DecisionPoint

October 2015

DecisionPoint

PMO Analysis Charts Reveal Interesting Divergences

by Erin Swenlin

While scanning my charts for my DecisionPoint Alert daily market review, I happened on the S&P 500 Price Momentum Oscillator (PMO) Analysis chart. It didn't look as I would've expected. This prompted me to review the same PMO Analysis charts for other indexes to see what they were saying. Across the board I found them unusual considering the strong rally we have experienced since the last bear market low.  Of course we have been watching and seeing many divergences in our indicators throughout this recalcitrant rally. As I wrote in the DecisionPoint Read More 

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IT Indicators on Small and Mid Caps Not Pretty

by Erin Swenlin

Last week I wrote my blog article about small and mid cap stocks not participating in the recent rally which is a sign of instability in the market as a whole. A review of the daily price charts in that blog article for the S&P 400, S&P 600 and NYSE Composite displayed serious weakness, especially when compared to the large cap indexes we cover in the DP Chart Gallery. In the meantime, intermediate-term indicators have been rising on not only the large caps, but also the small- and mid-cap indexes. If you check out the intermediate-term indicator charts in the DP Read More 

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Strong Price, Fading Internals

by Carl Swenlin

After the strong upside price action we've had in the last two days, I was expecting to see strong internal readings as well. But no. While price is within about two percent of record highs, internal readings are fading. On the chart above the green bars, which represent positive internal forces, are contracting as price moves higher. I don't consider this to be especially severe, but it indicates that the smaller-cap stocks in the S&P 500 Index are not participating in the rally as much as the larger-cap stocks are, and this is less than ideal. Last week I Read More 

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Small Caps and Mid Caps Not on Board

by Erin Swenlin

It was pointed out to me that small- and mid-cap stocks were not participating in the recent rally in comparison to the major indexes on our DP Scoreboards that I've recently covered in previous blogs. I called up three charts, the S&P 400, S&P 600 and the Russell 2000 ETF (IWM). It is true, these charts are far from bullish in the intermediate term to long term. Pivotal market reversals generally require small and mid-cap support. On all three of these charts, the September high is the problem. None of them have been able to penetrate it Read More 

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New! $NDX, $OEX and $INDU Intermediate-Term Trend Model BUY Signals

by Erin Swenlin

The bear market rally has now extended to Intermediate-Term Trend Model BUY signals. You'll see in the DP Scoreboards below that the Nasdaq 100, S&P 100 and Dow flipped to BUYs. Don't belittle the S&P 500 for staying Neutral, it is hundredths of a point away from joining the party. It is time to look at the charts and determine whether the characteristics are bear market rally or new bull market. The Dow is almost in a rising trend channel depending on how you choose to draw your trendline. You can see the Read More 

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Bear Market, Bullish Behavior

by Carl Swenlin

Based upon the fact that the 50EMA is below the 200EMA, I consider that we are in a bear market, and that we should expect negative outcomes more often than positive ones; however, we should remember that positive outcomes are also possible some of the time. Case in point, the market's recent behavior. On the chart above, one positive sign was how price reacted when the short-term indicators reached overbought levels and turned over. I had expected that price would pull back as overbought conditions were relieved, and I even thought that the double bottom formation might fail Read More 

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Why Are Neutral Signals Not Turning Into Sell Signals?

by Erin Swenlin

I recently received an email from a reader who asked me why the neutral signals on the  had not turned to red Sell signals. First there is the technical reason and then there are the charts. The technical reason is that our DecisionPoint Trend Model only changes on crossovers. Once the 20-EMA crosses below the 50-EMA, the only crossover possible is a positive crossover which would generate a BUY signal. The neutral signals occurred above the 200-EMA, meaning that at the time of the negative crossover of the 20/50-EMAs, the indexes were in a "Bull Market" (50-EMA > 200-EMA). Our Read More 

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Gold: New BUY Signal

by Carl Swenlin

On Wednesday of last week $GOLD generated a DecisionPoint Trend Model BUY signal when the 20EMA crossed up through the 50EMA. As we frequently stress, these signals are intended to be information flags, not action flags. They should prompt investigation, not blind response. Looking at the one-year chart above we can see that $GOLD has been trending slowly higher from the August shakeout low. This caused the moving averages to converge and then make a bullish crossover. The PMO for the last month has been very sluggish and somewhat flat, but it is rising and nominally bullish Read More 

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Short-Term Oscillators Overbought...Like in October Past?

by Erin Swenlin

I really appreciate receiving your questions, emails and webinar comments. They so often will spur an article and it likely is of interest to many others if someone took the time to send it to me. So here is today's question: "As for short term indicators, e.g., STVO, how do you analyze overbought resulting in a pull back verses market continues upward staying overbought as it did in OCT 2014?" Let me preface by telling you I don't want to appear "defending" this bear market. All I can do is make observations and comparisons. Given the Long-Term Trend Model SELL signals on all but the Read More 

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Rydex Assets Charts Spike

by Erin Swenlin

I received a question from a reader that I thought would make a great article: "Can you explain if there is any significance to spike on the Total Assets Rydex Bear Index Funds chart?" First, a quick refresher on the Rydex Asset Ratio. The Rydex Asset Ratio makes it possible for us to analyze sentiment based upon what investors are actually doing with real money. We do this by calculating a daily bear/bull asset ratio and monitoring the relationship between assets in the two types of funds. The idea behind using the Rydex Asset Ratio and other sentiment indicators is that we Read More 

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S&P 500 Earnings Trending Downward

by Carl Swenlin

This is one of my favorite charts, although I look at it infrequently because it's a little like watching grass grow. Instead just showing a graph of earnings, it puts earnings in a different context by presenting a set of bands that show where the S&P 500 Index would be if its P/E was 20 (red line), 15 (blue line), or 10 (green line). And the position of the S&P 500 within those value bands tells us where the index is in relation to being overvalued (red) or undervalued (green). (This chart is not "live.") Generally speaking, the Index meanders back and Read More 

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Swenlin Trading Oscillators Suggest More Upside But Beware Making a Bear into a Bull

by Erin Swenlin

The title "suggest more upside" refers to the short term, not the intermediate or long terms. We are still in a bear market, a genuine bear market, so we shouldn't expect bullish results. However, even within a bear market, there are rallies. The important thing to remember is that these rallies are there to relieve some pressure and only the last one will mean the end of the bear market. There will be plenty of signs in the indicators to reflect that the bear market is finishing, unfortunately the signs aren't there yet.  The monthly chart on the SPY is telling Read More