DecisionPoint

Short-Term Trend Model Whipsaws Plague DecisionPoint Scoreboards

Yet again, more whipsaw on the DecisionPoint Scoreboards. The Short-Term Trend Model (STTM) is highly sensitive given that it is based on 5/20-EMA crossovers. However, the main problem we have is consolidation. Price hit all-time highs, but has continued to meander sideways. This will draw the EMAs together and in the case of the 5/20-EMAs, they end up braiding and creating plenty of STTM whipsaw signals. Not so helpful during consolidation phases, but quite helpful to very short-term traders when the market is trending.



The NDX gapped up today after bouncing off support at 5550 and now it is getting ready to test the declining tops trendline. In the thumbnail, you can see the 5/20-EMA crossover. The NDX hasn't had to endure the same whipsaw as the SPX and OEX. I like that the PMO is scooping up in oversold, yet positive territory. OBV is rising nicely, but I'd like to see it surpass some of the other tops. I don't see why overhead resistance along the declining tops trendline would hold up; indicators look good. I would look for a move back up to at least 5850 to test the last June top.

The OEX and SPX both have pulled themselves out of a rounded top formation. This is a bearish formation and to see it resolve upward is quite bullish. The PMO ticked up on both the SPX and OEX, but not as definitively as the NDX's PMO "cup". We've seen lots of twitch on the PMO as it has fallen, although this does look a bit more promising.

The Dow hasn't had to deal with any short-term whipsaw. The steady rise helped put more margin between the 5/20-EMAs, so even though we are seeing some consolidation, it hasn't compromised the STTM. I do note the negative divergence between price tops and OBV tops, but I think the internal strength will protect it from falling out of the sky.

The true dichotomy in the short term is between the NDX and SPX short-term indicators. Notice that the SPX has indicators are narrowing around the zero line. They are rising, but not enough to look at this as the beginning of a new rally.

Check out the NDX Swenlin Trading Oscillators (STOs)! They are rising sharply and strongly. Given the PMO configuration mixed with the STOs, the NDX should be able to recapture all-time highs.


Helpful DecisionPoint Links:

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking


 

Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin


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