The following is an excerpt from the July 30, 2013 blog for Decision Point subscribers.
The market continued to amble along sideways, not making any significant move, likely in anticipation of the Fed meeting minutes and economic reports, particularly Q2 GDP, that will be released tomorrow.
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.
I've returned from an amazing two week European vacation on board a cruise ship where I was "forced" to unplug from the stock market (unless I wanted to spend __spamspan_img_placeholder__.75/min for WiFi, ridiculous!). I spent yesterday and today reviewing what happened while I was gone, which except for setting of a new all-time high, was actually very little.
Price hit the all-time high and has since struggled against that area of resistance. During the period of consolidation, the PMO topped and is drifting slowly lower.
Indicators have taken advantage of this sideways price movement to unwind and move out of overbought territory.
Price conditions are still overbought, especially in the intermediate term, where we see that nearly 90 percent of stocks are above their 200-EMA.
Yesterday, the ITBM and ITVM both had negative crossovers their EMAs which is bearish.
Conclusion: Price has stalled since hitting all-time highs. With major economic reports being released tomorrow, in addition to news out of the FOMC, price may finally be jolted out of this sideways continuation pattern. Short-term indicators are sitting in neutral and are ready for a move in either direction, but intermediate-term indicators look bearish. I would look for a price decline, unless news tomorrow is extremely favorable.
Dollar: As of 7/23/2013 the US Dollar Index ETF (UUP) is on a Trend Model neutral 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.
UUP is drifting lower toward support at the rising bottoms line. (For once timing of my trip was on my side as I was able to purchase Euros when the dollar hit a short-term high and sell them back yesterday while the dollar was lower.)
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.
Gold came off its low in June and had a positive run until it hit resistance along the resistance line drawn along the April/May lows. The PMO is still rising indicating there is positive momentum, but price has gotten stuck below the 50-EMA.
Crude Oil (USO): As of 6/7/2013 United States Oil Fund (USO) is on a Trend Model buy signal. The LT Trend Model, which informs our long-term outlook, is on a buy signal as of 7/3/2013, so our long-term posture is bullish.
USO had a negative PMO crossover yesterday, generating a PMO sell signal and today price dropped below the 20-EMA.
Bonds (TLT): As of 5/20/2013 The 20+ Year T-Bonds ETF (TLT) is on a Trend Model neutral signal. The LT Trend Model, which informs our long-term outlook, is on a sell signal as of 5/29/2013, so our long-term posture is bearish.
Price broke out of the steep negative trend channel but is just consolidating sideways, making no real effort to get a rally off the ground. The PMO is rising but is getting flat.
Technical analysis is a windsock, not a crystal ball.
