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PMO
BUY/SELL SIGNALS ADD
CLARITY TO MARKET STATUS
Chart Spotlight
by Carl Swenlin
DecisionPoint.com
December 19, 2005
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Below is an excerpt from
Decision Point's daily ETF Tracker report as of 12/16/2005. In it we
sort the list into groups of PMO Buy and Sell signals, ranked by the age
of the signal in calendar days. A quick reference to this list is one
way of picking up new trading ideas. Otherwise, tabular data can cause
the eyes to glaze over unless an effort is made to step back and
discover patterns in the mosaic.
Here are the things that immediately stand out to me: (1) The list of new Buy signals is very short and weighted with bond ETFs. (2) Most broad market indexes, including non-US markets, are classified as very old Buy signals (probably on the verge of switching to Sell signals) or new Sell signals. (3) All but one of the Sell signals are relatively new. Take a quick look for yourself. PMO (PRICE MOMENTUM OSCILLATOR) CROSSOVER SIGNALS The PMO generates a BUY or SELL Signals when it crosses up or down through its 10-DMA. These signals tend to be short-term in duration, but they can last for several weeks. Do not take them at face value because they can whipsaw quite a bit. They should be used to alert you to possible trading opportunities, not used as a mechanical trading model. THIS IS A LIST OF CANDIDATES FOR FURTHER RESEARCH AND IS NEITHER A
SOLICITATION NOR RECOMMENDATION TO BUY OR SELL THE LISTED SECURITIES.
12/16 Cal
Close % Days High Today PMO
Name/Symbol Price Change Signl Elap P/L P/L R/F Days
--------------------- ------ ------ ----- ---- ------- ------- --------
TIPS Bond iShrs TIP 102.57 +0.1% BUY 0 0.0% -0.6% R 15
SP500 LgCp Grwth IVW 60.55 -0.2% BUY 2 0.0% -0.2% F 0
DJ Sel Dividend DVY 62.97 +0.1% BUY 2 0.0% -0.2% R 3
InvesTop CrpB iS LQD 107.59 +0.4% BUY 2 0.3% 0.3% R 2
T-Bond 1-3 Yr iS SHY 80.39 +0.1% BUY 2 0.1% 0.1% R 3
Consumer Stpl SP XLP 23.80 -0.6% BUY 2 -0.3% -0.4% R 3
Consumer Non-Cyc IYK 54.27 0.0% BUY 3 0.9% 0.9% R 3
Malaysia iShares EWM 7.09 0.0% BUY 7 0.1% -0.3% R 9
Japan iShares EWJ 13.28 +1.4% BUY 28 5.8% 5.8% R 7
Energy SPDR XLE 51.07 -2.7% BUY 30 7.6% 4.1% F 0
Natural Res iSh IGE 89.14 -1.9% BUY 30 8.3% 5.4% F 0
Oil Svc Holders OIH 130.37 -2.3% BUY 30 13.0% 9.3% F 0
Utilities HLDRs UTH 117.37 -0.2% BUY 30 6.6% 6.3% R 30
France iShares EWQ 26.55 +0.8% BUY 32 6.4% 6.4% R 29
T-Bond 20+ Yr iS TLT 90.70 +0.3% BUY 35 1.8% 1.8% R 0
T-Bnd 7-10 Yr iS IEF 83.60 +0.2% BUY 36 1.2% 0.9% R 3
Pharmacutl HLDRs PPH 69.05 +0.8% BUY 39 2.4% 2.4% R 14
Utilities SPDR XLU 32.31 -0.9% BUY 39 4.9% 4.9% R 8
Health Care SPDR XLV 31.70 -0.1% BUY 42 3.4% 3.4% R 8
China 25 iShares FXI 62.22 -0.4% BUY 42 5.6% 5.0% F 0
Healthcare iShrs IYH 63.04 +0.1% BUY 43 3.7% 3.7% R 3
Australia iShrs EWA 19.27 +0.1% BUY 43 4.8% 3.8% F 1
Canada iShares EWC 21.84 +0.4% BUY 43 7.3% 6.3% F 1
EMU iShares EZU 79.22 +0.9% BUY 43 5.9% 5.9% R 29
Germany iShares EWG 20.47 +1.3% BUY 43 7.0% 7.0% R 29
HongKong iShares EWH 12.99 -0.5% BUY 43 2.0% 1.5% R 4
Singapore iShrs EWS 8.05 0.0% BUY 43 3.3% 3.3% R 30
EAFE Index iShrs EFA 60.40 +0.8% BUY 44 5.2% 5.0% R 15
Emerging Mkts iS EEM 87.50 -0.3% BUY 44 8.0% 6.5% F 1
South Korea iShr EWY 42.80 -0.9% BUY 44 10.6% 9.3% F 0
Taiwan iShares EWT 12.18 +1.3% BUY 44 8.8% 7.8% R 0
United Kgdm iShr EWU 19.34 +1.0% BUY 45 4.9% 4.7% R 0
Mexico iShares EWW 35.96 -1.0% BUY 46 14.0% 12.1% F 1
Switzerland iShr EWL 19.47 +0.1% BUY 46 7.2% 5.9% F 1
SP500 LgCp Value IVE 66.37 -0.1% BUY 49 6.7% 6.1% F 1
SP400 MdCp Value IJJ 71.63 -0.6% BUY 49 8.3% 7.2% F 1
SP500 Equal Wght RSP 168.42 -0.4% BUY 49 8.2% 7.4% F 0
SP500 LgCap SPDR SPY 126.36 -0.8% SELL 0 0.0% -0.7% F 1
SP400 MidCp SPDR MDY 135.10 -0.9% SELL 0 0.0% 7.1% F 1
SP600 SmlCp iSh IJR 58.81 -0.5% SELL 0 0.0% 5.6% F 1
SP600 SmCp Grwth IJT 118.25 -0.4% SELL 0 0.0% 5.9% F 1
SP600 SmCp Value IJS 64.80 -0.8% SELL 0 0.0% 5.8% F 1
Russell 2000 iSh IWM 67.84 -0.4% SELL 0 0.0% 6.4% F 2
Rus2000 Grwth iS IWO 70.65 -0.5% SELL 0 0.0% 7.5% F 2
Rus2000 Value iS IWN 67.23 -0.4% SELL 0 0.0% 6.5% F 1
Consumer Disc SP XLY 33.41 -0.7% SELL 0 0.0% 5.0% F 0
Gold ETF GLD 50.09 -0.3% SELL 0 0.0% 4.8% F 2
Real Estate iShr IYR 66.04 +0.4% SELL 0 0.0% 7.3% F 1
Semiconductor iS IGW 62.60 -0.5% SELL 0 0.0% 9.6% F 3
SP400 MdCp Grwth IJK 75.76 -0.6% SELL 1 0.6% 0.6% F 1
Intnet Arch HLDR IAH 36.17 -0.7% SELL 1 0.7% 0.7% F 35
Materials SPDR XLB 29.80 -1.2% SELL 1 1.2% 1.2% F 8
Intnet Infra HLD IIH 4.01 -0.2% SELL 2 0.5% 0.5% F 3
Network iShares IGN 31.91 -0.5% SELL 2 0.8% 0.8% F 3
Technology SPDR XLK 21.57 -0.8% SELL 3 1.1% 1.1% F 9
Telecom iShares IYZ 23.79 -0.3% SELL 3 0.5% 0.5% F 9
Brazil iShares EWZ 33.53 -1.3% SELL 4 2.3% 2.3% F 9
Nasdaq 100 Shrs QQQQ 41.58 -0.9% SELL 7 0.3% 0.3% F 11
SP100 iSh OEF 57.97 -0.3% SELL 7 0.0% -0.7% F 0
Consumer iShares IYC 60.90 -0.1% SELL 7 0.0% -0.5% F 1
Industrial SPDR XLI 31.67 -0.4% SELL 7 0.6% -0.7% F 0
Diamonds DIA 108.51 -0.2% SELL 8 0.2% -0.8% F 1
Internet HLDRs HHH 69.59 +0.4% SELL 9 0.8% -3.0% R 1
Intnet B2B HLDRs BHH 2.63 -0.8% SELL 9 0.0% -1.2% F 10
Bank Regional HL RKH 143.74 +0.3% SELL 10 1.3% -1.1% R 0
Broadband HLDRs BDH 19.20 -1.0% SELL 10 0.5% 0.2% F 1
Financial SPDR XLF 31.98 -0.4% SELL 10 1.5% -0.1% F 16
Wireless HLDRs WMH 59.08 -0.8% SELL 10 0.7% 0.7% F 1
Biotech iShares IBB 76.73 -1.0% SELL 14 0.7% 0.4% F 18
Retail Holders RTH 98.60 0.0% SELL 14 1.0% -0.8% F 1
Software iShares IGV 40.91 +0.8% SELL 24 1.5% 0.0% F 8
Average -0.3% 19 2.8% 3.2% 6
*****************************************************************************
If you were viewing this report in the subscribers' area of the website, you would be able to click on any line to get a chart of that stock. This would allow you to quickly evaluate the quality of a given crossover signal and the viability of the trade. By reviewing a number of charts, you would also be able to get a general sense of the character and focus of the rotation taking place in the market as a whole. Since this report is not "live," let me show a few examples. The chart below shows a stock with one of the few new Buy signals. Note how the price index is at the top of its one-year range, and the PMO is modestly overbought. This is far from being an ideal setup, and is fairly typical of the other new Buy signals. The next chart is of one of the new Sell signals. We can see how price is very extended to the up side, and the PMO crossover Sell signal has taken place while the PMO is overbought. This chart is typical of what we see on most of the other charts of stocks with new Sell signals, and the setup is very favorable. (That is my opinion, not a recommendation to bet the farm.) I should also note that, were we looking for attractive Buy signal configurations, they would look something like the ones in May and October.
To summarize, we have a small number of new Buy signals and they look very sloppy. There are a large number of new Sell signals, and most of them, on the other hand, are being generated from fairly attractive price and PMO configurations. Conclusion: Even though we are still in a bull market, now is not the time to be looking for trades on the long side -- there just aren't that many out there. As for trying to exploit the new Sell signals, the fact that we are still in a bull market, makes that a dangerous prospect unless a short-term orientation is maintained. A market correction is likely to take place, but we can't assume that it will be more than another correction in an up trend.
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