The following is an excerpt from the April 3, 2012 blog for Decision Point subscribers.
The Fed has been named the culprit today for stocks spending most of the day falling, but I note at the end of the day there was a small breakout from that down trend. We'll have to see if it carries over tomorrow.
* * * * * * * * * * * * * * * * * * * * *
STOCKS: Based upon a 12/05/2011 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a BUY signal as of 1/5/2012, so our long-term posture is bullish.
Today we have annotated in both the daily bar chart and its thumbnail a short-term rising trend channel. Trading got to the middle of it today. A notable feature of this trend channel is that it has taken the previous angle of ascent along the longer-term rising bottoms lines and flattened it to a more sustainable rise.
Looking at the indicators they all reflect a market consolidation, so the rising trend channel and its flatter angle of ascent are a rising consolidation. Note the corkscrewing or sideways movement of the indicators below.
Note the sideways movement of the McClellan Oscillator and the scattered readings in the thumbnail of the Summation Index. All are characteristic of a market consolidation.
Conclusion: The market is now consolidating in a slowly rising positive trend channel. Indicators are moving sideways so there is no telling when a breakdown or breakout of this channel might occur. For now we ride the trend up.
* * * * * * * * * * * * * * * * * * * * *
DOLLAR: As of 3/21/2012 the US Dollar Index ETF (UUP) is on a Trend Model NEUTRAL signal.
The dollar broke out today but still closed below the 20/50/200-EMAs. The PMO, however, turned up which is not surprising given it will react more quickly to large changes in price than the Trend Model which relies on EMA crossovers.
* * * * * * * * * * * * * * * * * * * * *
GOLD: As of 3/15/2012 Gold is on a Trend Model NEUTRAL signal.
Gold tumbled today, likely affected by the dollar's rally. Price broke down just below support along the rising bottoms line. The PMO topped below its 10-EMA which is not good.
A new rally in gold needs to start soon or we will see significant rising bottoms support on the weekly chart fail. The weekly PMO is falling fast so momentum is certainly not in its favor.
* * * * * * * * * * * * * * * * * * * * *
CRUDE OIL (USO): As of 10/27/2011 United States Oil Fund (USO) is on a Trend Model BUY signal.
USO fell almost a full percentage point today. The PMO has been moving steadily lower and price remains below the 20-EMA and resistance along the intermediate-term rising bottoms line. I note that USO has been trading in an island since the breakdown so an upside reversal is not out of the question.
* * * * * * * * * * * * * * * * * * * * *
BONDS (TLT): As of 2/9/2012 The 20+ Year T-Bonds ETF (TLT) is on a Trend Model NEUTRAL signal.
Bonds had a bad day, probably because minutes released from the Fed imply they are backing away from Quantitative Easing version 3 (QE3). A PMO SELL signal was generated as the PMO had a negative crossover its 10-EMA. Horizontal support is nearby at the low from last month and October.
* * * * * * * * * * * * * * * * * * * * *
Technical analysis is a windsock, not a crystal ball.
* * * * * * * * * * * * * * * * * * * * *
ABOUT THIS BLOG by Carl Swenlin
In 2005 I retired from writing my weekly newsletter. At the same time I introduced two mechanical timing models (the Trend Model and the Thrust Trend Model) to automatically declare our official position on the various market indexes we track.
In 2010 I decided that we needed to provide our subscribers with additional input regarding what we were seeing in the indicators, and where we were directing our focus, so the Decision Point daily blog was born. In general we follow these rules.
1. We try to keep our comments brief and to the point. Our objective in this area is to cover what we see as important on that day, not to fill space with a bunch of stuff for you to plow through. If there is nothing interesting happening with, say, bonds or gold, we won't write anything about them. On Friday we try to broaden our focus to the longer-term just to be sure we don't overlook anything in the bigger picture.
2. We do not attempt to predict the market. Our mechanical signals are the bottom line regarding our market posture. Our daily comments are meant to offer a more finely tuned perspective on the condition of the technical indicators, and what we think they are trying to tell us. We do drag out the old crystal ball from time to time, but only for the purpose of speculating about possible outcomes. We do not attempt to make "great calls."
Carl Swenlin
