DecisionPoint

DP Scoreboards Turning Green, But Beware Short-Term Weakness

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We've had a few signal changes arrive the past few trading days that you should be aware of. While these new green arrows look promising, the DecisionPoint Swenlin Trading Oscillators (STOs) suggest we may experience some short-term weakness before pushing past overhead resistance at June price tops. The NDX and Dow pulled back quite a bit and therefore are the slowest to recapture short-term PMO BUY signals. However, expect a DP Bulletin soon announcing those signals.



The two strongest charts are the SPX and OEX as both have managed ST BUY signals on trend and momentum. A Short-Term Trend Model (STTM) BUY signal triggers when the 5-EMA crosses above the 20-EMA. The problem I see for both of these indices is overhead resistance at the June price tops and especially the March tops. I suspect passing these areas of resistance will prove difficult. I'll explain why later.

As noted above, the NDX and Dow haven't triggered PMO BUY signals, but as you can see, the margin is quite thin between the PMOs and their signal lines, so we should expect those positive crossovers before week's end (barring a serious correction or pullback). As with the SPX and OEX, the OBV is rising nicely. The NDX is poised to test resistance at all-time highs. Based on market indicators for both the NDX and SPX (shown below the Dow chart), I would expect to see some difficulty with resistance levels I've pointed out. 

The Swenlin Trading Oscillators for all four indexes (you'll find these charts in the DP Market Indicators ChartPack) show very overbought conditions. The good news is that all four of these indexes are in "bull market" configurations which suggests that we may not need to see a serious pullback or correction to relieve these conditions. Many times overbought conditions can clear with price consolidation as we saw after the May STOs topped. I am expecting to see some struggle for these indexes to move much past current overhead resistance at June tops.


Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin


Helpful DecisionPoint Links:

Erin's PMO Scan

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking


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Erin Swenlin
About the author: helped create and manage the DecisionPoint.com website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at StockCharts.com, and is also a Member of the CMT Association. Learn More
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