Weekend Jan 5 2019
Our most reliable indicator found support exactly where it bottomed last February.
We will look at the longer picture shortly. On the positive side MACD turned up from its lowest point as has the A/D line itself. On the negative side, the last two attempts failed at the upper MA and the 50% RSI line. At top notice how RSI flipped during Sept Oct from above 50 to below 50. And we will get another test of the 50 level this next week.
Carl Swenlin has at Decision Point Stockcharts created a Price Momentum Oscillator PMO which is an improvement over MACD. Here is the longer term picture. The PMO monthly rarely gives a sell indication.
The crossover in fall 2007 ushered in the huge financial collapse. The crossover in 2015 resulted in a sideways correction. Now we have a third cross over. I placed the PMO on the main screen to emphasize just how far it could fall as it did in 2007. And notice it is falling from a lower high which is not good. It has been ten long years since the 200 month MA was tested. And no stock market expansion has ever lasted more than ten years.
Now let's use the same indicators for the last three months. While the DJIA 1,000 point day and Friday's 700+ point day seemed dramatic, in context below, not so much.
Again having PMO behind price demonstrates that on the two hour chart PMO is just now back to zero and in danger of topping again this next week. Relief rally anyone?
Here is the same configuration for the DJIA
This looks worse in that we have lower lows and lower highs, a bear market indicator.
INDU Daily the last four months
Bear markets can produce some remarkable rallies. But the 1,500 points in the Santa Rally just got the market back to the big down day Dec 19 which now becomes resistance. And notice the stochastic at bottom has not budged above the 50 level. The STO is also flashing a series of lower highs.
Transports, yikes even worse
All the MAs are falling in the main panel and STO is under 50 at bottom despite the short rally.Let's hope for a calmer day Monday which would allow us to exit any long positions on the heels of a rally.
Bonds TLT
Investors finally made the dash to safety in bonds. Despite the FED hike bonds have rallied leading to Jerome's comments at the FED. This is attributed to the big day Friday and TLT pulled back as stocks advanced.
Energy Ratio chart of Oil to the US Dollar
This illustrates just how beat up the energy markets are. USO is the oil ETF and it has a long slog ahead. Since oil is priced in dollars, the WTIC chart looks the same.
WTIC would have to take out the 54-5 level to turn the trend up.Apache APA has been cut in half the last three months, yikes!
Gold
The first leg up form August is complete. A pullback to 1255 at the 200 bar MA seems likely. That will be a good spot to add to position.
Kirkland Lake
KL is a gold miner which actually makes a profit. KL and Wheaton WPM need to be on the buy list for this pullback.
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