DecisionPoint

DP Alert: Short-Term Weakness Continues - Bonds Continue to Suffer But Holding Support

 | 

The DecisionPoint Scoreboards remain completely green, meaning all four indexes are on BUY signals in all three timeframes as far as price trend and condition. While it seems a condition we would want to celebrate, it suggests to me that the market is overextended. The consolidation and small decline on these indexes over the past week could cause a change or two to the Scoreboards, but if we see the market restart a rally after this week of little movement, signal changes would likely be avoided.



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: BUY as of 5/11/2018

LT Trend Model: BUY as of 4/1/2016

SPY Daily Chart: The rising price trend is intact. We saw some acceleration outside of the shorter-term rising trend channel which was quickly relieved. While we could be in for a test of the bottom of either of these channels, I suspect a pullback to the January top is about the worst we will see. The PMO top isn't good to see, but the OBV is still holding onto a rising bottoms trendline.

Climactic Market Indicators: Breadth isn't telling us much right now although New Highs are somewhat overbought. Most important on this chart to me is the VIX. I'm watching closely for a penetration of the lower Bollinger Band which would likely signal the end to this small decline. 

Short-Term Market Indicators: These indicators have now reached neutral territory. They decelerated somewhat today but the decline remains quite steep and suggests more downside or at a minimum some consolidation.

Intermediate-Term Market Indicators: I'm not liking this chart right now. The negative divergence between price tops and the ITVM tops is troubling. Typically when we see less support from the volume indicators, it suggests that volume is not supporting higher prices. I've felt that this timeframe was still positive, but this divergence could portend more downside over the longer term. I'll be watching not only for negative crossovers of the signal lines, but additionally whether the rising bottoms trendlines on both of these indicators is broken.

Conclusion: Indicators in all three timeframes suggest more downside for the SPX. While we are seeing all green Scoreboards, price was extended past the short-term rising trend channel which needed to be relieved. Be sure to read the DecisionPoint Weekly Wrap on Friday. Carl will give you the latest on these indicators and whether they have relieved overbought conditions enough to support a rally next week.


DOLLAR (UUP)

IT Trend Model: BUY as of 4/24/2018

LT Trend Model: BUY as of 5/25/2018

UUP Daily Chart: The Dollar attempted a rebound this week, but was brought down below the July top in trading today. The PMO is turning down below its signal line, so I would expect a test of the rising bottoms trendline at a minimum.


GOLD

IT Trend Model: Neutral as of 5/2/2018

LT Trend Model: SELL as of 6/22/2018

GOLD Daily Chart: Sentiment remains somewhat bearish and price seems to be undecided about the $1200 line of support/resistance. The PMO is still rising which suggests a rally should pick up about now. Yesterday the short-term rising bottoms trendline was broken and trading today didn't improve that situation much. I would have greater confidence in Gold if we could get that 5/20-EMA positive crossover to stick. 


CRUDE OIL (USO)

IT Trend Model: Neutral as of 8/16/2018

LT Trend Model: BUY as of 11/2/2017

USO Daily Chart: Oil is pulling back after testing overhead resistance at the May top. The chart still looks good so I'd look at this as a necessary pullback before prices rise again.


BONDS (TLT)

IT Trend Model: BUY as of 8/15/2018

LT Trend Model: BUY as of 8/20/2018

TLT Daily Chart: As I wrote about yesterday, TLT logged a new ST Trend Model Neutral signal (not a SELL since the crossover occurred above the 50-EMA) as well as a PMO SELL signal. Price did hold support at the October low, but I would not look for a rebound. OBV has fallen from the sky and this very clean PMO SELL signal tells us to stay on the sidelines.



Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin


**Don't miss any of the DecisionPoint commentaries! Go to the "Notify Me" box toward the end of this blog page to be notified as soon as they are published.**


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:


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


 

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
Subscribe to DecisionPoint to be notified whenever a new post is added to this blog!
comments powered by Disqus