It's been a week of consolidation and pullback for the major indexes. Given the look of our very short-term indicators, I would expect to see a move to the upside by Friday, or certainly by next week. Energy has been struggling, though it remains the only sector with a Long-Term Trend Model SELL signal (the 50-EMA is below the 200-EMA). Every other sector is enjoying BUY signals in the intermediate and long term. Oil is not helping the Energy sector, and it doesn't look like we will see higher prices in the near term.
The DecisionPoint Alert presents a mid-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil and Bonds.
Only the Canadian ETF is challenging its all-time highs. The margin between all-time highs and current prices is very large for the majority of global ETFs.
BROAD MARKET INDEXES
Similar to the chart above, note the margin between each index and its previous all-time high. Mid- and Small-Caps are especially degraded.
Each S&P 500 Index component stock is assigned to one, and only one, of eleven major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
IT Trend Model: BUY as of 6/11/2019
LT Trend Model: BUY (SPY) as of 2/26/2019
SPY Daily Chart: It appears we are experiencing a similar pullback as we have in June and, so far, July. The PMO is overbought and turning over, which isn't encouraging, but the OBV and volume pattern is favorable.
Climactic Market Indicators: This is the chart which suggests to me that we could be looking at a selling exhaustion. Normally, I would wait until the VIX starts to puncture the lower Bollinger Band, but the market is still showing strength. If the VIX oscillates above the moving average (on an inverted scale), it suggests market strength. Note that the last two pullbacks saw the VIX bounce off that average. This suggests higher prices or at least consolidation.
Short-Term Market Indicators: It's not a good thing to see these indicators in decline, but the last few pullbacks and resulting rallies occurred with a decline followed by a bounce off the zero line. If the market still has internal strength, which I believe it does (the rising trend hasn't been broken), I would look for another bounce on or around the zero line. Note that the green areas mark when these indicators oscillated above the zero line or close to it. That is indicative of positive relative strength.
Intermediate-Term Market Indicators: I don't like the negative crossover on these indicators, but they had reached mostly overbought territory and, as we like to say, "oscillators must oscillate." Still, they never got that overbought; we will want to watch these indicators closely. I think the rising trend could be broken.
Conclusion: Overall, the short-term is fairly positive, but the short- and intermediate-term indicators need to turn up soon. I'm looking for a positive price action next week, but if these indicators do not change their course as needed, I will begin putting up the caution tape.
IT Trend Model: BUY as of 7/8/2019
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: The Dollar hit overhead resistance and was turned away today. The 20-EMA remains above the 50-EMA, keeping the IT Trend Model BUY signal intact. At best, I would expect a test of the rising trend. At worst, I would look for a move to the June low. Given that the PMO is rising, I am not looking for a serious breakdown here.
IT Trend Model: BUY as of 6/3/2019
LT Trend Model: BUY as of 1/8/2019
GOLD Daily Chart: Gold is taking its sweet time consolidating the huge rally run it had in June. The good news is that, not only do we see a symmetrical triangle continuation pattern, but discounts are beginning to rise again. The bad news is that a PMO SELL signal in extremely overbought territory. I would look for more sideways movement until the PMO can move away from overbought extremes.
CRUDE OIL (USO)
IT Trend Model: Neutral as of 5/30/2019
LT Trend Model: SELL as of 6/4/2019
USO Daily Chart: Of major concern is the short-term double-top formation that is nearing execution. Interestingly, according the textbooks, the minimum downside target is calculated by subtracting the height of the pattern from the confirmation line (the middle of the "M"). The PMO is turning over as well. I remain bearish on Oil.
IT Trend Model: BUY as of 12/6/2018
LT Trend Model: BUY as of 1/2/2019
TLT Daily Chart: TLT had a great run in May. It then continued in a rising trend, but formed a bearish ascending wedge. The expectation was a drop the height of the back of the pattern, which interestingly puts it right at this month's low. The PMO is decelerating, but both the OBV and SCTR look like they could be perking up. The OBV logged a higher low this week and the SCTR is nearing the "hot zone" above 75. I'll get more bullish when I see the PMO actually turn up.
Technical Analysis is a windsock, not a crystal ball.
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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.
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