trend Model only 4 one-hundredths of a point away from a SELL signal. It appears that these Trend Model BUY signals were late to the party. Looking at the chart for Read More 

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DP Market Update: Short- and Intermediate-Term Indicators Bearish - March 3, 2015

by Erin Swenlin

Prices corrected through mid-day but managed to pare down some of the losses with a late-day rally. You can see that price has been in a continuation pattern for over a week. Today it appeared horizontal support would not hold, but the prices pulled themselves back up into the consolidation zone by the end of the day. The purpose of the DecisionPoint Daily Update is to quickly review the day's action, internal condition, and Trend Model status of the broad market (S&P 500), the nine SPDR Sectors, the U.S. Dollar, Gold, Crude Oil, and Bonds. To ensure that using Read More 

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Market Correction Indicated as Fewer Stocks Participate in Current Rally

by Carl Swenlin

A good way to gauge internal strength is by examining the percentage of stocks above their moving averages. On the chart below we can see the percentage of S&P 500 stocks above their 20EMA (short-term), 50EMA (medium-term) and 200EMA (long-term). The point of interest I have highlighted is that, while price tops are moving higher, indicator tops are moving lower, which is a negative divergence. Currently, the SPY price index is near the top of its rising trend channel, which I interpret as an overbought condition. Further, price appears to be topping. My conclusion is that we are Read More