DecisionPoint

DP Weekly Wrap: SPY New All-Time Highs; Crude New BUY Signal; Has Gold Bottomed?

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On Friday SPY made new, all-time intraday and closing highs, exceeding the records set on Tuesday. The daily PMO has been very flat and holding at around +1 since the end of July. This summarizes the steady price rise during that period and does not present a problem. There is, however, a problem on the OBV panel in the form of a negative divergence. It is not a giant issue, but we will consider it later in this article.



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.


SECTORS

Each S&P 500 Index component stock is assigned to one, and only one, of 10 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.


STOCKS

IT Trend Model: BUY as of 5/11/2018

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

SPY Daily Chart: The only overhead resistance at this point is the top of the rising wedge. The only horizontal resistance will be the current new highs. I have pointed out the OBV negative divergence corresponding with this month's two tops. I think it is reasonable to expect a little pullback in response to that. One might ask if the OBV's failure to exceed the OBV tops in February and March is also a negative divergence. Technically it is, but I personally do not give weight to such long distance divergences.

SPY Weekly Chart: I don't see any problems in this time frame. Price is moving up in the rising trend channel, and the weekly PMO shows a solid bottom.

Short-Term Market Indicators: As price is making higher highs, the STO-B and STO-V have topped. Short-term weakness is likely.

Intermediate-Term Market Indicators: The indicators in this time frame are still showing negative divergences; although, Friday's ITBM and ITVM readings exceed their tops earlier this month. This confirms the short-term price trend.

 

Conclusion: The STO-B, STO-V, and OBV are telling us to look for a short-term correction. The ITBM and ITVM are modestly overbought, so a correction could extend beyond the short-term, but I think that is a low probability.


DOLLAR (UUP)

IT Trend Model: BUY as of 4/24/2018

LT Trend Model: BUY as of 5/25/2018

UUP Daily Chart: Last week I thought that UUP had an island reversal setting up. On Monday price eased down into the gap, and then it jumped across the remaining gap on Tuesday. The daily PMO has topped and crossed down through the signal line. It looks pretty negative at this point.

UUP Weekly Chart: It is beginning to look as if the rally that began early in the year is finished. The weekly PMO hasn't topped yet, but the price action of the last three weeks looks terminal.


GOLD

IT Trend Model: NEUTRAL as of 5/2/2018

LT Trend Model: SELL as of 6/22/2018

GOLD Daily Chart: It is possible that gold made an important bottom last week. I get this impression based upon the rally early this week, followed by a one-day 'retest' on Thursday, and finally the strong breakout on Friday. All this was accompanied buy a daily PMO bottom and upside signal line crossover. My problem with this move is that it is too fast and choppy, not a smooth transition. There is no obvious support on the daily chart, so we need to look longer-term.

GOLD Weekly Chart: There is no obvious support below last week's low in this time frame. If gold has made a bottom, the weekly PMO has not detected it yet.

GOLD Monthly Chart: I'm a week early with the monthly chart, but I'm still looking for that support. And there it is on the declining tops line drawn from the 2011 top! There is no assurance that it will hold, but gold has made a good start at a trend reversal on the daily chart.


CRUDE OIL (USO)

IT Trend Model: BUY as of 8/24/2018

LT Trend Model: BUY as of 11/2/2017

USO Daily Chart: On Thursday Erin wrote a thorough article on crude oil, and I realized that I had failed to see the bullish falling wedge formation due to my fixation on an unruly rising trend line. The wedge has resolved upward, as expected, and on Friday the IT Trend model switched back to a BUY signal. There is a nice PMO bottom that suggests that there will be more upside follow through.

USO Weekly Chart: Confirming a steady price rise, the weekly PMO has been well above the zero line and flat for most of this year. The path is clear until resistance at about 16.00.


BONDS (TLT)

IT Trend Model: BUY as of 8/15/2018

LT Trend Model: BUY as of 8/20/2018

TLT Daily Chart: The July decline triggered LT and IT Trend model SELL signals, but they were reversed this month. The fact is that price has been moving sideways for three months, keeping the EMAs close together. Until price moves up out of that range, another signal reversal is possible.

TLT Weekly Chart: This week TLT broke above the declining tops line drawn from the July top. The move is not yet decisive, but it probably will be soon. There is still a potential head and shoulders pattern, but that potential is fading fast. The weekly PMO is positive, being above the signal line and rising.



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Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Carl


NOTE: The signal status reported herein is based upon mechanical trading model signals, specifically, the DecisionPoint Trend Model. They 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 (but not necessarily) 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.


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


 

Carl Swenlin
About the author: is a veteran technical analyst who has been actively engaged in market analysis since 1981. He was the founder of DecisionPoint, one of the web's premier market timing and technical signal services, which was acquired by StockCharts.com in 2013. Carl has contributed his market commentary and expert analysis to StockCharts since then. He is a Member of the CMT Association. Learn More
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