We noticed on Thursday evening how poor the internals were for the SPY based on Price Momentum Oscillator (PMO) internals. These internals are the percent of stocks with rising PMOs and the percent of stocks with PMO Crossover BUY Signals. The accompanying short-term Swenlin Trading Oscillators (STOs) and IT Breadth Momentum (ITBM) and IT Volume Momentum (ITVM) are also in decline.
Currently a mere 18% of stocks hold rising momentum. This is not a good foundation for a rally. At the same time I know that things get as bad as they are going to get before they start getting as good as they can get. These are oversold readings that could see an upside reversal. For now they are puny readings. Note also that the STOs turned down in negative territory.
We currently have less than one quarter of stocks with PMO BUY Signals where the PMO is above its signal line. We note that this indicator also saw a top below the signal line which is also quite bearish. Both the ITBM and ITVM continue to decline out of overbought territory. They still have plenty of real estate to fall further.
Conclusion: While the rally on Friday could change the face of some of these indicators, the PMO indicators won’t likely see a significant upside reversal. Even if they do, they are still likely to be reading below our bullish 50% threshold. Considering how close we are to all-time highs, we should have stronger internals. Beware.
Good Luck & Good Trading,
Erin Swenlin
Introducing the new Scan Alert System!
Delivered to your email box at the end of the market day. You’ll get the results of our proprietary scans that Erin uses to pick her “Diamonds in the Rough” for the DecisionPoint Diamonds Report. Get all of the results and see which ones you like best! Only $29/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!
Learn more about DecisionPoint.com:
Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here! Or join us live at 9am PT every Monday by registering HERE.
Try us out for two weeks with a trial subscription!
Use coupon code: DPTRIAL2 Subscribe HERE!
Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
Helpful DecisionPoint Links:
Trend Models
Price Momentum Oscillator (PMO)
On Balance Volume
Swenlin Trading Oscillators (STO-B and STO-V)
ITBM and ITVM
SCTR Ranking
Bear Market Rules
