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

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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 especially the breakout to new all-time highs. The OBV on this breakout has moved above the top in July which can be considered a bullish confirmation. 

Bonds on the other hand, just logged an IT Trend Model Neutral signal. The signal was triggered when the 20-EMA crossed below the 50-EMA while the 50-EMA was above the 200-EMA. DecisionPoint considers any stock, ETF, index, etc. to be in a "bull market" while the 50-EMA is above the 200-EMA; so rather than move to a SELL signal while that stock, index, etc. is in a "bull market", we choose a Neutral signal (meaning fully hedged or in cash). TLT has been forming what could be considered an island which would set up a closure of the gap down. We're also seeing price hold the 200-EMA. The PMO is unwinding and is below zero for the time since March. While I think this would be a great place for a reversal, I know that yields are rising, the financial sector is beginning to thrive again and all of that has me less than bullish on bonds. I don't think this will be the reversal point. Given the PMO is continuing lower and we're not seeing convincing evidence from either the OBV or SCTR, I expect the decline to continue to $122 for TLT.

With the rally in the Oil and Gas sector, GSG had begun to enjoy a rally itself. Unfortunately being tied so closely to Oil, when Oil began to drop, so did GSG. However, the rising trend channel and price remaining above the 200-EMA triggered a Long-Term Trend Model BUY signal as the 50-EMA crossed above the 200-EMA. The overbought PMO SELL signal isn't good, but it is decelerating and trying to turn up. The OBV isn't convincing nor is the volume pattern. Last week there was a glut of selling on very high volume and today's breakout showed very unimpressive volume. So while we are seeing this closure of the gap on the island and a new Long-Term Trend Model BUY signal, I wouldn't be jumping into GSG to catch a rally. It could be very short-lived. One nice thing about the LTTM BUY signal is that it does set up GSG in a "bull market" configuration and that will definitely provide fertile ground for a subsequent rally. I would be cautious 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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Erin Swenlin
About the author: helped create and manage the DecisionPoint.com website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at StockCharts.com, and is also a Member of the CMT Association. Learn More
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