DecisionPoint

New! Intermediate-Term Trend Model BUY Signal on Dow

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The DecisionPoint Scoreboards had a big change today, probably the first of a few more. The new Intermediate-Term Trend Model BUY signal for the Dow Industrials isn't necessarily a buying opportunity. With the recent rally, price has been trading well above the 50-EMA so consequently, the 20-EMA was able to speed up for a positive crossover the 50-EMA. However, there are some serious problems with the charts that suggest price is ready to decline not breakout.


First is the daily chart for the Dow Industrials. The rally has been steep and strong, but now that price has reached a strong area of overhead resistance it is balking. On the bright side, the Price Momentum Oscillator (PMO) is not showing any signs of deterioration yet, but other indicators are.

While the PMO may not be that overbought on the daily chart, the overall condition of the Dow is very overbought in the short and intermediate term. 

Notice on the short-term indicator charts that the STVO and Swenlin Trading Oscillators (STO-B, STO-V) have been sitting in overbought territory, but they are now trending downward as price topped today.

The intermediate-term indicators, the VTO, ITBM and ITVM are a bigger problem. They have been in extremely overbought territory (especially for a bear market) but have now turned down suggesting a market top and at least pullback.

Conclusion: I would be more excited about this new ITTM BUY signal if the indicators were not so overbought and topping. This suggests a price top rather than a breakout above strong overhead resistance.

Erin Swenlin
About the author: is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More
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