Stocks took a tumble Friday morning before a dramatic turnaround on reports that “euro zone ministers agreed in principle to extend heavily indebted Greece’s financial rescue by four months.” (Reuters)
Investors hate uncertainty and now that the long negotiation process between Greece and its creditors has reached some sort of near-term resolution, optimistic buyers have once again pushed stocks into record territory. The S&P 500 closed at 2110 and the Dow closed at 18140.
Using a Renko trend following model, let’s identify whether the trend is positive or negative on a short-term, intermediate-term, and long-term basis for stocks, bonds, gold, the US dollar, and oil.
Stocks: The trend for U.S. stocks using the S&P 500 is positive on all timeframes. The short-term trend turned positive (issued a buy signal) earlier this month on 2/5/2015. The intermediate-term trend has remained positive (on a buy signal) since 10/24/2011. The long-term trend has been positive (on a buy signal) since 2/1/2012.
Here is a Renko daily chart (showing support and resistance levels) of the S&P 500 over the last six months with white and red boxes indicating the direction of the short-term trend. Renko “buy” and “sell” signals only appear when price changes and volatility exceed a certain threshold and, thus, attempt to eliminate noise by focusing only on changes in trend.
Bonds: Using the iShares Barclays 20+ Year Treasury Bond Fund (TLT), the short-term trend for bonds has been negative since 2/5/2015. The intermediate-term trend also turned negative this month on 2/9/2015. The long-term trend has remained positive since 8/1/2014.
Here is a Renko daily chart showing the short-term negative trend in place since 2/5/2015.
Gold: The short-term trend for gold turned negative on 2/6/2015. The intermediate-term trend turned positive on 1/12/2015 and the long-term trend has been negative (on a sell signal) since 12/1/2011.
Here is the short-term trend chart.
Dollar: Using the US Dollar Index ETF (UUP), the short-term trend turned negative on 2/3/2015. The intermediate- and long-term trend both turned positive on 9/2/2014. (Note: To read Chris Puplava’s recent analysis on the US dollar and the potential for a further correction, click here.)
Here is the short-term chart showing the recent sell signal issued earlier this month:
Oil: Using the United States Oil Fund (USO), the short-term trend turned positive on 2/3/2015. Both the intermediate- and long-term trends are still negative.
Here is the short-term chart going back one year, which shows the continuous sell signal since 7/11/2014 that only recently reversed direction this month.
