Nearly all of the short-term BUY signals on the DecisionPoint Scoreboards (found in the DP Chart Gallery) were lost today. It is a result of the rather steep decline yanking 5-EMAs and Price Momentum Oscillators (PMOs) downward. However, they have arrived just as the indexes have landed close to support and sentiment is very bearish. Remember that sentiment is a 'contrarian' indicator, so bearish sentiment indicators equal bullish conditions.
The Scoreboards are below. The only short-term BUY signals left are ST Trend Model signals for the OEX and SPX. However, looking at their charts below, you can see another decline will move them Neutral as well.
The SPX and OEX have not tested their declining tops lines and the Dow has now reached declining tops support. This could be an area for a short-term bounce. The NDX may find support at its 200-EMA. However, the strongest area of support lies along the horizontal at the May lows. If we see prices reverse now, I wouldn't expect a strong rally; it just isn't an optimum set-up. In the intermediate term, I would look for a test of May lows. Now that is a good place for bulls to reignite a rally.
In the meantime, sentiment is growing more bearish. Below you can see that the VIX is overextended above the top Bollinger Band. Also, note that Wall Street Sentiment is very bearish.
Conclusion: I suspect the DecisionPoint Scoreboards will be in for a few short-term whipsaw changes if sentiment is correct and we see a near-term bounce. Support is certainly available, but we may need a test of the May lows first.
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Technical Analysis is a windsock, not a crystal ball.
Happy Charting!
- Erin
