DecisionPoint

December 2017

DecisionPoint

DP Yearly Wrap 2017

by Carl Swenlin

Last week we were looking at a rising wedge formation, which we said normally resolves downward. This week price moved through the bottom of the wedge sideways, but that doesn't really qualify as a downward resolution, which would necessarily require price to move, well, down. Friday's price bar does convey a small burst of downward energy, but the two-week trading range remains intact. Regardless of our expectations the market still didn't seem inclined to give up any ground. That could have something to do with the new tax bill -- investors waiting to take capital gains in 2018, when tax Read More 

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DP Alert: NDX Logs New SELL Signal - Gold Shines - ST Indicators Rising Again

by Erin Swenlin

I hope you and yours had a fantastic and warm Christmas! As Bob Cratchit so eloquently put it, "I was making rather merry yesterday". The holidays continue as does holiday trading into the new year. We received a new PMO SELL signal on the NDX, so I've updated the DP Scoreboards accordingly. The market is taking a pause, as is the NDX which likely accounts for the drop in positive momentum. For the NDX, the PMO never really had an opportunity to put distance between it and its signal line which also contributed to the signal change. The 20-EMA is holding for the NDX, but the negative Read More 

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DP Weekly Wrap: Bitcoin Collapse

by Carl Swenlin

Two weeks ago I led with a chart of the Bitcoin Index. It was in a dangerous parabolic advance, and I said: "Yes, price could go higher, but it is also at a point where the parabolic could collapse, and the potential downside is back down to the support of the basing pattern between 400 and 1000."  Well, it did go higher by about +15%, and this week it collapsed, down almost -40% on a closing basis. It is still far from the potential downside, but the danger has been clearly demonstrated. The Bitcoin ETF chart shows the intraday swings, and it Read More 

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DP Bulletin: Dollar (UUP) ITTM SELL Signal - ITTM Neutral Signals for XLU and RYU

by Erin Swenlin

The Dollar (UUP) continues to form a bearish head and shoulders pattern in textbook fashion. The decline continues and consequently, there was a negative 20/50-EMA crossover BELOW the 200-EMA which constitutes an Intermediate-Term Trend Model (ITTM) SELL signal. For the Utilities SPDR (XLU) and Utilities Equal-Weight (RYU), new ITTM Neutral signals executed on a 20/50-EMA negative crossover ABOVE the 200-EMA which is why it is a Neutral signal and not a SELL signal. Nothing bullish on this chart. I expect the Dollar to continue to decline and test Read More 

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DP Alert: UUP PMO SELL Signal - IT Indicators Toppy

by Erin Swenlin

The DecisionPoint Scoreboards remain completely "green". Hard to argue with the strength of this bull market in all three timeframes. However, the intermediate-term indicators are trying to top and have a negative crossover. ST indicators continue to fall. The Dollar looks very weak and it is getting more bearish as BUY signals continue to fall away for UUP. 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 Read More 

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Using Volatility Index Charts to Analyze Short-Term Trading Conditions

by Erin Swenlin

I am often asked why I use an inverted scale on my Volatility Index charts. The answer is that I find it to be an excellent overbought/oversold indicator in the short term when it's flipped. Typically it is said that if the VIX is low that is bullish for the market because there is complacency or a lack of fear of investing. I agree that in the big or slightly longer-term picture that is true. However, I think that many miss out on the 'sentiment' value of the VIX. Remember that sentiment readings are contrarian. So, if everyone is bullish, that is bearish for the market in the shorter Read More 

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DP Alert: PMO BUY for NDX Finally - Gold Sentiment Suggests Rally

by Erin Swenlin

The only red arrow left on the DP Scoreboards was erased today as the NDX triggered a PMO BUY signal on the daily chart. The last time we saw no red on the Scoreboards, it lasted about two days. The bull winds are blowing hard, so I think this all "green" board should stick around a bit longer. STOCKS IT Trend Model: BUY as of 11/15/2016 LT Trend Model: BUY as of 4/1/2016 The 10 minute bar chart suggests to me we are about to experience some "pause". First it looks like a possible Read More 

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DP Weekly Wrap: NAAIM Exposure Index Highest Reading Ever

by Carl Swenlin

This week the National Association of Active Investment Managers (NAAIM) Exposure Index reached the highest reading since its inception in 2006. Rather than stay 100% invested, NAAIM members will raise or lower their fund's market exposure based upon their assumptions regarding future market action. The potential range of the Index is +200% to -200%, but historically it has ranged from slightly below zero to around +100%. This week it hit +109.4%, and as a sentiment indicator I'm wondering how we should interpret it. Looking at previous performance, there Read More 

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DP Alert: Short-Term Head & Shoulders Still Viable on Dollar (UUP)

by Erin Swenlin

No new changes to the DecisionPoint Scoreboards. The NDX is holding onto its PMO SELL signal and it still has some margin to cover before the new PMO BUY signal can generate. Of particular interest today, and of course coming on the heels of a very bullish blog on the Dollar, today's drop could be starting the beginning of a right shoulder. 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 Read More 

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Utilities Sector Dimming - UUP Garners a New IT Trend Model BUY

by Erin Swenlin

We've seen some very interesting sector rotation this past year as the market continues to climb higher. Money doesn't seem to really be leaving the market, just rotating from one sector to the next. The Utilities sector was a good run through October and into November. However, it appears money has been rotating out (along with the technology sector which has been lagging) and moving toward Financials and Industrials. Just look at the Dow and SPX which both hit all-time highs today. The Dollar is showing improvement despite some bearish features on its chart. Yesterday saw a new PMO BUY Read More 

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DP Alert: Short-Term and Intermediate-Term Indicators Bullish - NDX STTM BUY Signal

by Erin Swenlin

On Friday, the NDX logged a new ST Trend Model BUY signal. Currently DP indicators are looking bullish and seeing improvement in the technology sector is encouraging for the market in general. I did point out on today's MarketWatchers LIVE show that one could make a case for a head and shoulders formation developing. A few problems with this conclusion..NDX is still in a strong bull market so the effectiveness of a bearish pattern is tilted toward NOT forming. Additionally, it isn't a head and shoulders until it executes and that would require a decline from here and a breakdown below Read More 

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DP Weekly Wrap: BitBubble

by Carl Swenlin

In the DP Weekly Wrap I normally lead with a chart of the market, but this week Bitcoin was so prominent in the news, I thought a chart of the Bitcoin Index would be more appropriate. What we have here is a classic parabolic advance (the red arc), with price moving from about $400 in 2016 to almost $16,000 yesterday. Also impressive is the recent advance of +154% in just under four weeks, but we can see that the advance has become about as vertical as it could possibly be. The message I want to convey is that this kind of chart pattern is extremely dangerous. Yes, price could go higher Read More 

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Bull/Bear Market Rules and Head & Shoulders Patterns (UUP and TLT)

by Erin Swenlin

I'm sure many have heard the phrases, "Bull Market Rules Apply" or "Bear Market Rules Apply". I thought today I'd give you two examples of how these "rules" interact with chart patterns. In particular, a previous reverse head and shoulders on UUP and the break up of a head and shoulders pattern on TLT. Before I get to that, how do you determine which rules should be applied? Using DecisionPoint analysis, it's pretty easy. The DecisionPoint Long-Term Trend Model helps us to determine which rules to follow. The LT Trend Model triggers SELL signals when the 50-EMA crosses below Read More 

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DP Alert: Indicators Topping - Gold Triggers PMO SELL and STTM SELL Signals - NDX STTM Neutral

by Erin Swenlin

First and foremost I am pointing out the new ST Trend Model Neutral signal that arrived today on the NDX. Despite attempting to rally from the recent decline, price was unable to move high enough to prevent this Neutral signal from appearing. Today I discussed with Tom thoughts on whether we are looking at a small bounce off a decline or a last gasp before more decline. I'm of the thought that the decline and weakness are still a problem and with this signal, a big problem. Looking at the chart, I think there is more downside to digest with a move likely to support at 6200. At that point Read More 

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DP Weekly Wrap: Blowoff

by Carl Swenlin

There were a couple of news stories on which to blame Friday's pullback, but my opinion is that the vertical up move of the prior three days was a short-term blowoff that needed to be corrected. The blowoff is most readily identified by the rapidly expanding volume midweek, capped by a buying climax on Thursday. I usually include the SPX volume panel with the SPY chart because it tells the story of the S&P 500, whereas SPY volume is all about the ETF. The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition Read More