During today's MarketWatchers LIVE Show (12:00 - 1:30p MWF), the big news was the correction on Oil. Oil prices dropped more than 5 percent after the government reported an unexpected increase in crude inventories. After global producers cut inventories, the hope had been that supplies would lessen the current "glut", but it wasn't enough, which sent prices careening lower.
The markets have been backing off this week but so far it hasn't shifted any short-term timing signals on the DecisionPoint Scoreboards. Gold rallied today and finally hurdled long-term overhead resistance along a declining tops trendline that originally formed in 2012. Price has made numerous attempts at pushing through this trendline, but today, it finally succeeded.
Last week I wrote: ". . . our short- and intermediate-term indicators suggest that we will see a few more weeks of rally before another correction/consolidation." In the first two days of this short week price continued to consolidate the prior week's advance, and then the rally continued in the last two days, with price moving to new, all-time highs. Let's examine the prospects of such positive action continuing.
Admittedly I was surprised that the market had just a brilliant day given the very bearish configuration of short-term market indicators. Apparently I should have paid more attention to the short-term buy signals that were produced over the past week or two. The rally brought the S&P 600 ETF (IJR) a new IT Trend Model BUY signal with a PMO nearing a positive crossover BUY signal.
It's the last day of the month and consequently time to review the monthly charts that have just gone final. There are some interesting configurations, especially on the Dollar and Bonds which I'll cover later in the blog. I'd like to start first with the large cap indexes in the DecisionPoint Chart Gallery. The Long-Term PMO signals are generated by the monthly PMO crossovers. None of the Scoreboard indexes switched their current LT PMO BUY signals. Indeed, all PMOs are rising and are not showing signs of deterioration or deceleration which bodes well for long-term investors. You'll find the charts of INDU, OEX, NDX and SPX below.
No new changes to report today. Although we are seeing BUY signals on all of the DecisionPoint Scoreboards, the short-term picture is not that bullish according to our other market indicators.
Last week I said that I was expecting the market to do a little more work on the downside before the bull market resumed, but the market had other ideas. Prices continued to rally, and on Thursday SPY broke to new, all-time highs. Volume expanded on that day, but it was still well below the one-year average of daily volume. Below we'll look at evidence that fewer stocks are participating in the rally.
As noted in the DP Scoreboard Summary below, all four major indexes triggered PMO BUY Signals today as the PMO crossed above its signal line. This certainly confirms the ST Trend Model BUY signals that appeared after yesterday's strong rally. You'll note in their charts below that all made new intraday all-time highs. These breakouts above overhead resistance are impressive and do suggest we could see continued follow-through. Remember you can reach these charts anytime in the DP shared ChartList. The link is at the top of our blog.
The market recovery since Wednesday has been remarkable. With this steady rally, last week's bearish signals are being erased. I did mention in yesterday's blog that ST Trend Model signals will whipsaw quite a bit but they do help us to characterize the market in the very-short term. These new BUY signals could be considered bullish confirmations of the new rally higher.
I received some very important alerts this afternoon. Gold triggered a new IT Trend Model BUY signal as the 20-EMA crossed above the 50-EMA. In addition, Gold also saw a new PMO BUY signal; and, like the SPX, a new Short-Term Trend Model (STTM) BUY signal was triggered as the 5-EMA crossed above the 20-EMA. STTM signals can whipsaw quite a bit, but they can clarify the significance of short-term breakouts or breakdowns. The new signals on Gold suggest some important areas of resistance could be broken this time around.