Yesterday I had the pleasure of doing a podcast with FinancialSense.com's James Puplava (I'll send the link out to the DecisionPoint free email list when I have it - sign up on the DecisionPoint.com homepage). We talked at length about the "top ten" large-cap stocks that run the show in the SPX. James did a study taking out those big-cap stocks and found the chart was very different as to what is actually going on in the SPX. I decided to take a look at RSP, the equal-weight S&P 500 ETF. Wow! According to RSP, the market is in a declining trend with a bearish bias. If investors get spooked and start letting go of the large-cap positions quickly, the market could fall swiftly, as there is no foundation of strong stocks to pick up the slack.
More to this point, notice the lack of participation on Net A-D and Net A-D Volume, which were negative on the last few rally days. The VIX is now below its moving average on the inverted scale, which suggests internal weakness ahead.
And how about those negative divergences in %Stocks indicators, which show a decline in participation despite the rallies higher? The Swenlin Trading Oscillators (STOs) have continued lower.
We have are just beginning a weekly free DecisionPoint Trading Room on Mondays at noon ET! Carl has agreed to join us for the first one on August 24th at noon ET! He's never done anything like this before, so it will be pretty special to get his intraday take on the markets and what to expect in the week ahead.
I just finished up my DP "Diamond Mine" trading room this morning for Diamonds subscribers only. This intimate trading room was fantastic and is certainly worth the price of admission by subscribing to our Diamonds Reports. We examined the Diamonds presented this week and symbols to watch in the coming week.
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Today's ChartWatchers "Diamond of the Week":
This "Diamond in the Rough" selection from the August 19th DecisionPoint Diamonds Report. I have included the chart from Wednesday with my original comments, after which I follow up with the current chart.
Zoom Video Comm Inc (ZM) - Earnings: 8/31/2020 (AMC)
Zoom Video Communications, Inc. engages in the provision of video-first communications platform. It connects people through frictionless video, voice, chat and content sharing, and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations. It focuses on customer and employee happiness, a video-first cloud architecture, recognized market leadership, viral demand, an efficient go-to-market strategy and robust customer support.
Yesterday I presented Citrix (CTXS), the purveyor of "GoToMeeting", and today I have one of its competitors, Zoom Communications. This chart looks very similar to the one I opened with of $DJUSSW. We have a possible flag formation that is ready to execute. The PMO has turned up and it looks like ZM may break out of this trading range. I would set my stop around the 20-EMA as I don't think I'd want to ride it down to support at $225. There is a slight negative divergence between OBV tops and price tops right now, which is another reason I really would want to wait on it if it starts to drop below the 20-EMA. They do report earnings soon, so keep that in mind.
FRIDAY's Chart is below:
We don't see much more on the weekly chart, as Zoom is very young and doesn't have a lot of data. I do think the flag is very clear in the thumbnail.
Conclusion: RSP and the SPX indicators are weaving a tale of a likely decline. RSP is still in a long-term declining trend and the negative divergences persist on the indicators.
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Happy Charting! - Erin
Technical Analysis is a windsock, not a crystal ball.
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