The following is an excerpt from the April 16, 2013 blog for Decision Point subscribers.
The market opened up and rose higher to close up 1.4% by day's end. The market has recouped over half of yesterday's losses.
The Materials ETF (XLB) followed its equal-weight partner (RTM) and switched off its BUY signal to move to Neutral. The signal was generated when the 20-EMA crossed below the 50-EMA while the ETF was in a bull market (50-EMA above the 200-EMA).
Stocks: Based upon a 12/10/2012 Thrust/Trend Model BUY signal, our current intermediate-term market posture for the S&P 500 is bullish. The LT Trend Model, which informs our long-term outlook, is on a BUY signal as of 12/13/2012, so our long-term posture is bullish.
Today's bounce was actually pretty impressive on the daily bar chart. A bounce in response to oversold ultra-short-term indicators could have been expected, but this was a little more height than anticipated. Volume contracted but was still above average. The PMO is still falling, but decelerating.
Ultra-short-term indicators cleared oversold conditions and are now neutral. Participation Index - UP had a fairly high reading, but no yet extreme.
Short-term indicators are still going down, but they decelerated and remain overbought.
Intermediate-term indicators turned up today but are still below their EMAs in somewhat overbought territory.
Price conditions are very overbought in the longer-term (Stocks Above 200-EMA). Intermediate-term is somewhat overbought and short-term is neutral.
Conclusion: Price didn't reach support before bouncing up aggressively. Indicators range from neutral to overbought so the bias is bearish. This combination supports possible market consolidation to clear overbought conditions in the short-term and intermediate-term. If the pullback is truly finished, we will want to see some positive follow-through to today's price rise.
Dollar: As of 2/20/2013 the US Dollar Index ETF (UUP) is on a Trend Model BUY signal. The LT Trend Model, which informs our long-term outlook, is on a BUY signal as of 3/13/2013, so our long-term posture is bullish.
The dollar finally broke down and away from the rounded top neckline. Support could be found at January's price top, but that might get here too quickly. The next stopping point could be around the 2013 low at about 21.50.
Gold: As of 12/6/2012 Gold is on a Trend Model NEUTRAL signal. The LT Trend Model, which informs our long-term outlook, is on a SELL signal as of 2/15/2013, so our long-term posture is bearish.
Normally a 1.1% price increase looks makes an impression on a daily chart, but in the case of Gold, it looks like a drop in the bucket after the recent crash.
Support levels are still looking far away when you look at the monthly chart.
Technical analysis is a windsock, not a crystal ball.
