A mere two weeks ago, the Sector Signal Scoreboard (2nd slide below) was all "green" as each sector was on IT Trend Model BUY signals. The DP Scoreboards below were completely green at the beginning of September. Today both are dotted with Neutral signals (and some SELL signals in the case of the DP Scoreboards below). Most importantly, the only three sectors holding their BUY signals? The defensive sectors: Healthcare, Consumer Staples and Utilities. The market has topped and leadership has moved to defensive areas of the market. The correction is not likely over.
The DecisionPoint Alert presents an mid-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil, and Bonds.
SECTORS
Each S&P 500 Index component stock is assigned to one, and only one, of 10 major sectors. This is a snapshot of the Intermediate-Term and Long-Term Trend Model signal status for those sectors.
STOCKS
IT Trend Model: Neutral as of 10/15/2018
LT Trend Model: BUY as of 4/1/2016
SPY Daily Chart: Price bounced off the IT rising bottoms trendline, as well as support along the June low. The PMO is decelerating but hasn't bottomed. Volume continues to be unimpressive.
Short-Term Market Indicators: They are rising strongly and are nearing neutral territory already. I see this as bullish for the short term.
Intermediate-Term Market Indicators: I like that these indicators are bottoming in oversold territory, I just wish it were more than a 'tick' upward. A solid bottom on these indicators generally leads rallies.
Conclusion: This looks like a reactionary bounce that will likely succumb to downside pressure. Sector leadership needs to see an improvement in Financials and Cyclicals which are the next in line on the road to recovery.
DOLLAR (UUP)
IT Trend Model: BUY as of 4/24/2018
LT Trend Model: BUY as of 5/25/2018
UUP Daily Chart: I've been bearish on the Dollar but the picture is beginning to brighten as we saw a gap up and a .5% price rise today, along with a PMO bottom. The SCTR is still healthy. I'll look toward overhead resistance at the August top.
GOLD
IT Trend Model: Neutral as of 5/2/2018
LT Trend Model: SELL as of 6/22/2018
GOLD Daily Chart: On a short-term basis, Gold and the Dollar are not correlated. This gives gold the opportunity to rise even if the Dollar rises. The PMO is very healthy. I do notice that discounts are shrinking, implying there is more demand. I'm looking for a breakout above 1240.
CRUDE OIL (USO)
IT Trend Model: BUY as of 8/24/2018
LT Trend Model: BUY as of 11/2/2017
USO Daily Chart: Oil was hit hard today, dropping below short-term rising bottoms trendline. USO could hold support here at the May top, but with the negative PMO configuration, I suspect price will test the IT rising bottoms trendline before making its way higher.
BONDS (TLT)
IT Trend Model: Neutral as of 9/13/2018
LT Trend Model: SELL as of 9/18/2018
TLT Daily Chart: I'm still underwhelmed by Bonds. While they did rally somewhat last week, they immediately got hung up at resistance at the Feb/May lows. The PMO is trying to top and the SCTR is in decline.
Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
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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.
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
