DecisionPoint

DP Alert: IT Trend Model BUY Signal for equal-weight Industrials ETF (RGI) - Gold & Bonds Pullback

No changes to the DP Scoreboards. We're just waiting on the Dow to log a PMO BUY signal. Reviewing the chart of the Dow we can see that a PMO BUY signal should trigger on the next positive close, if not sooner. Today's breakout to new all-time highs was impressive. I like that it appeared off the positive divergence between the OBV and price.



The purpose of the DecisionPoint Alert 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 sometimes we let a chart speak for itself.


SIGNALS: Here we include charts of any important signal changes triggered today by our Intermediate-Term Trend Model.

As noted in the title, RGI triggered an new IT Trend Model BUY signal when the 20-EMA crossed above the 50-EMA. When I pulled up this chart, I wanted to give myself a head smack. The PMO reversal back in late August would've been the perfect time to get in and it was followed up with a PMO BUY Signal. Overhead resistance is near at about $110, but with this kind of momentum, I would expect that resistance to be taken out. It may require a pullback first. 

 

NOTE: Mechanical trading model signals 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 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.


STOCKS

IT Trend Model: BUY as of 11/15/2016

LT Trend Model: BUY as of 4/1/2016

Price continues higher and new all-time highs were logged again today. For a week I thought would end lower, this is more than a little surprising. 

The breakout of the last two days is very impressive and has certainly changed my mind about the market closing lower this week (but then you don't have to be a math major to figure that one out). The PMO BUY signal is safe and the EMAs are configured bullishly with plenty of margin among them.

Ultra-Short-Term Indicators: Looking at the readings from yesterday and today, I suspect we are seeing an initiation impulse. When and if the VIX penetrates the upper Bollinger Band, I would then expect prices to contract.

Short-Term Indicators: The trend on these indicators is very bullish, but they are beginning to get overbought. What needs to happen is a decline or at least some price consolidation in order to unwind these two. We can see that overbought conditions were relieved mostly by consolidation, not by a correction. I have to believe that's what will be up next. However....

Intermediate-Term Indicators: ...when I look at these very bullish intermediate-term indicators, it is hard to be bearish even in the short term. They are rising nicely with little hesitation and are far away, very far away, from overbought territory. Based on these indicators I'd expect the rising trend channel to stay intact on the SPX.

Conclusion: Impulse indicators, breadth and VIX, suggest a buying initiation. Yet, short-term indicators are getting overbought. I would expect a bit more upside this week followed by some consolidation along new support at 2485 to relieve those overbought indicators. Based on the IT indicators, we should expect more upside after that.


DOLLAR

IT Trend Model: NEUTRAL as of 3/21/2016

LT Trend Model: SELL as of 05/24/2017

I didn't bother to put the daily chart up because you cannot see support levels since they occur more than 4 years ago. The $23.00 level for UUP will likely be reached before we see the Dollar rally again. The good news is that the PMO is getting oversold on the weekly chart, so I would expect that $23 level to hold.


GOLD

IT Trend Model: BUY as of 7/31/2017

LT Trend Model: BUY as of 4/12/2017

Gold and Bonds are pulling back after both experienced a great rally. The rising trend channel should hold up. A topping PMO in overbought territory is a bit alarming but support at $1300 should hold up in any case. 


CRUDE OIL (USO)

IT Trend Model: SELL as of 8/29/2017

LT Trend Model: SELL as of 3/9/2017

The declining tops trendline continues to bound USO price action. While the PMO and OBV look very encouraging, I continue to be skeptical of USO's ability to even test overhead resistance at $10.30. As I noted in an earlier blog article, you can see that most of the PMO BUY signals have arrived just before a price top. Everyone gets bullish and get momentum to shift and then less than a week later the decline begins. The volatility has been brutal on investors and I continue to shy away from it even when the PMO generates a BUY signal.


BONDS (TLT)

IT Trend Model: BUY as of 3/31/2017

LT Trend Model: BUY as of 6/16/2017

Today saw an important break down below not only horizontal support, but also rising bottoms trendline support. Indicators are telling the same story, expect more decline. I'd look the the $125.50 level as near-term support, but likely support is all the way down to $122. I'd beware TLT right now.


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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