We already saw some shake up on the DP Scoreboards on Friday with the new intermediate-term PMO SELL signals on all but the NDX. With the recent rally, we are now seeing the Scoreboards flip back to bullish in the short term. The S&P 100 is a hair away from producing its PMO BUY signal. I've included the charts below the Scoreboards. You'll note the breakouts on all of the charts. Price is about ready to test all-time highs on all of these indexes.
The purpose of the DecisionPoint Alert Daily Update is to quickly review the day's action, internal condition, and Trend Model status of the broad market (S&P 500), the nine SPDR Sectors, the U.S. Dollar, Gold, Crude Oil, and Bonds. To ensure that using this daily reference will be quick and painless, we are as brief as possible, and sometimes we let a chart speak for itself.
SIGNALS: Here we include charts of any important signal changes triggered today by our Intermediate-Term Trend Model.
I received a technical alert today that the S&P 600 and its associated ETF (IJR) triggered new ITTM BUY signals. The signal was generated when the 20-EMA crossed above the 50-EMA. Note that price is flirting with all-time highs. All of the indicators are bullish, though I'd like to see the OBV put in a higher top than the one in late March; that would be a bullish confirmation.
NOTE: Mechanical trading model signals 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 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.
STOCKS: Based upon a 11/15/2016 Intermediate-Term Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 (SPY) is bullish. The Long-Term Trend Model, which informs our long-term outlook, is on a BUY signal as of 4/1/2016 so our long-term posture is bullish.
Another gap up today followed by consolidation. The follow-through on yesterday's rally was impressive.
While price broke out above the symmetrical triangle continuation pattern yesterday, today price traded above that new support and is beginning to reach new all-time highs. Note the new PMO BUY signal on strong volume. My main concern right now is a possible buying exhaustion versus an initiation to higher prices.
Ultra-Short-Term Indicators: The cluster of positive breadth readings along with a VIX that is about to penetrate the upper Bollinger Band, I'm leaning toward a buying exhaustion. The VIX is considered a measure of market "fear". Seeing investors move into such complacency with these low readings, generally suggests a pending decline.
Short-Term Indicators: These indicators are looking very good as they rise strongly. They are getting overbought right now which could be a problem, but there is room to move higher.
Intermediate-Term Indicators: I like that we got positive crossovers on both the ITBM and ITVM. This is considered very bullish IF they can make this a solid bottom. Right now the bottoms came in right about the time the market began the rally last week. At this point I'm waiting to see if this will turn out to be a false bottom the likes of which we saw at the end of March.
Conclusion: Indicators are mixed right now. While they are leaning bullish, I'm concerned about the VIX, overbought short-term indicators and a possible false bottom on IT indicators. I remain cautiously bullish in the short term.
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DOLLAR: As of 3/21/2017 the US Dollar Index ETF (UUP) is on an Intermediate-Term Trend Model Neutral signal. The Long-Term Trend Model, which informs our long-term outlook, is on a BUY signal as of 10/17/2016, so our long-term posture is bullish.
There are two possible formations lined up here. I am leaning toward this being the bearish triangle. We got a significant, though not decisive breakdown that closed the gap from November which I find bearish. We have a PMO SELL signal in effect and it is making no move to turn around or even decelerate right now. OBV is showing a bearish confirmation.
GOLD: As of 2/3/2016 Gold is on an Intermediate-Term Trend Model BUY signal. The Long-Term Trend Model, which informs our long-term outlook, is on a BUY signal as of 4/11/2017, so our long-term posture is bearish.
Greg Schnell and I talked about the important areas of overhead resistance that Gold was facing yesterday. At this point, it failed the test. Price turned lower when it hit the 1300 level, nearly reached the top of the rising trend channel and butted up against very long-term overhead resistance of the green declining tops trendline. I don't think it's over for Gold, but I do believe it may need to test the bottom of the rising trend channel before it takes on resistance again. If the Dollar continues to fall, as I think it will, then Gold should turn up for that test. The PMO was a concern for me until I realized it isn't yet at the top of its 'normal' range around 2.0. I don't like the pending PMO SELL signal, but I do note a short-term positive divergence on the OBV.
CRUDE OIL (USO): As of 3/8/2017 United States Oil Fund (USO) is on an Intermediate-Term Trend Model Neutral signal. The Long-Term Trend Model, which informs our long-term outlook, is on a SELL signal as of 3/9/2017, so our long-term posture is bearish.
USO is headed back to test support around $10. With the recent PMO SELL signal, I do suspect it to move at least down to support. Even if price were to bottom here, it would set up a negative divergence with the OBV bottoms. I'd look for Oil to move back to $47/barrel and USO to travel past support to test lows from last year.
BONDS (TLT): As of 3/31/2017 The 20+ Year T-Bonds ETF (TLT) is on an Intermediate-Term Trend Model BUY signal. The Long-Term Trend Model, which informs our long-term outlook, is on a SELL signal as of 11/17/2016, so our long-term posture is bearish.
Interesting how price reached gap resistance and was turned away. The PMO is somewhat overbought and declining. I suspect Bonds will need to test support around $118 before being able to recover. That should take the PMO back to neutral or lower, hopefully in preparation for a rally.
Technical Analysis is a windsock, not a crystal ball.