DecisionPoint

October 2017

DecisionPoint

Swenlin Trading Oscillators Reaching Oversold Levels

by Erin Swenlin

The Swenlin Trading Oscillator (STO) is an overbought/oversold indicator that can assist in identifying short-term tops and bottoms. There are two versions, one using advances and declines (STO-B), and one using advancing and declining volume (STO-V). DecisionPoint analysis considers these to be short-term indicators. Right now they are quickly reaching oversold levels not seen since August when we saw the rally begin a steady rise. Typically in a strong bull market we see these indicators oscillate mostly above the zero line, but in August, they dipped down to oversold extremes. We Read More 

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Beware of the Parabolic Price Move - Intel (INTC) Example

by Erin Swenlin

As I was preparing for today's MarketWatchers LIVE broadcast this morning, Tom asked me to take a look at a handful of large cap breakout charts. The one that jumped out at me was that of Intel Corp (INTC). The chart pattern is worrisome. The recent move from its lows around $35 in August to it's close today at $44.37 is characteristic of a parabolic price pattern. The parabolic or exponential move higher on a chart is fantastic if you were lucky enough to hop on board for the takeoff. However, it's the landing that is the problem with these moves. I've annotated INTC to show you the Read More 

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DP Weekly Wrap: Another Blink Moment

by Carl Swenlin

Last week there was a one-day decline that didn't actually last a whole day. On Wednesday this week there was a rather more robust decline, but it didn't last a full day either, and the market took back a good chunk of its losses by the closing bell. As of Friday, the market was once again hitting new, all-time highs. Well, I should clarify that most broad market indexes were doing that, but two Dow components (Chevron and Merck) had a really bad day and kept the Dow nearly flat. The DecisionPoint Weekly Wrap presents an end-of-week assessment Read More 

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DP Bulletin: NDX Whipsaws Back to PMO BUY Signal

by Erin Swenlin

Just a quick headline! NDX whipsawed back into a PMO BUY signal after two days on a SELL. After today's brilliant move by the technology sector, the PMO was yanked back up above its signal line. This was a beautiful breakout today with a gap up to form new support at prior resistance. Hard to argue with what looks like an initiation impulse such as this on price. This doesn't look like a fake out rally, but I would expect to see it pause or pullback slightly. Helpful DecisionPoint Links: DecisionPoint Read More 

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Momentum Failing on SPX - New PMO SELL Signal - Dow Holds PMO BUY Signal

by Erin Swenlin

I updated the DecisionPoint Scoreboards yet again today. Yesterday saw the new PMO SELL signals on the NDX and OEX and today the SPX has followed suit by generating its own PMO SELL signal. You'll note that "one of these things is not like the others" on the Scoreboards as far as the short-term PMO. The Dow Industrials ($INDU) has been the titan of indexes with very little holding it back. Below is a tale of two very different charts. The SPX has dipped this week and yesterday, it nearly closed below rising bottoms line support and the 20-EMA. It wasn't a Read More 

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DP Alert: PMO SELL Signals on SPY, OEX and NDX - Climactic Indicators Suggest "Rally Pop"

by Erin Swenlin

Two important changes occurred on our DP Scoreboards today. The OEX and NDX both logged new PMO SELL signals as their PMOs crossed below their signal lines. I had expected the SPX to follow suit, but by an incredibly thin margin, its PMO BUY signal survived. The SPY wasn't so fortunate as a new PMO SELL signal appeared on its daily chart. So, I know you're asking, "You mentioned a 'rally', how can you expect a rally with all those new SELL signals?" A rally 'pop' is just that. A quick or sharp move upward in one or two days. This can develop into more, but I use climactic indicators Read More 

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Dollar Greening Up - IT Trend Model BUY Signal and Inverse H&S

by Erin Swenlin

On Friday, Gold minted a new IT Trend Model Neutral signal, so it isn't surprising to see the opposite occur for the Dollar. Looking at the chart of UUP, there are plenty of bullish characteristics. This new IT Trend Model BUY signal is a great confirmation of the very bullish reverse head and shoulders pattern that has formed. Lots going on in this chart, let's break it down. First and foremost, the IT Trend Model BUY signal was generated when the 20-EMA crossed above the 50-EMA. There is technically still a bear market bias on UUP given the 50-EMA is so far below the 200-EMA. The Read More 

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DP Weekly Wrap: If You Blinked, You Missed It!

by Carl Swenlin

Back in September the market had a small pullback that took all of three days (blue circle on chart below). This week I was expecting at least something similar, but all that happened was an intraday dip on Thursday that disappeared by the time the market closed! Then on Friday the market gapped up to new, all-time highs. The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil, and Bonds. STOCKS IT Trend Model: Read More 

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Healthcare Sector Feeling Better

by Erin Swenlin

Tom Bowley and I have been talking on MarketWatchers LIVE about sector rotation and how the healthcare sector is getting more "healthy". Today I got confirmation that this sector is back in favor. A PMO BUY signal was generated on both the Healthcare SPDR (XLV) and on the equal-weight Healthcare ETF (RYH).   After enjoying Julius de Kempenaer's presentation on yesterday's MarketWatchers LIVE show, I was inspired to do a short-term Relative Rotation Graph (RRG) of the sector SPDRs. Tune in on Friday's MarketWatchers LIVE show and I'll show you how easy it Read More 

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New PMO SELL Signal on Small-Cap ETFs, IJR and IWM

by Erin Swenlin

The short-term rally in large-cap indexes like the SPX, OEX and INDU was not contagious for the S&P 600 or Russell 2000. Below I've annotated their associated ETFs, IJR and IWM to show you the new PMO SELL signals. Although these SELL signals arrived today, a look at the charts suggests that these signals will whipsaw back to BUY signals. You'll note on both IJR and IWM that the PMOs are overbought. Generally PMO SELL signals in overbought territory tend to be more successful in calling a decline than signals that arrive in oversold territory. That being said, I don't believe Read More 

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DP Alert: Is the Rally Exhausted? - PMO BUY Signal on Bonds

by Erin Swenlin

Teflon rally, perma-rally, overbought rally, irrational exuberancewhatever you call it, our indicators are suggesting at a least pause in the action, if not a pullback. Looking at the DP Scoreboards, we see all green arrows (buy signals) except for the IT PMO signal on the NDX. Although the NDX's weekly PMO is rising, the margin remains somewhat wide between it and its signal line as you can see in the weekly chart of the NDX below. The purpose of the DecisionPoint Alert Daily Update is to quickly review Read More 

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DP Weekly Wrap: Parabolic Neutralized

by Carl Swenlin

Last week I identified a short-term parabolic advance, a pattern in which price advances in an ever-steepening upward curve. Typically parabolics become too steep and they collapse. In this case price moved sideways through the curve, effectively neutralizing the bearish implications of the formation. We currently have a small rising flag formed by this week's price bars, which is bullish, but we need to look at the broader picture. The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market Read More 

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Put/Call Ratios At Simultaneous Lows - Bearish for the Market

by Erin Swenlin

A MarketWatchers LIVE viewer emailed me today and suggested I revisit the Put/Call Ratio chart. Upon recommendation, I did just that and was glad that he pointed it out to me so that I could point it out to you. I'll be talking about it in more detail during tomorrow's MarketWatchers LIVE show, so be sure to join Tom and I at 12:00p - 1:30p EST or catch the latest episode on our webinars page. I really didn't have to update the annotations here because in an article I wrote in December 2016 pointed out the same configuration. Typically when these ratios reach Read More 

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Gold Narrowly Avoids IT Trend Model Neutral but Not Out of the Woods

by Erin Swenlin

Carl and I have been watching the Gold chart carefully for a likely Intermediate-Term Trend Model (ITTM) Neutral Signal. However, with the rally of the last two days, both the 20-EMA and 50-EMA have slowed their descent. A negative 20/50-EMA crossover will trigger that ITTM Neutral signal. Why not a SELL signal? If the 50-EMA is still above the 200-EMA, we're looking at a LT bullish trend and we choose to move to a neutral signal (cash or fully hedged) rather than make a bearish short during a bullish LT trend. We generally don't see many gaps on Gold, but Read More 

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DP Alert: Market Rally Pop, No Follow-Through

by Erin Swenlin

No changes to the DP Scoreboards today, but you can see that every signal is a BUY signal except the IT PMO signal on the NDX. Check out my ChartWatchers article to learn more about why that is the case. Ultra-short-term indicators had pointed to a possible "rally pop" today, which we received on the open. However, there wasn't any follow-through. 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 Read More 

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DP Weekly Wrap: Impervious Rally

by Carl Swenlin

I awoke Monday morning to news of the outrage that had taken place in Las Vegas the night before, and I experienced the now all-to-familiar feelings of weariness at the state of the world. There has been enough rehash of this terrible event, and my purpose of mentioning it was not further intrude on your peace of mind. There is a lesson to be learned here about how the market reacts to catastrophic events. Many of the financial commentators were truly amazed that the market didn't seem to be fazed by the horror that had transpired. In fact, the market rallied every day except Friday. The Read More 

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PMO BUY Signal on NDX Confirms Breakout - Commodities LT BUY - TLT IT Neutral Signal

by Erin Swenlin

It took the NDX two weeks to a month more to update its Short-Term PMO to a BUY signal in comparison to its peers. The dates underneath the signals on the Scoreboard tell the story of a difficult decline and then rally run for the NDX and technology in general. Two more interesting signals came in today. GSG, the Commodities iShares ETF logged a new Long-Term Trend Model BUY signal. Additionally, TLT triggered a new IT Trend Model Neutral signal. The NDX recently logged a ST Trend Model BUY signal (9/29) and today's PMO BUY signal confirms the price trend and Read More 

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DP Indicator Spotlight: McClellan Summation Index Overbought and Rising on Major Indexes

by Erin Swenlin

Developed by Sherman and Marian McClellan, the McClellan Summation Index is a breadth indicator derived the McClellan Oscillator, which is a breadth indicator based on Net Advances (advancing issues less declining issues). The Summation Index is simply a running total of the McClellan Oscillator values. Even though it is called a Summation Index, the indicator is really an oscillator that fluctuates above and below the zero line. The DecisionPoint Market Indicator ChartPack includes a ChartList of the McClellan Oscillator/Summation Index for the major indexes (NYSE, NASDAQ, NDX, SPX, OEX Read More 

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DP Alert: Island Formations and Gaps - More All-Time Highs - RYU Signal Change

by Erin Swenlin

No new changes on the DecisionPoint Scoreboards at this time, but we should see the IT PMO signals change on Friday. I was notified by my Technical Alert that weekly PMO crossovers occurred on all but the NDX. These signals will need to stay intact at the end of trading on Friday for them to become documented signals. 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 Read More 

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Signal Change Bulletin: New BUY Signals for NDX and Consumer Discretionary ETF (XLY)

by Erin Swenlin

Wanted to update readers on two new signal changes that triggered after the close today. You'll see that the NDX DecisionPoint Scoreboard has logged yet another change for the NDX. This time a ST Trend Model BUY signal. The NDX triggered an ST Trend Model BUY signal today when the 5-EMA crossed below the 20-EMA. Not surprising given the rally that the technology sector had today. We're still waiting on the PMO BUY signal to return on the NDX.  Additionally, the Consumer Discretionary ETF (XLY) triggered an Intermediate-Term Trend Model Read More