I've always thought the moniker "death cross" was terribly dramatic (and I still do). However, this time around, it does seem ominous. The SPX lost its Long-Term Trend Model BUY signal, a signal that had been in place since early 2016. These signals don't come very often, so we should always take heed when they do arrive. Not only did we see those LTTM BUY signals disappear, we lost 3 out of 4 Short-Term PMO BUY signals. The Scoreboards are looking ugly.
Below are the daily charts of all four Scoreboard indexes. Today's turnaround was welcomed, but I'm afraid there won't be too much follow-through based on the deterioration of the DP Scoreboards. As I've told my viewers on MarketWatchers and on Friday's during the new DecisionPoint show, I'm waiting for some strength and rally before I likely sell my long-term positions. The NDX is currently the only index holding the November low when you look at intraday trading.
The bearish confirmations on the Dow chart are concerning. We aren't seeing this on the other three. Interestingly, it has not triggered a LT Trend Model SELL signal. Given the bearish confirmations, I am looking for more downside.
Take a look at the last time the NDX had a LT Trend Model SELL signal on 50/200-EMA negative crossovers. I would like you to note the margin that was required to get this recent LTTM SELL signal v. the margins prior to the last LTTM SELL signals. This speaks to the veracity of this decline, whether you believe it a correction nearing its end or more bear market action. Be careful out there.
Conclusion: Being a bear is really no fun. Either you're right and the market continues to tumble (which is always joyful, right?) or you're wrong and the train leaves the station without you. For me, I've learned it's okay to take some profits and simply move to cash. Leaving money on the table because you missed part of a rally is a head smack moment, but I'd rather miss out on the beginning of a recovery than ride the roller coaster down further. A head smack beats a losing portfolio. Do check with your broker or tax preparer regarding taxation when/if you move to cash.
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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