TAKEAWAYS
- XLK "Bearish Shifts" Move IT and LT Bias to BEARISH
- XLK PMO Nearing Crossover SELL Signal
In Monday's DecisionPoint Trading Room we discussed that Technology (XLK) was the last one standing on our Bias Scoreboard with a Bullish Bias in both the intermediate term and long term. Today that bullish bias was lost in both timeframes. When the Silver Cross Index drops below its signal line, it is a "Bearish Shift" that moves the IT Bias to "Bearish". When the Golden Cross Index drops below its signal line, it moves the LT Bias to "Bearish" on a Bearish Shift.
The Price Momentum Oscillator (PMO) is in decline again and is headed for a Crossover SELL Signal. Most concerning is the complete loss of participation. %Stocks > 20/50/200EMAs have seen declines since the sector topped at the beginning of September. We would easily read the ST Bias as "Bearish" given %Stocks > 20/50EMAs are below our bullish 50% threshold.
Adding insult to injury are the RSI dipping below net neutral (50) and Stochastics which are falling fast.
Conclusion: Technology tends to lead the market and in this case it should lead the market lower. Indicators are falling with the PMO nearing a SELL Signal. Relative strength has been failing and the loss of the Bullish Bias in both the IT and LT suggest this is not a sector to rely on in your portfolio.
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