During the MarketWatchers LIVE program (airs 12:00p - 1:30p EST M/W/F), Tom Bowley and I have started a segment called "Anatomy of a Trade" where we go through our process for identifying investment prospects. I use Price Momentum Oscillator (PMO) scans to start every mining exercise. One of the scans I have been using regularly identifies stocks that have PMOs rising for three days and have a bullish IT and LT Trend Model set-up (meaning the 20-EMA > 50-EMA > 200-EMA). I did adjust this scan slightly (for the better I think) from the one I ran today by screening for only US stocks that are trading above $10. Today's favorite (you can see it in the MarketWatchers LIVE blog for today) was UMC, but it trades in the $1 - $2 range and really isn't for beginning traders or those with a low risk tolerance due to its volatility.
No new changes to report on the DecisionPoint Scoreboards (found in the DecisionPoint Chart Gallery link on the homepage). The market has hit overhead resistance at all-time highs and is struggling to overcome. Meanwhile the defensive Energy Sector just logged LT Trend Model SELL signals, effectively moving them into an official 'bear market'. The equal-weight Financials ETF (RYF) logged a new IT Trend Model BUY signal. Seeing a "defensive" sector moving to a bear market and the Financial sector heating up suggests bullish investors.
During today's MarketWatchers LIVE show (Tune in MWF 12:00-1:30p EST) Tom Bowley and I looked at "Monday Set-Ups". Check the MarketWatchers Recap here to see the list. I found the Singapore ETF (EWS) through a Price Momentum Oscillator (PMO) Scan that I like to run (see it in this ChartWatchers article). This chart came right to my attention even with over 50+ CandleGlance charts the scan produced. Here's why I like it:
Last week I wrote: "My posture is to look for an up move next week, and as last week, a daily PMO bottom will be the first, if not infallible, clue that the market is done correcting. If an upside breakout follows, I will believe it." As it turned out, we got the breakout and PMO (Price Momentum Oscillator) bottom on Monday. There was nice follow through on Tuesday, but overhead resistance drawn from the March all-time high put a stop to forward progress. Let's dig into the technicals and see what next week may have in store.
The short term remains bullish in terms of the DecisionPoint Scoreboards. The long term also is showing all bullish BUY signals. Momentum looks to be a problem in the intermediate term. The SELL signals on all but the NDX come from the Price Momentum Oscillator (PMO) on the weekly chart. You can go look at them with annotations in the DP LIVE shared ChartList right here.
The DecisionPoint Scoreboards have been flipping out! I mean the signals are flipping quickly on all of the Boards! I wrote about the five signal changes we got yesterday in the DP Alert article here. The short term picture is very bullish with all four major indexes showing "green". The long-term picture is also very favorable. Momentum in the intermediate term is still declining (you can view the IT PMO on the weekly charts in the DP LIVE shared ChartList here).
We already saw some shake up on the DP Scoreboards on Friday with the new intermediate-term PMO SELL signals on all but the NDX. With the recent rally, we are now seeing the Scoreboards flip back to bullish in the short term. The S&P 100 is a hair away from producing its PMO BUY signal. I've included the charts below the Scoreboards. You'll note the breakouts on all of the charts. Price is about ready to test all-time highs on all of these indexes.
We had three new signal changes hit the DecisionPoint Scoreboards on Friday (4/21). When I reviewed the weekly charts on Friday, I noted that the Price Momentum Oscillators (PMOs) had finally crossed below their signal lines on all but the NDX (which retains its current BUY signal).
Last week I wrote, "The first necessary signal that the correction is over would be for the daily PMO (Price Momentum Oscillator) to turn up." That happened on Thursday, but there was no follow through on Friday due to, I believe, it being options expiration day, which tends to dampen volatility and keep prices steady. The slight decline caused the PMO to turn down again, but the direction is basically sideways. Let's see if a deeper analysis will clarify the situation for us.
Today the Nasdaq 100 triggered a new Short-Term Trend Model (STTM) BUY signal. This replaces a Neutral signal from exactly one week ago. In the thumbnail of the chart below the DecisionPoint Scoreboards, you can that the Neutral signal was the victim of whipsaw. I've been bearish on the market of late, but looking at NDX price movement, I like the last bottom forming above the previous and a breakout attempt being made to new all-time highs. Note also that the Price Momentum Oscillator (PMO) has now turned up.