DecisionPoint

March 2018

DecisionPoint

DP Weekly/Monthly Wrap: Is That a Reverse Flag?

by Carl Swenlin

Last week the market broke down from a rising wedge pattern and dove into a scary decline. This week was choppy and wild, but price stayed within a somewhat ragged range that looks to me like a bearish reverse flag formation. Price remained above the 200EMA, and every day volume was a bit above the one-year average of volume. Has there been a successful retest, or is there more trouble ahead? The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Read More 

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New ST PMO BUY Signal for UUP - Sector Rotation On Defense

by Erin Swenlin

The Dollar has been poised for a breakout for some time. The PMO has been rising nicely, but UUP has been banging its head on overhead resistance with not much success. Looking at the big picture, relative strength has been shuffling toward defensive sectors like Consumer Staples and Utilities which should make investors uneasy. Since forming the double-bottom back in January/February, I've been bullish on the Dollar but it has struggled. In fact, the double-bottom pattern was scrubbed when the final breakout in March didn't take. Price has been pounding on overhead resistance with no Read More 

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SPX and XLF Trigger IT Trend Model Neutral on Friday and NDX Loses IT PMO BUY Signal

by Erin Swenlin

After day with the SPX up 2.72% and the NDX up 3.78%, it may seem strange to be talking about the loss of BUY signals on the DecisionPoint Scoreboards. My answer is that one day does not a bull market make. However, I'm not on board with this being a new bear market, although there is certainly evidence to support this position as found in Carl's DecisionPoint Weekly Wrap. We are in the midst of a strong correction and have nearly reached the support levels of the February lows. This retest will be very important as rising bottoms trendline support in the longer term is being tested Read More 

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DP Weekly Wrap: Sixteen-Month BUY Signal Ends

by Carl Swenlin

This week the rising wedge we had identified resolved downward, as expected. Once that happened, we needed to provide a context that could help determine an initial downside target, so we focused on the double top confirmation line, drawn across the low between the tops. That line was violated on Friday, and now the minimum downside target is the support line drawn across the February low. Actually, the double top downside projection is slightly below that line, but I chose to go for the obvious. The IT Trend Model BUY signal, one of the longest lasting that I can remember, switched to Read More 

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Climactic Indicators Suggest Dead Cat Bounce Ahead - NDX and OEX Neutral Signals

by Erin Swenlin

Two more BUY signals were lost on the DecisionPoint Scoreboards. We haven't seen the Intermediate-Term Trend Model Neutral signals on the Scoreboards in over a year. This consistent deterioration is worrisome and combined with bearish chart patterns and indicators, I'd have to say the correction is still 'on'. Our climactic indicators give us a sense of what to expect in the next few days and they pointing to a dead cat bounce.  Let's review the signal changes first. The OEX is in serious trouble right now after executing the double-top formation. As I noted Read More 

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DP Alert: Bearish Double-Top on SPY - USO Breaks Out Big

by Erin Swenlin

Below you'll find the latest DP Scoreboards. I've included a Sector Scoreboard that Carl and I will keep updated for analysis of sector rotation. The NDX is the only Scoreboard index holding its own. I don't think the NDX is out of the woods (see my article from yesterday) especially when we are seeing such weakness among the others. 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 Read More 

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NDX Catches the Bearish Contagion - SPX Loses Both Short-Term BUY Signals

by Erin Swenlin

Just like dominos, the BUY signals on the DP Scoreboards are toppling and we're finally seeing some deterioration on the NDX. With Facebook (FB) and other technology stocks taking it on the chin the past few days, the NDX is finally succumbing to the downside pressure. A look at the Scoreboards below does tell you that the NDX is still showing relative strength amongst them. I would like to take you on a walk through these four indexes from strongest to weakest based on the arrival of the latest bear signals. The recent breakdown from the Read More 

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Dow Troubles: New IT Trend Model Neutral Signal - OEX Triggers ST Bearish Signals - Indicators Bearish

by Erin Swenlin

You'll note three BUY signals were lost today on the Dow and the OEX. The Industrials have been struggling. The Dow was unable to trigger a PMO BUY signal when the other three indexes had managed them with ease. The picture is getting worse for the Dow and the chart pattern is not encouraging. The question now is whether the deterioration of the Dow and now the OEX will tear down the SPX and NDX, neither of which is showing much strength as it is. I have been watching a large symmetrical triangle on the Dow which more often than not is a continuation pattern, so Read More 

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DP Weekly Wrap: Bearish Rising Wedge Appears

by Carl Swenlin

First, the super high S&P 500 volume today was because of options expiration, so don't read anything else into it. Last Friday's encouraging breakout is looking like a short-term bull trap , as the market pulled back to the declining tops line support this week. Drawing a line across the two recent tops forms the top of a bearish rising wedge formation, bearish because rising wedges normally resolve downward. The reason for this tendency is that the rising trend line at the bottom of the wedge is usually too steep to be sustained, and a breakdown (correction) is needed, at the very Read More 

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Dow's Weakness and DP Indicators Suggest Gloomy Short Term

by Erin Swenlin

It was only yesterday that I added a new BUY signal to the Dow's Scoreboard and today, it's already gone. The Short-Term Trend Model (STTM) is based on 5/20-EMA crossovers. The Dow's 5-EMA crossed below the 20-EMA while it was above the 50-EMA--that constitutes a Neutral signal. Had the crossover occurred below the 50-EMA, it would have been an STTM SELL signal. The Scoreboards clearly show Today intraday low tested the rising bottoms trendline that forms the bottom of a symmetrical triangle. These patterns are continuation patterns so the expectation is a break Read More 

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DP Bulletin: OEX & Dow Get New Buy Signals

by Erin Swenlin

On Friday, the OEX managed to get both a new Short-Term Trend Model (STTM) BUY signal and a Short-Term Price Momentum Oscillator (PMO) BUY signal. At the time the Dow was the only Scoreboard to not have ST buy signals. Today that changed with a new STTM Buy signal for the Dow. The PMO missed a positive crossover on the Dow by less than one hundredth of a point. So expect to see it tomorrow. In the case of the OEX, I like the new rising trend channel that is forming. The Dow isn't too bad with a symmetrical triangle. Symmetrical triangles are continuation patterns Read More 

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DP Weekly Wrap: Double Bottoms Abound

by Carl Swenlin

Friday was an exceptionally positive day, as prices advanced on good news regarding North Korea and jobs. Here are charts of the S&P 500 (SPY) and the 10 major sectors. The recurring theme we see is the double bottom. One exception is Utilities (XLU), which hasn't quite made the turn off the second bottom, and Technology (XLK), which actually formed a more aggressive "V" bottom. In addition, XLK has advanced to new, all-time highs this week. All the PMOs have bottomed, and most are above their signal lines. In general it looks as if we have witnessed a successful retest of the February Read More 

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SPX Scoreboard Adds Buy Signals - Is Correction Over?

by Erin Swenlin

Let's get that title question answered right nowNo, I don't think the correction is over. Yes, today we got both a ST Price Momentum Oscillator (PMO) BUY signal and an ST Trend Model BUY signal. The chart still has problems. We had Tushar Chande on MarketWatchers LIVE today (go watch the recording!) and he made a case for a retest of the February low or the set-up of a double-bottom. He noted that many of his fellow bloggers, like Tom and I, have pointed out evidence to bolster that position. It was a bit easier to take that position when the SPX, Dow and OEX Scoreboards were only Read More 

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DP Alert: Mixed Messages Warrant Caution

by Erin Swenlin

It's days like today that I find it frustrating to write (probably why this is posted late). It's not really writers' block, but the many mixed messages or lack of messages I'm getting on the charts right now. I could probably make a bullish and bearish case quite easily on most of these charts, but rather than that, I'll give you what the dispassionate indicators are saying. The DP Scoreboards are mixed as well, but clearly leaning neutral to bearish for all but the NDX. The purpose of the DecisionPoint Alert Daily Update Read More 

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Rydex Ratio Turns Down - Bullish Sentiment = Bearish Implications

by Erin Swenlin

I decided to take a look at the Rydex Ratio today to see what the daily assets might be telling us as far as "actual money" sentiment. Here's a refresher for those new to the Rydex Ratio and sentiment readings in general. First, sentiment tells us if market participants are feeling bullish or bearish. The sentiment polls measure those "feelings" by simply asking those polled whether they are bullish or bearish on the market. The Rydex Assets chart shows the reality of what investors are actually doing with their money. Many times it will not sync with the polls. Read More 

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DP Weekly Wrap: Breakout Fakeout and Broken Wedge

by Carl Swenlin

At last Friday's close we were faced with SPY pushing at the top of a bullish flag formation (not annotated). On Monday there was a strong breakout that proved to be a fakeout. On Tuesday price topped and fell back to the top of the flag, and at this point a new formation, a bearish rising wedge, emerged. It is bearish because the rising trend lines on rising wedges are usually too steep to maintain, and the wedge usually resolves downward. The breakdown took place on Wednesday, and the decline continued into Thursday. Friday's intraday reversal hints at a continued bounce next week Read More 

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DP Bulletin: Scoreboards Lose BUY Signals

by Erin Swenlin

After deep declines today, the DP Scoreboards lost most of their short-term BUY signals. Rising wedges had appeared on the daily charts and today's decline confirmed it. The expectation is a breakdown from the wedge. The NDX is showing the most relative strength as it continues to cling to its short-term BUY signals. It's beginning to look like we will see a double-bottom rather than a "V" bottom. Be sure to read tomorrow's Weekly Wrap by Carl Swenlin, he'll go more in depth on the short- to intermediate-term market conditions. The strongest Read More